Introduction to Point-of-Sale (POS) Systems
This report will enlighten on the new technology known as point-of-sale system. Information technology strategies are adopted by every organisation whether large or small (Seethamraju 2015). The advantages are visible once the technology is adopted. However, small enterprises do not have enough resource and infrastructure to support information technology strategies (Brimblecombe Liddle and O’Dea 2013). Technology benefits to SMEs are significantly crucial for carrying out operations in organisation and developing strategies to improve them. Four Seasons Greenhouse and Nursery that is located in Colorado is an example of small enterprise that maintained its inventory information using a manual register. They entered information of the products realizing maximum profits manually in the register. As a result, important operational data was ignored by the enterprise that led to no profit and sometimes loss to the enterprise. The business operations carried out by Four Seasons Greenhouse and Nursery lacked in reviewing and tracking individual products margin. To improve business operations, the enterprise adopted point-of-sale system in 2008. Point-of-sale system is defined as the process of storing information of the point at which customers pay money for to merchants to buy a product (Harris and Patten 2014). The following paragraph will focus on the advantages and disadvantages of POS followed by the way it will help business gain competitive advantage and the risks that are invited by the system.
Advantages:
The devices that are used by point-of-sale system are barcode scanners, weighing scales and cash registers. The customers use touch screens, payment terminals as well as other hardware and software tools to make payment. The enterprise that owns POS system can track business data and transaction information immediately at point of sale with the use of these devices. The system eliminates the risks that are involved in tracking and storing information manually. Additionally, the system can update inventory information along with keeping a track of sales transaction (Nikolova and Inman 2018). Sales history of the enterprise is maintained at the same time. Device like barcode reader stores the information of transacted product in centralised database immediately the barcode of the product is read by it. POS system helps to maintain correct inventory data for sold products that aids in decision-making while helping business to shift to high profit production (Mayer, Borges and Simske 2018). The system is much more robust and has more functionality than cash registers. Four Seasons Greenhouse and Nursery will be benefitted by useful operational data that will help to manage business efficiently.
Advantages of Using POS Systems
Disadvantages:
The two types of systems that are supported by point-of-sale system are web-based system and software-based system. However, web-based systems are more user-friendly because of which most business enterprise adopts this system (Ismail and King 2014). The additional cost for internet access might not be afforded by small enterprises. If the organisation use software-based system then continuous update of software to new version is required from software company manufacturer. Updating software invites new complications in the system that increases cost of updating hardware.
POS system will help in eliminating reliance on manual way of storing transaction information that will reduce the risks of ignoring inventory items sold. Maintaining correct inventory information facilitates decision-making. Decisions related to number of units to be ordered for an item does not depend on current inventory units. The guesswork that was made for ordering items have now been eliminated that helped business operation on leaner inventory units. The system will provide the business with transaction details such as number of items purchased, sold and discarded of inventory items. Good decision-making ability will help the business gain competitive advantage. POS implementation in business exposed that business owners did not knew much about the business. When business owners reviewed reports of this new system, they found that a number of products were not profitable as they thought. The products that will contribute maximum profit to organisation can be understood from detailed cost report. This report provided an opportunity for business to shift to production of more profitable products that will indirectly lead to more profit. Increase in profit will help enterprise to compete with other enterprises. Detailed knowledge of product costs will help organisation to price products in a way to make profit. Keeping track of information related to products and their costs will help managers manage operations of the business effectively. Time will be saved that can be used to manage other things rather than wasting it on mundane functions.
When amount of data increases with expansion of business, it becomes hectic to manage them. Organising data is important to handle them so that they can impose sanity to businesses. The advantages of using centralised database are as follows:
Data security is improved: Data that are stored in central databases face less challenges of security as strong data security is provided by central database (Wimmer et al. 2013). Important customer information that needs strong protection should be stored in central databases so that it is kept secured.
Types of POS Systems
Data preservation is improved: The main advantage that is provided by centralised database is improved data preservation (Hustad and Olsen 2013). If hardware failure occurs, centralised database preserves data and prevents from unauthorised access. As a result, loss of data is eliminated and the system is referred as a fault-tolerant system.
