Advantages of the Point-of-Sale System
Discuss about the new POS system implemented by Four Seasons Greenhouse and Nursery.
The point-of-sale systems have replaced traditional cash registers and manual data tracking process. POS systems can accurately maintain, distribute and track sales, purchase and inventory data (Rahman & Ripon, 2014). POS systems help organizations to generate more revenue and increase profit margin by simplifying and enhancing operational efficiencies of the business (Refer to Appendix 2). This report analyses a case study of a small business, Four Seasons Greenhouse and Nursery that has started using a POS system since 2008. This report discusses various advantages and disadvantages of the POS system. It shows how this POS system will help the organization to achieve competitive advantages and facilitate the decision making. This report recommends suitable telecommunication options for the POS system of the business and discusses the various types of business risks that can occur due to the POS system. It also gives suggestions for protecting the organization against the business risks.
The POS or point-of-sale system has been able to overcome the challenges faced by Four Seasons Greenhouse and Nursery (Refer to Appendix 1). Several advantages of the new POS system are:
- The process of manual tracking gets eliminated by implementing a POS system. POS systems can automatically produce business reports for effective operations of the organizations. The POS system can be considered to be an advanced version of a cash register. It enhances the accuracy of the reports and saves time.
- The POS system allows the business to effectively store, track and update sales, inventory and purchase data in real-time. It also provides robust functionality in distributing business data to the organizations for facilitating them to manage and operate their business in an effective manner (Laudon & Laudon, 2016). Therefore, the POS system helps the business to generate more revenue.
- The POS system provides accurate information about the inventory counts and enhances the decision making process. It helps the business to operate and focus on lean management of inventory units (Refer to Appendix 1). Therefore, the POS system reduces inventory waste, reduces cost and increases stock turnover.
- The POS system provides accurate product cost details to the business that helps the business to get an insight into the profitability of all the products. This enables the business to improve product pricing and generate more profit. Proper and consistent pricing of products will increase the level of customer satisfaction and help the business to grow.
- The POS system helps in effectively controlling employee schedules. It helps in accurately allocating labour expenses to the specific functions as well as departments. Therefore, the POS system helps in enhancing employee satisfaction.
The disadvantages of the new POS system are:
- The initial cost of installation of the POS system is high. The POS system requires regular maintenance and software update that increases the expense of the business. Hence, it becomes difficult for a medium or small sized organization to use the POS system.
- There are certain confidential, privacy and security risks associated with the POS system. Absence of regular software updates and security policies can lead to these risks. The security risks can leak and manipulate sensitive business data. Therefore, any security breach can adversely affect the business.
The POS system will play a significant role in helping the business to gain competitive advantages. POS systems will enhance the speed and accuracy of the financial transactions. The point-of-sale system will help in recording sales data immediately during the time of transaction or sale. The POS system will eliminate the method of manual tracking and promote automatic recording, tracking as well as distribution of data. The POS system can flawlessly perform transactions and calculations (Moon, Kim & Ham, 2014). The absence of human intervention will eliminate the errors in sales, inventory and purchase reports. POS systems will help the business to make accurate decisions regarding inventory units and pricing of the products by providing correct inventory information and product cost reports respectively (Williams et al., 2014). Hence, consistent product pricing, elimination of inventory waste and reduction of inventory cost will help the business to increase the level of customer satisfaction and generate more revenue. Organizations will be able to increase their profit margin by implementing the POS system. Controlling and tracking of employee schedules along with proper allocation of labour costs to different departments can be done by the POS system. Therefore, the POS system will help in retaining employees by increasing their satisfaction level. POS systems will provide timely and accurate reports to the business and enhance the efficiency of business operations. The POS system will create a solid business infrastructure that will simplify the reporting and processing of business operations (Refer to Appendix 1). It will reduce the amount of paperwork and increase the speed of the business operations. The overall operational efficiency of the business will increase by implementing the POS system. Four Seasons Greenhouse and Nursery will be able to utilize the benefits of the POS system and gain competitive advantage by increasing the business operational efficiency.
Disadvantages of the Point-of-Sale System
1) A centralised database integrates the information of various departments of a business. Therefore, it reduces data redundancy by storing data in a single structured database (Gouhar, 2017).
2) A centralised database provides consistent data to its business users by enabling the business to establish data standards. Implementation of strong security policies reduces the risk of data theft and data manipulation. Therefore, it helps in enhancing business assessments by improving the quality of data.
3) A centralised database provides data access to the business users depending on various authorization levels and user needs. It helps different users belonging to different departments to access the same data at the same time from various locations. It has strong control over data concurrency that does not allow more than one user to modify the data at the same time but allows two or more users to read at the same time (Srinivasan & Manohar, 2012). Therefore, a centralised database enhances business operations by allowing data sharing in an easy and effective manner.
4) A centralised database can control all the data of an organization in a central repository which can redirect valuable resources for fulfilling the business needs. It enables implementation of changes in a single instance (Coronel & Morris, 2016). Therefore, a centralised database saves time and increases business productivity.
5) A centralised database helps in controlling and saving the cost of storing and retrieving data. It helps in enhancing the accuracy and validity of data. The better management of data along with easy access method helps in improving the decision making process of the business.
