Advantages And Disadvantages Of POS Systems

Advantages and Disadvantages of new POS system

Information Technology is one of the most important needs of every industry irrespective of its size. Information technology provides a number of benefits in business. By making use of information technology business gain the ability to view changes in the global market. The use of information technology in business provides the benefits of reduced downtime and reduction in the operational cost (Drnevich & Croson, 2013). The use of information technology further improves the productivity of an organization, in turn reducing the cost of labour. Similar business benefit is observed by Four Seasons Greenhouse and Nursery that is located on Colorado.

This small nursery used to operate on manual systems that resulted in significant business loss. However, the implementation of a point of sales (POS) system helped the organization in eliminating the operational inefficiencies, which in turn lead to the increase in business profit. The point of sales system helped the owners to tract useful business data quite easily. The aim of this report is to discuss the advantages and the disadvantages of POS system. The process by which the POS system can help the business in gaining a competitive advantage will be discussed in the report as well.

1. Advantages and Disadvantages of new POS system

The new POS system that has been implemented in Four Seasons Greenhouse and Nursery has a number of advantages and disadvantages. It not only helped the organization to achieve a business benefit, but also helped in decision making. The advantages of the new point of sales system are as follows-

1. The use of POS helps in increasing the efficiency of the different business processes within the organization (Westerman, Bonnet & McAfee, 2014). With the help of the POS system, the managers of Four Seasons could efficiently track the inventory items along with the employee productivity, which in turn helped in increasing the efficiency.
2. With the help of Point of Sales system, appropriate inventory management could be possible (Fleisch, Weinberger & Wortmann, 2015). The detailed reporting of the inventory items increases the business profit as well.
3. Collection of accurate sales and employee data could be possible with the help of POS. This further helps in effective decision making.
4. The use of POS has helped the Four Seasons greenhouse and nursery to know about the detailed product cost. This in turn helps in accurate pricing of the product and increase in the profit margin of the products.
5. One of the most significant advantages of POS is that it helps in generation of accurate reports, which in turn helps in better task distribution.

Although the use of POS offers a number of advantages to the business, there are certain disadvantages as well. The disadvantages of the new POS system are as follows-

1. One of the most significant disadvantages associated with the POS is that, many small companies may not have the resources and the expertise to implement such a complex system like POS (Baden-Fuller & Haefliger, 2013). For small business, the use of POS may not always be a cost effective solution.
2. For management of the new POS, Four Seasons will have to manage and troubleshoot major hardware and software problems which are common in POS.
3. The storage of data in POS is subjected to certain security risks, which are needed to be addressed. Appropriate management of the major security risks is essential for proper functioning of the POS.
4. The software upgrades associated with the use of POS is quite costly and hard to install (Laudon & Laudon, 2016). Therefore, the use of POS system is quite inconvenient for small businesses.

Thus, it can be observed that there are certain major disadvantages associated with the use of POS (Peppard & Ward, 2016).  However, the use of POS system is found to be beneficial for Four Seasons as it helped the organization in effectively managing their business processes.

2. Role of POS in gaining Competitive Advantages

One of the most significant advantages of Point of sales system is that it helps the business in gaining a competitive advantage. The use and implementation of a POS system in Four Seasons greenhouse and nursery has helped in redesign the entire business process of the firm (Ingram et al., 2015). The new POS system that has been introduced in the nursery helps the owners to track the useful business data and sales transactions (refer to appendix). This in turn helps the business in gaining a competitive advantage. The nursery used to maintain manual registers for keeping a track of the inventory products (Pearlson, Saunders, & Galletta, 2016).

This process was quite inefficient and it was prone to human errors. With the use of the new POS system, the organization could gain competitive advantages as the system provides robust functionality in inputting, tracking and distribution of the data (Nguyen et al., 2015). Accurate inventory data maintained by the POS further helps in decision making. Enhanced decision making ability helps in elimination of guess work, which in turn increases the business profit. The increase in business profit along with better understanding of the needs of the firm, cost of each product and out of stock items help in increasing the competitive advantage as well.

