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Advantages of POS Systems

Case study -- Blooming with Technology

The use of information technology is needed by every industry size and type of business. Small businesses can realize the positive effects through adopting technology. However, small businesses often do not have the resources and expertise of large corporations to implement information technology strategies. However, the benefits of technology for small and medium-sized enterprises (SMEs) are just as crucial to business operations and strategy.

Consider Four Seasons Greenhouse and Nursery, located in Colorado. This small nursery was like many other small businesses and garden centers. They used manual registers to track and maintain its inventory as well as determine which products were realizing the most profit. The profits from the nursery were either "negligible" or a loss. They did not have access to useful operational data to effectively manage their business. For example, they did not track or review the margins of individual products. However, they believed that they needed to do something different for their $1M business operation.

Enter a new point-of-sale system (POS) in 2008. The system allowed the owners to track useful business data from the sales transactions immediately at the time of the sale; eliminating the need for tracking sales manually. The system processes and stores data from the sale while updating the inventory as well as compiling a sales history. This eliminates reliance on manual entry of sales transactions and reduction of inventory units for the items sold. POS systems provide much more than a cash register. These systems provide more robust functionality in inputting, tracking, and distributing data to provide useful information to operate and manage the business

Accurate inventory data maintained by the POS helped with decision making. Decisions on how many units of a product to order were no longer based on speculation about current inventory units. Now, accurate inventory counts eliminate the guesswork on how much to order, helping the business to operate on leaner inventory units. The system's reporting can provide the detail transactions for an inventory item, such as how many were purchased, discarded, and sold.

he implementation of a POS system also confirmed that the owners did not know as much about their business as they thought they did. As they reviewed reports from the new system, they saw that some products were less profitable than they thought. The more detailed cost reporting by item helped them to understand which products contributed the most profit to the operation. Their new perspective of the "real costs" provided the opportunity to shift production to the higher-profit items, thereby gaining more profit. Prior to implementing the POS system, they simply did not have the time to approach this level of decision making.

Knowledge of their detailed product costs helps them to price products more profitably. Price changes can be implemented temporarily (for a promotion) or permanently and still remain within acceptable product margins. The accurate and timely reporting of this information assists them to be more effective managers of their business operations. The ability of the system to process sales, inventory, and purchasing transactions immediately reduces the need for data entry of paper information. The time savings can be used for managing the business rather than mundane clerical functions.

The new system has expanded Four Seasons' management control over employee schedules to review and allocate labour expenses to specific departments and functions. An additional benefit allows the owners to delegate more responsibility to the staff and establish accountability. Instead of the owners establishing goals, they provide the system's data and ask staff to submit their sales goals for the next reporting period. Ultimately, the information technology system creates a solid infrastructure to process and report the businesses operations for the entire enterprise. 

The garden centre is an excellent example of how technology can realize benefits for a business. The ability for organizations to remain competitive and agile is crucial. These systems allow organizations large and small to leverage business data to gain a competitive advantage and operational efficiency.

Read the case study and answer the following questions:

1) What are the advantages and disadvantages of the new POS system?

2) How will this POS system help the business gain competitive advantages?

3) What are the advantages of having a centralised database?

4) How could this POS system facilitate decision making?

Advantages of POS Systems

In the modern day business, it has become essential for the organisation to make sure that they have adopted many best of IT technologies for their operations (McCarthy, 2018). Since financial management is very crucial in any organisation hence making it through the help of systems like Pont of sale is highly important. This is because point of sale devices gives the exact data related to the number of purchase or transactions done with the customers. This report showcases all the aspects linked with the use of POS and the way in which it influences the decision making.

Point of sale has been one of the most significant technologies that are in use (Dontigney, 2018). There are several advantages and disadvantages lined with the use of POS systems.

Advantages include:

  • POS system assists the managers to locate crucial data from their sales transactions at the same time when it is generated.
  • It reduces the chances of errors in the transactions.
  • It also reduces the time taken in carrying out the whole transaction.
  • It reduces the chances of duplication as it is a highly efficient system.
  • It also assists in the real time management and tracking of all the inventories.
  • POS systems monitor records of sales and provide a timely detail of the transactions.
  • It helps in the process of CRM as customers also get alert about their transactions (Expert market, 2018).
  • Since it contains all the details of the purchase being done hence it assists in the process of decision making.
  • It ensures transparency as well brings accountability in the operations of the various units.

Disadvantages are as follows:

  • The cost of maintaining the system is higher. This is because it needs to be continuously upgrading of technology is required.
  • Specialist IT professionals are required for the maintaining the system.
  • Various risks related to security and privacy is present since if it gets hacked then various financial loses to the company can be possible (Gomzin,2014).

