In today’s fast-paced, omnichannel retail environment, customers expect seamless experiences, whether shopping online, in-store, or via third-party marketplaces. For businesses, meeting those expectations depends on one critical capability: balancing inventory efficiently across all channels. Microsoft Dynamics 365’s Distributed Order Management (DOM) delivers that capability with intelligence and flexibility.
What Is Distributed Order Management (DOM)?
Microsoft defines DOM in D365 Commerce as an omnichannel order-fulfillment optimization solution that helps retailers deliver the right products from the right sources, in the right quantities, and at the right times.
It’s not just a routing engine, it uses mixed integer programming (MIP) and predictive models to weigh competing constraints (inventory, cost, delivery times, business rules) and determine optimal fulfillment strategies.
In the LinkedIn article by Fayaz Rafeeq, DOM is described as a system to optimize fulfillment, allocation, and distribution across multiple channels and inventory locations. The article underscores that DOM is not simply about order routing, it’s about increasing inventory utilization, reducing costs, and enabling smarter omnichannel operations.
Key capabilities of D365’s DOM include:
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Optimizing fulfillment based on multiple criteria (cost, proximity, rules)
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Dynamic evaluation of routing options at the batch or order-line level
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Configuration of profiles that let you run different optimization strategies depending on business segment or order type
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Constraint-based logic layering (e.g. maximum distance, partial orders, inventory rules)
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Automated inventory lookup, distance calculations (via Azure Maps or Bing Maps), and fulfillment-plan generation
Balancing Inventory Across Channels
One of the biggest risks in omnichannel retail is having stockouts in one channel while inventory sits idle in another. DOM addresses this by providing a unified inventory view and dynamically allocating stock where it’s needed most.
With D365 DOM, retailers can:
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Prioritize fulfillment channels: Set rules defining which locations (warehouses or stores) should be considered first. For example, you might prefer distribution centers over stores, or vice versa.
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Manage partial fulfillment: Define limits on how many locations can be used to fulfill a single order to avoid fragmented shipments.
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Filter out offline or overloaded locations: Exclude stores or warehouses from consideration if they are experiencing issues or have hit capacity limits.
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Set distance constraints: Limit how far a fulfillment location can be from the customer to control shipping cost and delivery time.
Because DOM continuously evaluates options under these rule sets, it can prevent waste (by avoiding over-allocation) while reducing stockouts across channels.
How DOM Processing Works in D365
Understanding the behind-the-scenes steps can help clients and technical teams appreciate the sophistication of DOM:
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Batch Jobs
DOM runs as a batch process (scheduled) under a configured profile. -
Order & Line Filtering
It filters sales orders and lines based on origin, delivery mode, and whether they’ve been brokered before. -
Batch Partitioning
Large sets of order lines are broken into batches (e.g. up to 1,500 lines) for parallel optimization. -
Inventory Lookup & Constraints
DOM checks on-hand and reserved inventory (for supported dimensions) and excludes unsupported dimensions unless customizations are built. -
Distance & Cost Calculation
Delivery addresses are converted to latitude/longitude and the system leverages Azure Maps or Bing Maps to compute distance. That cost becomes part of the optimization model. -
Fulfillment Plan Generation & Application
The optimizer yields fulfillment plans; depending on settings, results may be auto-applied to order lines.
Because DOM considers many possible fulfillment combinations and runs optimization across thousands of options, it produces routes that balance cost, speed, and resource constraints, something manual routing or legacy OMS systems struggle to do.
Real-World Benefits & Strategic Value
Implementing DOM in D365 can yield tangible improvements:
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Cost savings: Because the system recognizes that shipping a whole order from one location is usually cheaper than splitting it, DOM will prefer fewer shipments when possible.
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Faster delivery times: By choosing closer fulfillment sources, DOM reduces transit distances and helps meet customer expectations for speed.
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Better utilization of inventory: Idle stock in one channel can be redeployed to meet demand elsewhere—avoiding markdowns or write-downs.
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Scalable fulfillment strategies: By running multiple profiles, retailers can test different strategies (e.g. cost-saving vs expedited) depending on product, customer segment, or sales channel.
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Resilience during disruption: When one warehouse or store becomes unavailable, DOM will re-route fulfillment dynamically based on rules and constraints rather than breaking.
Fayaz Rafeeq’s article emphasizes that DOM isn’t just for large enterprises—it scales with the complexity of your network, offering more sophistication and adaptability than traditional OMS systems.
Integration & Ecosystem Synergy
DOM works best when integrated into a broader D365 ecosystem:
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Commerce: It handles the omnichannel order orchestration layer.
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Supply Chain Management / Warehouse Management: Supplies real-time inventory and logistics data.
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Power Platform / Analytics: Enables reporting, rule adjustments, and custom extensions.
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Other modules: Seamless connections to procurement, returns, and fulfillment processes.
Because DOM’s logic is rule-based and profile-driven, organizations can adapt to evolving business needs without overhauling core architecture.
Final Thoughts
Distributed Order Management in Dynamics 365 is much more than a routing tool, it’s a strategic engine that brings intelligence, responsiveness, and efficiency to omnichannel fulfillment. With advanced optimization, real-time inventory visibility, and configurable business rules, it ensures you’re not just meeting customer expectations, but doing so in a way that optimizes cost, utilization, and resilience.
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