Advantages And Disadvantages Of Point-of-Sale Systems For Small Businesses

Benefits of a New Point-of-Sale System

Discuss about the Implementation of Point-of-sale system.

A business that goes by the name four seasons Greenhouse and Nursery is located in Colorado. It was running at a loss that is profits were negligible. For effective management of their business, they needed useful operational data. Their business operation was valued at 1 million US dollars. In 2008, they decided to make use of information technology in the form of Point-of-sale system. This system eliminates the need for tracking sales manually since the admin can instantaneously track business data once the sale commences. It reduces the cost by eliminating the need for manual data entry (Dorsey et al., 2017). The business will not have to hire additional persons for manual data entry. This report will answer basic questions about POS system. The implementation of POS system for a new business will also be discussed. Additionally, the risks that a POS system can bring will also be discussed briefly.

The first paragraph will mention the advantages of a new POS system. At first glance, it may seem expensive but the benefit provided by the system is immense. One of the distinct advantages is that it improves accuracy (Advantage360.com, 2018). It implements scanning which is much more effective than manually entering a random number in a register. The next advantage is that it helps in thorough analysis. It helps business owners to manage flag items for reorder, sales pattern and inventory.  A POS system is basically a cash register but since it is based on PC, it unlocks a cauldron of data for a particular business.

This paragraph will state few disadvantages of a POS system. The first disadvantage can be cost. A single register can be connected to a larger network of information which is the essence of POS system. For business owners, a web based system is much more convenient than software based system. However, this comes at a price since the business owners have to pay for internet access on registers and also a monthly fee to the provider of the system (National Processing, 2018). Additionally, if the owners decide to go with the software based system, then there will be a requirement to update the system at a regular basis and this might incur some additional costs and investment in hardware might also be needed. Since, POS systems remain connected to the internet; there are security and privacy risks also.

Since most of the things are available online, customers are less willing to stand in the line. With a simple press of a button a customer can get a product delivered. Transaction process can be expedited and this will result in additional sales in a given day. Additionally, a cloud based POS system can eliminate lines and it allows a sales associate with a digital hand held device to complete transaction on sales floor. Another competitive advantage that the point of sales system brings is that it provides detailed analysis sales or transactions (Expert Market US, 2018). This will allow the business to identify which products are being sold the most and the ones which are lagging. By analyzing this, the business can decide on how to increase the profit margin. This is surely a competitive advantage since the business that does not implement POS systems, there is no way for them to identify which products are lagging in sales and thereby increase the profit margin.   

Disadvantages of a Point-of-Sale System

A centralized database is stored, maintained and located in a single location. Mainframe computer or a server CPU can be the location. The advantages are as follows:

1. One of the significant advantage is data redundancy is minimized and data integrity is maximized. This basically means that a set of data has one record. This helps in maintaining reliability of data and accuracy of data (Coronel & Morris, 2016).
2. It ensures security of data since it has only one data storage location. This means that only one possible location can be attacked.
3. Centralized database includes fault tolerant setup and thus ensures better data preservation than other types of databases.
4. It is simple and easier to use for an end user because of the single database design it possesses.
5. Data administration and data portability is much easier (Effective Database Management, 2018).
6. It is cost effective than other database designs since power supply, maintenance costs and labor costs are minimized.
7. Since data is stored in a single location it can be analyzed, changed, mirrored and reorganized.
8. One of the major advantages is that all information can be accessed from the same location at the same time.
9. All the end users immediately receive information once the database is updated.

Owners are able to track business data once the sale commences which was not possible earlier. By far the biggest advantage of having point of sales system is the ability to get accurate, up-to-the-minute, and immediate assessment of the inventory. The owners then by analyzing the inventory can get the information about which product is selling the most and the one selling the least (POS Highway, 2018). With the help of the data, the owners can lower the price of the product that is selling the least and can increase the price of the product that is selling the most. Therefore, with the help of decision making provided by the POS system, profit margin of a business can be increased considerably.

POS system eliminates the need for tracking sales manually. There is no need for manual entry of sales transaction. This system is able to process and store data from sales transaction and also updates the inventory and compiles sales history.

A POS system helps manage a business in a better way. POS system provides alert facility. It lets a user know when a product is at the re-order point. It helps in deciding the pricing and this helps in striking the best deal with the suppliers. The most important thing is that POS system allows a user to track inventory which if physically done will take lot of time.   

POS system is network or computer based. It will seem little bit complicated to set up a network based POS system however it is not that complicated. POS workstation needs to be connected to the POS server. By applying standard network design, POS servers and POS workstations is connected to a local area network. A computer network which spans a relatively smaller area is termed as LAN (Local area network). LANS connect personal computers and workstations (Binder, 2013).