Various benefits are linked with use of POS systems. Since it carries a detailed information regarding every transaction made within the firm hence it acts as a facilitator in the decision making process. POS systems are highly crucial in the process of customer satisfaction hence it provides competitive advantage to companies using it (Adeoti and Osotimehin, 2012). Apart from this it gives the idea about the sales that are making maximum profits. It plays a crucial role in the making of marketing strategies which ultimately gives competitive advantage to the consumers. It also fastens the speed of transactional processing hence consumers do not have to wait for long to get their billings done.

In the modern day business, CRM has a crucial role in the business management and hence POS systems due to its dynamic nature help in removing the discrepancies in the work process. It also helps in reducing the number of flaws in the work process which is necessary for the smaller firms like Four Seasons Greenhouse and Nursery. It reduces labour cost which is highly necessary in giving them financial strength.

It has become essential for the management of the organisation to have a centralised database. This is because centralised database have large number of advantages. Some of the advantages are as follows:

  • It reduces the chances of redundancy and higher data integrity can be ensured as data is kept at one place.
  • Larger data security can be ensured as attacks can be possible from one source.
  • At the time of decision making data can be accessed easily as all the data collected at various locations can be available to the consumers at the same time (Hansen and Sia, 2015).
  • Data portability as well as its management becomes simpler.
  • It is highly cost effective method as the large amount of data is centralised location where less resource will be required to maintain the data.
  • Making changes or updating of data becomes simpler.

As huge amount of data is kept with the help of POS systems hence it adds largely to process of decision making. The basic facility it provides is the fact that it helps in making of the decisions that are highly data driven. Such decision helps in gaining of the edge in the market.

Disadvantages of POS Systems

Precise data regarding the sale is provided by POS which is crucial in the organisation’s growth and its revenue margins. Since the data collected is real time hence it helps in making of the better decisions that are genuine and helps them in their operations. It plays a greater role in the making decisions that are linked with offers and discounts. The accumulated data can be utilised for enhancing the efficiency of the operations that are going on in the back office which helps in improving the customer satisfaction (Hongqiang, 2011). More informed and evaluative decisions can be made with the help of POS systems. More customised marketing decisions can be made with the help of data that is gathered with the help of POS systems. It also assists in making of the customised marketing decisions. Data analysis becomes easier as more competitive decisions can be made with the help of it. This gives the idea regarding the loop holes that are present in the transactional operations.

Manual methods of data storage and manipulation is a highly time taking process and there is high probability of making mistakes. The POS systems remove the chances of redundancy and the gathered data can be easily tracked by taking use of POS system. Real time generated data through the use of POS can be tracked easily. This is related with ordering diminishing stock to identify the sellers that are performing at best (Rese, Schreiber and Baier, 2014). Previously it was done with the help of manual methods but was very effective in terms of time management. It will be crucial for the strategic decision making mainly when STP strategy has to be made as it gives the idea regarding which kind of product is preferred by which targeted audience.

Information can be tracked with manual methods also but it is a slower process which is not considered to be good in the present business. The data which is tracked through the use of manual methods may lead to construction of wrong decisions (Szell, Lambiotte and Thurner, 2010). Apart from this it requires huge amount of human efforts to do the entire process. A doubt still remains in the minds of people regarding whether the information is error free or not. Many a time a quick decision especially related to day to day sale has to be made; in such cases manual tracking is not effective.

Telecommunication Options for Small Companies

Questions associated with the sales and transaction can be easily answered. POS is highly capable of giving answers related with the customer choice and the trending products. It also gives the answers regarding the things that are providing them competitive advantage in the market. It is also capable of giving answers related to the way in which any unit is performing as well as the areas in which changes are required.

Information that is collected with the use of POS system is of strategic importance. These data can be utilised for decision making especially the decision that are related with making changes since it finds discrepancies in the whole process (Polasik, et al., 2012). Effective decisions can be made according to the collected data with the help of POS systems. Decisions that are made according to the data driven approach is always better for managing the business.

Various telecommunication options are available with smaller firms like Four Season Greenhouse and Nursery Company. Telecommunication option must be selected as per the firm’s requirement. Few of the basic options that are available with the firm are regarding the network type that must be used.

In all the options that are present with the company, LAN could be one of the best options. It is due to the reason that Four Seasons Greenhouse and Nursery Company has limited resources available with it. Apart from this LAN also gives higher speed of operations.

Taking use of wired technology can be helpful for the smaller companies. It is so because it is easier to maintain and gives higher speed of operation with less chance of data leaks. Taking use of Ethernet cable could be beneficial in this regards as it is easier to handle.

