Advantages, Disadvantages, And Risks Of Point Of Sale System

Advantages of Point of Sale System

1. POS: Advantages/ Disadvantages

Point of sale system can be defined as a combination of hardware and software components that different business organizations use to simplify the transactional operations associated with their business and the further simplifies the process of day to day business operations. Flexibility in managing the transactional operations is one of the key advantages of using a point of sale system in business. The benefits of using a point of sales system is listed below.

1. The business managers could obtain a variety of positives with the use of a new point of sales system. Improving the efficiency of the transactional processes associated with a business is one of the advantages of using a point of sales system (Arvidsson, Holmström and Lyytinen 2014). A POS eliminates the need of a manager in memorizing the prices of the goods or manual recording of a large amount of data in a register.
2. The stock or inventory management becomes easier with the help of the new point of sale system. This is because the traditional approach often requires the staffs and employees to physically review the correct number of inventory units on a regular basis that often results in human errors (Hall 2012). The point of sales system automatically updates the stock and inventory data at the time of sales thus eliminating the need of tracking the same manually. This is one advantage of using a point of sale system.
3. The report generation is easier in point of sales system as customizable reports can be generated using the POS. The report contains the information such as daily sales, order to be purchased and the orders that are cancelled. The advanced reporting capabilities helps in proper identification of the demands of the customers thus helps in customers’ satisfaction, which is one significant advantage of point of sales system.
4. The current and the historical reports help in identifying the areas where the business have made losses and this in turn helps in proper decision making (refer to case study in appendix). Decision making is an important aspect of any business organization. Effective decision making further helps an organization in gaining a competitive advantage in the market.
5. The new point of sale system further helps in employee tracking. With the POS, the activities of the employee can be tracked easily. This can be achieved with the use of unique identification codes that are linked with the specific goals of an employee. Therefore, the point of sale system helps in effective scheduling and tracking of the labour expenses and reviewing the schedules of the employees.  This is one advantage of using a point of sale system in business.
6. Although the initial implementation cost of point of sale is very high, it helps in maintaining the cost expenditure of the organization (Caldeira et al. 2012). Therefore, price consistency can be considered as a major advantage of a POS system.

After evaluation of the benefits and the advantages of the point of sales system, it is essential to evaluate the issues associated with the use of point of sales system.

1. The web based POS system is prone to the cyber security risks and cyber threats. This is a negative impact of using point of sales system. This cyber security threats can risk the confidential data of the organization.
2. The time and money investment that is needed for implementing a POS system is very high and therefore, the adoption and use of POS in small sized organizations becomes quite difficult. This is one major disadvantage of use of point of sales system. Furthermore, the hassle of regular updates and maintenance cost is high as well.
3. For accessing the point of sale system, a continuous and reliable internet connection is needed.  Therefore, in case of an internet outage, the access to the point of sale system becomes quite difficult, which is a major disadvantage of a POS system.

The above discussed points give an idea of the issues that a business might have to face with the implementation of a new point of sale system. The number of benefits offered by the point of sale system surpasses the issues and challenges associated with the POS and therefore, the implementation of POS in Four Seasons was beneficial for their business.

2. Competitive Advantage in Business

The point of sale system helps the business in gaining a competitive advantage, which is one significant advantage of the system. The process by which a POS system will help the business in gaining a competitive advantage is listed below.

1. The accuracy in the project reports that is obtained from the new POS system helps a business in gaining a competitive advantage. Furthermore, the proper analysis and management of the inventory items and sales patterns helps the business in gaining a maximum profit thus giving an organization a competitive advantage.
2. Accurate knowledge about the sales and the inventory items will help the owners and the management of Four Seasons in facing the challenges associated with the retail markets, thereby giving the organization a competitive advantage in the market.
3. The use of a POS system helps in tailoring the needs and benefits of the customers. This increases the satisfaction of the customers towards the business thus helping the business in gaining a competitive advantage (Laudon and Laudon 2016).
4. The business can be easily managed with the help of the new POS system as the accurate data about the sales and inventory helps the organization in proper decision making. Effective decisions help an organization in gaining a competitive advantage in the market.
5. The tracking of the employee schedule helps in proper management of the work load of the employees. The increase in the efficiency of the employees helps in gaining the competitive advantage of the business.

These are the number of ways by which the POS system will help Four Seasons in gaining a competitive advantage in the market.

3. Centralized Database

The choice of centralized database is appropriate for storing the data that will be generated in the POS. There are a number of benefits of making use of a centralized database system. The advantages or benefits of a centralized database are listed below.

1. One of the significant advantages of using a centralized database is that it maintains data integrity. There are no chances of data loss in a centralized database system or unauthorized data access and therefore, it helps in maintaining the data integrity (Osman and Knottenbelt 2012).  
2. Use of Centralized database assures that the data will be preserved in a proper manner, so that there are no chances of data loss even during a disaster. Therefore, proper backup and disaster recovery is an advantage of using a centralized database system.
3. Since the unauthorized data access is prevented in use of a centralized database, the use of centralized database improves the data security, which is a significant advantage of the new point of sales system (Coronel and Morris 2016).
4.  The cost of implementation and use of centralized database is comparatively low in comparison to the use of a decentralized database system. This is one of the major advantages of using a centralized database system.
5. The speed and reliability of data processing and access of the data increases in centralized database system. It eliminates the redundancy of data storage in the database and therefore, it facilitates the virtualization of the data.
6. The data distribution in a centralized database system follows a planned approach and therefore, it reduces the communication cost as the data can be accessed quite easily. It therefore facilitates easier information flow.