A Point of sales system can be wired or wireless. This depends upon business needs, space and the level of investment. Wireless technology can be implemented since it eliminates the need for cabling and maintenance cost is low however the initial investment is required. Telephone cabling installation is required for Point of sales units to communicate over the internet or to any other stations. CAT 5e cabling can be done and this is a popular choice for most users of POS system (Rarr, 2018). Wi-Fi can be used for wireless POS systems. For a wireless POS system to work correctly, a base station should be connected directly to a central network so that handheld devices can communicate wirelessly (SearchMobileComputing, 2018).  

Certainly, there are risks associated with a POS system. This paragraph will mainly highlight the threats associated with the implementation of POS system. If the network is not strong enough then the point of sales systems can get compromised. Hackers can penetrate weak networks and steal information such as business account data and credit card numbers. A business can suffer huge losses when personal details of customers get stolen.  There are various sophisticated ways by which an attacker can infiltrate a network. Ways such as malware attacks, Cross scripting attack, Distributed denial of service attacks, man in the middle attacks and SQL injection attacks (Zhang et al., 2016). Based on the possible ways to hijack a system, there is need to have a strong network. The second threat can arise from faulty devices. A device needs to be secure even if the network is strong. Internal attacks are also a major threat posed by a POS system. Employees who are malicious can install skimmer into credit card processing terminal (Tri, 2018).

Conclusion:

From the report it can be concluded that advantages outweigh the disadvantages. Although few risks are involved, the positive impact that a POS system can bring to a business cannot be discounted. Positive impacts that a Point of sales system brings includes automation and less employee requirement thereby saving cost for the organization. There is no need for anyone to track sales manually since once the sales commences the Point of sales system will store data about that product. It keeps sales history, updates the user about which product is selling the most and the ones that do not. Additionally, there is no need to check the inventory physically as the POS system automatically updates the inventory once a product is sold. Thus, by acquiring such information the profit margin for any business can be increased.  

References:

Advantage360.com. (2018). [online] Available at: https://www.advantage360.com/services/point-of-sale/ [Accessed 21 Apr. 2018].               

Binder, Y. (2013). U.S. Patent No. 8,582,598. Washington, DC: U.S. Patent and Trademark Office.

Coronel, C. and Morris, S., 2016. Database systems: design, implementation, & management. Cengage Learning.

Dorsey, J., Henderson, W., Grassadonia, B., McKelvey, J.M. and Wen, X., Square Inc, 2017. Point of sale system. U.S. Patent Application 15/599,826.

Effective Database Management. (2018). Why Should You Have a Centralized System?. [online] Available at: https://effectivedatabase.com/why-should-you-have-a-centralized-system/ [Accessed 21 Apr. 2018].

Expert Market US. (2018). What Is The Advantage Of A POS System?. [online] Available at: https://www.expertmarket.com/pos/pos-system-advantages [Accessed 21 Apr. 2018].

National Processing. (2018). The Key Disadvantages Of POS Systems – National Processing. [online] Available at: https://nationalprocessing.com/blog/key-disadvantages-pos-systems/ [Accessed 21 Apr. 2018].

POS Highway. (2018). Improve Data Gathering and Decision-Making – POS Highway. [online] Available at: https://www.poshighway.com/blog/improve-pos-data-gathering-for-decision-making [Accessed 21 Apr. 2018].

Rarr, V. (2018). Point of Sale or POS network cabling installation for your restaurant or bar. | BridgeCable.com Network Cabling Services In Philadelphia. [online] Bridgecable.com. Available at: https://www.bridgecable.com/blog/network-cabling/point-of-sale-or-pos-network-cabling-installation-for-restaurant-to-do-list/ [Accessed 21 Apr. 2018].

SearchMobileComputing. (2018). What is wireless point of sale (wireless POS or WPOS)? – Definition from WhatIs.com. [online] Available at: https://searchmobilecomputing.techtarget.com/definition/wireless-point-of-sale [Accessed 21 Apr. 2018].

Tri, R. (2018). 7 Ways Your Point Of Sale Security Is At Risk | POS On Cloud. [online] POS on Cloud. Available at: https://posoncloud.com/7-ways-your-point-of-sale-security-is-at-risk/ [Accessed 21 Apr. 2018].

Zhang, H., Cheng, P., Shi, L. and Chen, J., 2016. Optimal DoS attack scheduling in wireless networked control system. IEEE Transactions on Control Systems Technology, 24(3), pp.843-852.