As similar to other technological devices various kinds of risks exists in the use of POS systems. It is crucial that business houses are aware of all the type of risk linked with these systems (Pantano, 2013). Most common type of risks in the POS system is as follows:

  • Security: As large amount of data gets stored in the POS system. These data are of strategic importance hence it becomes crucial for the firm to ensure safety of these data. If security is ensured then it may result in some serious issues for the firm. It has a bad effect on the stakeholders and the linked benefits. Hackers may steal the financial data which can lead to heavy monetary loses. For ensuring the safety of the data different security software can be utilised.
  • Privacy: Since a huge amount of data is stored in the POS system hence it is crucial for them to manage the data privacy. If the customer data goes into the hands of unauthorised people they may use it for their personal benefit. This is also not good for the image of the firm.
  • Confidentiality: Taking use of the POS system has generated the issues regarding the confidentiality of the data. Since a whole lot of credit and debit cards are scanned through POS system hence more confidentiality needs to be maintained. Use of firewalls will be highly beneficial.

Conclusion

A conclusion can be derived from the report that POS system has wide range of advantages and disadvantages linked with it. Due to the strength that POS system provides to the decision making it gives competitive advantage to users. Taking use of centralised system can be useful as it gives makes the data handling procedure simpler. Wired connectivity with the LAN facilities can be helpful in this regards. Confidentiality, privacy and security must be provided to the POS system so that any huge data loss may not be possible as it is very crucial in the modern day business environment.

References

Adeoti, O. and Osotimehin, K., (2012) Adoption of point of sale terminals in Nigeria: Assessment of consumers’ level of satisfaction. Research Journal of Finance and Accounting, 3(1), pp.1-6.

Dontigney, E., (2018) The advantages of Centralised Database storage [Online]. Available at: https://itstillworks.com/info-8623828-advantages-centralized-database-storage.html. [Accessed on: 7th May 2018].

Expert market (2018) Expert Point-of-sale. [Online]. Available at: https://www.expertmarket.com/pos/pos-system-advantages. [Accessed on 7th May 2018].

Gomzin, S. (2014) Hacking Point of Sale: Payment Application Secrets, Threats, and Solutions, John Wiley & Sons.

Hansen, R. and Sia, S.K., (2015) Hummel's Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned. MIS Quarterly Executive, 14(2).

Hongqiang, Z., (2011) The Application of 3G Technology at Electronic Point-of-sale System [J]. Value Engineering, 12, p.170.

McCarthy, M., (2018) The benefits of Moving to a Point-of-sale (POS) System. [Online] Available at: https://www.allbusiness.com/the-benefits-of-moving-to-a-point-of-sale-pos-system-10206841-1.html. [Accessed on 7th  May 2018].

Pantano, E., (2013) Ubiquitous retailing Innovative Scenario: from the fixed point of sale to the flexible ubiquitous store. Journal of technology management & innovation, 8(2), pp.84-92.

Polasik, M., Górka, J., Wilczewski, G., Kunkowski, J., Przenajkowska, K. and Tetkowska, N., (2012) June. Time efficiency of Point-of-Sale payment methods: Empirical results for cash, cards and mobile payments. In International Conference on Enterprise Information Systems (pp. 306-320). Springer, Berlin, Heidelberg.

Rese, A., Schreiber, S. and Baier, D., (2014) Technology acceptance modeling of augmented reality at the point of sale: Can surveys be replaced by an analysis of online reviews?. Journal of Retailing and Consumer Services, 21(5), pp.869-876.

Szell, M., Lambiotte, R. and Thurner, S., (2010) Multirelational organization of large-scale social networks in an online world. Proceedings of the National Academy of Sciences, 107(31), pp.13636-13641.

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"Advantages And Disadvantages Of Point Of Sale (POS) Systems In Business Management." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/hc1041-it-for-business/case-study-blooming-with-technology.html.

My Assignment Help (2020) Advantages And Disadvantages Of Point Of Sale (POS) Systems In Business Management [Online]. Available from: https://myassignmenthelp.com/free-samples/hc1041-it-for-business/case-study-blooming-with-technology.html
[Accessed 28 March 2024].

My Assignment Help. 'Advantages And Disadvantages Of Point Of Sale (POS) Systems In Business Management' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/hc1041-it-for-business/case-study-blooming-with-technology.html> accessed 28 March 2024.

My Assignment Help. Advantages And Disadvantages Of Point Of Sale (POS) Systems In Business Management [Internet]. My Assignment Help. 2020 [cited 28 March 2024]. Available from: https://myassignmenthelp.com/free-samples/hc1041-it-for-business/case-study-blooming-with-technology.html.

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