The POS system could help Four Seasons Greenhouse and Nursery with business decision making by providing accurate cost reports, sales data and inventory data. Initially, Four Seasons Greenhouse and Nursery depended on manual registers for tracking and maintaining its inventory. The use of manual registers and manual tracking led to negligible profit or loss. The point-of-sale system eliminated the need for manual tracking and helped the business to track sales data in real-time (Refer to Appendix 1). The POS system could update the inventory, compile sales history and store the data immediately from the time of sale. It could produce error-free reports for facilitating business operations. The POS system could store, track and distribute data for providing useful information for operating as well as managing the business. Therefore, POS systems effectively process the business activities.
Telecommunication Options for the POS System
Manual inventory management is a labour intensive process. It consumes more time. The possibility of error occurrence is more when manual processes are involved. Inaccurate tracking of the sales data and inventory units affects the entire business. The POS system on the other hand could automate the process of data tracking and operate the business in an effective manner.
The point-of-sale system could accurately maintain the inventory data that helped with the decision making of Four Seasons Greenhouse and Nursery. Initially, the business decided the number of units to be ordered based on guesswork and speculations. The POS system could provide accurate details about transactions for inventory items and answer such questions that provided information about how many items were sold, purchased and discarded.
The POS system provided accurate cost details that helped the business to differentiate between profitable and less profitable products. This helped the business to produce more profitable items and increase the profit margin. The POS system could provide details about the product costs that helped in maintaining consistent pricing (Pearlson, Saunders & Galletta, 2016). Hence, the POS system could help Four Seasons Greenhouse and Nursery to effectively use the information for managing the business in a better manner.
WAN or wide area network can connect several LANs that are located in various locations and cover a larger span as compared to a LAN or MAN (Refer to Appendix 3). The most suitable network for the POS system of Four Seasons Greenhouse and Nursery will be WAN. WAN will help the employees of the company to remotely access network resources from any location and enhance business productivity. Installation of WAN connection will not require the purchase and configuration of the components unlike setting up of LAN and save business cost (Comer, 2015). WAN will also help in expanding the business by linking different sites.
Wired networks make the use of physical medium such as fiber optic, copper wire and twisted pair cables for connecting various devices. Wireless networks transmit information over long distance without any physical medium and use electromagnetic waves.
The most suitable medium or technology for Four Seasons Greenhouse and Nursery will be wireless technologies. The wireless technology will allow the users to move freely by connecting to the Internet and instantly share files without using cables (Iniewski, 2017). The business will not incur heavy installation and cabling cost by using wireless technologies.
Wi-Fi technology will be suitable for the POS system of Four Seasons Greenhouse and Nursery as it will help the business to instantly share resources among various devices. It will eliminate the complex process of wiring and help the employees to easily access information (Adib & Katabi, 2013). Wi-Fi technology will enhance the operational efficiency of the business by improving its responsiveness (Xiao-yang, 2012).
Types of Business Risks Due to the POS System
The POS system can bring three main types of risks to the business such as security, confidentiality and privacy risks. Security risk can occur when there is lack of effective network security policies and encryption (Kizza, 2017). If the POS system is not up-to-date then it can cause security risk. The business can be protected against the security risks by updating the software on a regular basis. The security risks can be prevented by using encryption methods and security policy (Stallings et al., 2012). Firewall can be implemented for preventing and detecting intrusion.
Privacy risk can occur due to the presence of malicious codes and virus. Malware attacks can steal sensitive data and adversely affect the business (Saeed, Selamat & Abuagoub, 2013). Virus attacks can corrupt the POS system and destroy business data by replicating itself. Privacy risks can be prevented by installing anti-virus software and updating the software on a regular basis.
Confidentiality risk occurs when there are no authorization levels and all the users have access to all information present in the POS system. Authorization levels must be enforced and data must be encrypted for restricting the access to sensitive business information (Singh, 2013). A specific category of users must be able to access information related to their specific domain.
Conclusion
From the above discussion, it can be said that Four Seasons Greenhouse and Nursery will be able to achieve operational efficiencies and competitive advantages by using the new POS system. According to this report, centralised database can integrate the information of various departments and help in enhancing business productivity. This report also pointed out that the accurate data of inventory has helped in the decision making process of the business. It also showed that detailed cost reports have helped the business to identify profitable items and raise profit margin. The most suitable telecommunication options for the business will be WAN and wireless technologies. This report said that regular software updates, use of firewalls and anti-virus software will be able to prevent the business from various risks that can occur due to the POS system.
References
Adib, F., & Katabi, D. (2013). See through walls with WiFi!(Vol. 43, No. 4, pp. 75-86). ACM.
Comer, D. (2015). Computer networks and internets. Pearson.
Coronel, C., & Morris, S. (2016). Database systems: design, implementation, & management. Cengage Learning.
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Moon, Y. J., Kim, W., & Ham, S. (2014). Users’ intentions to employ a Point-Of-Sale system. The Service Industries Journal, 34(11), 901-921.
Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
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Srinivasan, M., & Manohar, R. (2012). Performance of Concurrency Control Mechanisms in Centralised Database Systems. Indian Journal of Computer Science and Engineering, 3(3).
Stallings, W., Brown, L., Bauer, M. D., & Bhattacharjee, A. K. (2012). Computer security: principles and practice (pp. 978-0). Pearson Education.
Williams, B. D., Waller, M. A., Ahire, S., & Ferrier, G. D. (2014). Predicting retailer orders with POS and order data: The inventory balance effect. European Journal of Operational Research, 232(3), 593-600.
Xiao-yang, L. I. (2012). WIFI technology and its application and development [J]. Information technology, 2, 062.
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