Role of POS in gaining Competitive Advantages

3. Advantages of a Centralised Database

Four Seasons greenhouse and nursery has decided to make use of centralised database system to store data related to the POS (Lu et al., 2015). There are a number of advantages of making use of a centralised database system, which are as follows-

1. The use of centralised database system is beneficial for Four Seasons as it improves data preservation (Chan, 2015). This is possible mainly because the centralised database storage include fault tolerance setup and redundant storage for data preservation.
2. The use of centralised database system helps in improving the physical security in comparison to that of a decentralised database.
3. The use of centralised database system further improves data security, which is one significant advantage of centralised database system.
4. The use of centralised database system helps in reducing the cost of storage in comparison to that of decentralised database system.
5. The use of centralised database system further improves the reliability and update in speed of data processing.4. POS in Decision Making 

As identified in the earlier section of the report, the use of POS helps in decision making. One of the most significant reasons behind the same is effective processing of the different business activities. POS. POS can manage the business processes more effectively since it helps in accurate inventory management by elimination of the guesswork. Furthermore, knowledge of detailed product cost helped the organization to price products more profitably.

It has been observed that the information cannot be tracked manually in an effective manner. This is mainly because manual information tracking is prone to human errors (Ghosh et al., 2014). Apart from that, manual information tracking is a time consuming matter, which can be eliminated with the implementation of a POS system.

With the use of POS system, the questions associated with the inventory data, the accurate cost of products and details about the employee schedule can be answered quite effectively.

The information stored by the new POS system helps in effective decision making as the associated business can be managed more effectively. The implementation of the new POS system confirmed that the owners have no idea about their business (Goldratt, 2017). Regular and accurate report generation helps the business owners in easy identification of low performing goods and out of stock item. Apart from that, the use of the new POS system can helped in delegating more responsibilities to the staffs of the organization. These benefits offered by the POS system helps in effective decision making.

5. Recommendations of Telecommunication Option

In order to effectively manage the business processes, the POS system needs to operate in an efficient manner. The implementation of the POS system will require an effective network. The network type that is chosen for implementation of POS is LAN or Local Area Network. A local area network can be described as a computer network that interconnects all the digital devices in a limited area such as office or University campus. Thus the use of this network is appropriate to consider for implementation of POS in Four Seasons Greenhouse and Nursery.

The WAN or MAN is not recommended for Four Seasons Greenhouse and nursery. In wide area network, digital devices scattered over a large area are interconnected together. Therefore, a wide area network extends over a large geographical distance, which is not required for Four Seasons. MAN on the other hand is mostly used for network connections in metropolitan area.

The type of media that is recommended for Four Seasons is wireless technology (Kumar,  Jain & Barwal, 2014). AWI-FI connection is to be set up and the available devices in a particular network will be connected with a Wi-Fi connection.

6. Risks in POS system

As discussed earlier, one of the major risks associated with the use of a POS system is the security risks. The storage of data in POS is subjected to data security risks (Chelli, 2015).  The security risk arises mainly because most of the POS system comes with a default password. Regular update of the passwords is necessary in order to reduce the security risks. Certain privacy issues are associated with POS as well. Confidentiality of the data stored in the system is needed to be maintained with accurate data protection by making use of access control.

Conclusion

The purpose of the report was to analyse the major benefits and issues associated with the use of POS systems in business. With the use of POS systems, easier data storage and tracking of the stored data is possible. The report discusses the most significant advantages and disadvantages of the system. With the help of a POS system,  the owners and managers of Four Seasons can take effective decisions. The use of the POS system could help Four Seasons in eliminating the inefficiencies of manual record keeping. Thus, it can be said that the use of information technology works in favour of business growth in every industry irrespective of its size and type of business.

Recommendations

The recommendations for effective implementation of POS system are as follows-

1. The operational need of an organization is needed to be identified prior to the implementation of POS system.
2. The security risks and issues associated with the use of POS is needed to be addressed for efficient use of the POS system.

References

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