Physical security is improved: Data stored in laptops and notebooks is vulnerable to loss because the devices might be stolen or lost. The lost and stolen device can be accessed by anyone and data stored in locally might be at security risks (Scanlon 2016). When data is stored in a centralised database, it cannot be physically accessed to a single location. Hackers who intentionally steals important data to cause loss to business will not be able to access these data as they are under strong security checks.
Reduction in costs along with improvement in reliability and speed update: Huge cost is incurred for implementing server technology however overall cost is reduced in maintaining a central server. Cost spent to maintain multiple computers that stored data in multiple location would be more. Therefore, centralised database has added advantage of reduction in cost. Components of higher quality and redundancy are used in central databases that makes it more reliable than local storages (Scanlon and Kechadi 2013). Updates applied on database passes through central storage to all computers connected to it. As a result, speed of update is high. Local storages do not have the facilities that makes centralised database advantageous than local storage.
Point-of-sale system facilitates in taking correct decisions. The products that will increase profit of business are identified well and accordingly decisions are made for production of the particular products. In point-of-sale system processes, the items that are sold are immediately stored in database through various devices. Products that are sold in huge amounts and causes maximum profit to business can be easily determined. It eliminates manual storage of data. Information that are tracked manually might sometimes be wrong. Humans cannot be perfect all time. As a result, there might be some mistake in entering data in manual registers. It affects decision-making. In the case study of Four Seasons Greenhouse and nursery, inventory data was entered manually in manual registers that resulted in negligible profit and sometimes loss to the business (Bocken et al. 2014). It was lacking useful operational data that could lead to effective decision-making. Questions that were answered by use of POS are: products that brings maximum profit to business, amount of raw materials that should be ordered to reduce cost of production, number of products that were discarded, purchased and sold. Information gained from POS system will help business to keep a track of inventory data and product that will directly lead to business profit. Data collected in database will facilitate business in deciding which products needs to be produced in large quantities, decide amount of raw materials that should be ordered to make the product and so on (Bhalla et al. 2013). Expansion of business and quality of service also depends on correct data and information that are stored in centralised database.
Importance of Centralized Database for Point-of-Sale Systems
Four Seasons Greenhouse and Nursery is referred to as a small enterprise. Small enterprises so not have enough funds and infrastructure to implement costly technologies. Therefore, LAN would be useful for implementing POS. WAN or MAN can be used in large enterprises however SMEs will not be able to afford for WAN or MAN. Moreover, number of computers that will be connected to the network will be less. As a result, LAN will be ideal network for this POS system. Internet providers will provide access to network such that POS system processes can be carried out. Wired as well as wireless technologies can be used to build network. Wireless technology would eliminate the risks of wired media however, cost of implementation would be large. In case wired technology is used for network, fibre optics would be the best option. It would eliminate the risks associated with coaxial and twisted pair cables. However, the cost of installation of fibre optics is more.
Besides the advantages of POS system, the system remains to be vulnerable to security risks. Employee theft is the most common risk faced in a POS system. Cashier who is in charge of scanning goods sold and purchased might bypass scanning of some items thereby profiting himself however, the business will be at loss (Foxall 2014). By hacking security systems of centralised server, a hacker can gain access to confidential data. Therefore, data security, privacy and confidentiality is lost. To mitigate these risks, it is crucial for POS system to create an admin window for the owner or administrator to inspect daily sales, regularly check sales and purchase receipts (Laudon and Laudon 2016). Besides all this precautions POS system will not be able to become 100% risk free. This is because of dishonest employee and staffs that will be present in the enterprise.
Conclusion:
It can be concluded from above discussions that POS system facilitates in decision-making. It might be difficult for small and medium-sized enterprise to implement POS however considering its effects on business it is implemented by SMEs. It helps in keeping track of inventory data and products that should be produced in huge amounts to maximize profit. POS system stores data in centralised database that has added advantage of improved data preservation and security. Physical security is also provided that helps to recover stored information in case of system failure. Manually stored data are prone to theft however, data stored in centralised database are immune to risks of theft and data loss. LAN helped the enterprise to connect to internet and implement POS system in the enterprise. Besides these advantages, POS systems are still vulnerable to security threats. Internal staffs of the enterprise are hacking the system to steal important information. To mitigate these risks, the enterprise should limit access of users to its centralised database. Only trusted and registered staffs should have access to it. Apart from the security risks, POS system in any organisation should ideal for maintaining a track of products that are sold, purchased or discarded
References:
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