The above discussed points give a clear idea of the advantages of using a centralized database system. Therefore, the choice of a centralized database system is appropriate for Four Seasons.

4. The process of Decision-Making 

As discussed earlier, the use of point of sales system increases the effectiveness of decision making in the organizations. The process of enhancing the decision making capability of the management in Four Season is discussed below.

1. For proper decision making an efficient management of the business processes associated with an organization is necessary. The point of sales system helps in easier tracking of the business data thereby helping the employees in easier management of all the operations of the business (van der Meer, Kurth-Nelson and Redish 2012). This is the way by which the point of sales systems helps in managing the business activities more effectively.
2. The point of sales system automatically tracks the sales and inventory data and therefore, there is very less chance of error in the process (Ingram et al. 2015). The manual tracking process on the other hand is not only time consuming but also invites human errors. Therefore, it becomes almost impossible to track the information of the organization in an effective manner.
3. The point of sales system helps in proper decision making by effectively answering the questions that are related to the inventory sales, number of orders and the cost of products (Jeston 2014). The proper knowledge about the actual product costs not only helped the organization in making more profits, but also helped in effective decision making.
4. The point of sales system helps in easier tracking of the vital business information and helps in automatic report generation. This information helps in better management of the business and further helps in decision making.

5. Telecommunication Option

The choice of the telecommunication mainly depends on the need of the organization. Since Four Seasons is a small sized nursery, the use of local area network or LAN will serve its purpose (Wang et al. 2015).

WAN or MAN is not chosen for Four Seasons as these networks interconnects the systems of a wider geographical area (Zhang et al. 2012). LAN will be the backbone of all the systems that are to be connected with the POS.

Disadvantages of Point of Sale System

For establishing the connection, wireless media is recommended as wireless media makes the information availability easier. Wired network is not chosen as it establishes a restricted connection. The use of wireless network is however associated with certain security risks.

6. The Risks 

The use of a point of sales system although has a number of benefits, there are certain risks associated with its use. The use of wireless media further increases the cyber security risks associated with POS (Von Solms and Van Niekerk 2013). The threats of hackers and malware, risk the security, privacy and the confidentiality of the data.

The security risks can be addressed by using proper encryption standards for data encryption and enforcing access control in the system.

Conclusion:

The point of sale system proves to be a benefit for Four Seasons as it helped the organization in eliminating the issues associated with the use of manual registers. The use of centralized database for POS is justified and its advantages are discussed in the report. However, it is necessary to address the risks that are associated with the system. Therefore, it is recommended that proper security measures are taken to prevent the data loss.

There are many instances where the use of technology has benefited an organization by reducing the human labours and human errors. This is one main reason behind the large organization making use of information systems such as enterprise resource planning system (ERP), Point of sales (POS) system and other information software that helps in managing and integrating the business operations of an organization (Rainer et al. 2013). The need of information systems is equally important for small or medium sized enterprises (Kirchmer 2012). However, these enterprises may not be able to implement the information system as readily as a large sized organization due to resource constraint or lack of money. The report aims at establishing the benefits of a point of sales system in a small sized organization called Four Seasons. The losses that the organization faced due to the use of the registers for keeping a track of sales and other essential information could be addressed with the use of a new point of sales system (Eason 2014). However, along with the advantages, the disadvantages of the use of point of sales system are needed to be evaluated as well. The report discusses the benefits, advantages, disadvantages and the risks of using a point of sales system in Four Seasons are discussed in the report.

References:

Arvidsson, V., Holmström, J. and Lyytinen, K., 2014. Information systems use as strategy practice: A multi-dimensional view of strategic information system implementation and use. The Journal of Strategic Information Systems, 23(1), pp.45-61.

Caldeira, M., Serrano, A., Quaresma, R., Pedron, C. and Romão, M., 2012. Information and communication technology adoption for business benefits: A case analysis of an integrated paperless system. International Journal of Information Management, 32(2), pp.196-202.

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

Eason, K.D., 2014. Information technology and organisational change. CRC Press.

Hall, J.A., 2012. Accounting information systems. Cengage Learning.

Ingram, T.N., LaForge, R.W., Williams, M.R. and Schwepker Jr, C.H., 2015. Sales management: Analysis and decision making. Routledge.

Jeston, J., 2014. Business process management. Routledge.

Kirchmer, M., 2012. Business process oriented implementation of standard software: how to achieve competitive advantage efficiently and effectively. Springer Science & Business Media.

Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.

Osman, R. and Knottenbelt, W.J., 2012. Database system performance evaluation models: A survey. Performance Evaluation, 69(10), pp.471-493.

Rainer, R.K., Cegielski, C.G., Splettstoesser-Hogeterp, I. and Sanchez-Rodriguez, C., 2013. Introduction to information systems. John Wiley & Sons.

van der Meer, M., Kurth-Nelson, Z. and Redish, A.D., 2012. Information processing in decision-making systems. The Neuroscientist, 18(4), pp.342-359.

Von Solms, R. and Van Niekerk, J., 2013. From information security to cyber security. computers & security, 38, pp.97-102.

Wang, Y., Chi, N., Wang, Y., Tao, L. and Shi, J., 2015. Network architecture of a high-speed visible light communication local area network. IEEE Photonics Technology Letters, 27(2), pp.197-200.

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