How For Seasons Greenhouse And Nursery Gained Competitive Advantage Through Installation Of POS System

What is Competitive Advantage?

Four Seasons Greenhouse and Nursery is a small nursery based out of Colorado. The company used manual processes for tracking and maintaining inventory and identifying most profit generating products. This did not include review f individual product margins. Profits obtained from the nursery were actually negligible. The company lacked access to full data that could assist them in managing operations in better ways. In 2008, the company installed a new POS system, which got the company several benefits through provision of operational data. This report explores the case of the company with the objectives to understand how information technologies can help organizations create competitive advantage or assist decision-making. It would also explain the foundation of the technology and the risks it brings related to security, privacy, and confidentiality.

• It allowed automatic tracking of the sales data driven transactions and thus, keeping the recorded of the same manually was not required
• When making sales, the system would also update the inventory such that the availability status of the items sold remains updates
• The system would maintain a record of sales data and could be used for generating historical data reports to give the company decision makers an insight into the trends in sales
• Inputting, tracking, and distributing data with the organizational staff had become easy and helped employees to manager day to day business with efficiencies
• Procurement decisions for the inventory could be taken using the data with more accuracy
• System reports provided detailed insights into inventory including products purchased, products sold or discarded.
• It helped company identify less profitable products as well as most profitable products and as a result the company could take a decision to shift its production from low profits to high profits products
• Implementing price changes for a short time or long time was easier
• As the data was recorded at the time of sales using which inventory was automatically updated, the need to enter any data manually was mostly eliminated
• The system also allowed managers to review schedules of their employees
• Expenses needed for individual departments to function could be allocated using POS system
• Managers could use the system for delegating their work to their teams or staff which established both responsibility and accountability  for managers as well as employees as everything was system recorded and thus, had transparency

• It is a web based system and thus needs high internet connectivity which can be a cost to the company and would have problems if the internet connectivity is not sound
• If the system faces any issues with the hardware, the repairs can be both time consuming and costly for the organization
• Customers using credit cards are at the risk of exposing their personal data which can result into the compromise of their privacy and security as web based system is prone to security threats like hacking
• The system would need to be continuously updated which can add complications as well as cost to the organization 

Competitive advantage is the ability of an organization to defend itself against competition through unique business model and selling preposition such that barriers are created for the factors that can take away the competitive edge of the organization. A competitive advantage puts an organization into a better position  in the market as compared to its rivals (Sirolikar & Haridas, 2016).

As per dynamic capability theory, dynamic capabilities in an organization can bring competitive advantage to it. The capabilities of the firm can be directly related to the company’s processes, position in the market and the growth path. Competitive advantage can be achieved in a retail organization in various ways such as through improved R&D, product innovation, and resource divestment (Ivanov & Mayorova, 2015).

A major competitive advantage can be achieved if the managers of the organization are able to learn faster than their competition. IT infrastructure that supports decision making forms a base for building competitive advantage. With the POS system installed, the managers of the company would receive real time data and thus, can take decisions in the real time and thus, can have an edge over competition (Consuegra, 2006).

With the installation of new POS system, the company would be able to gain a competitive advantage in following ways:

• With the real tie insights available, the company managers would be able to take decisions faster than competition as they would be able to identify sales trends and understand customers in the real time
• A dynamic learning environment would be created for employees to keep taking insights from the POS data study and keep learning continually
• With responsibility and accountability of employees enhanced, the company would have more productive staff(Sampath, 2016).

POS wold make a centralized system for recording transactions, managing employee schedules, and managing inventory operations. There are several advantages of using such a centralized system such as:

• All departments of the company are connected with the central database and thus, all have the same level of insight on the inventory and sales
• With centralized system, delegation across the organization becomes easy to handle as roes and responsibilities of all are clear and the work allocation would be unbiased
• With centralized operations, all employees would remain updated and thus, there would not be any duplication of work
• Centralization of systems would need standardization of processes which would enhance the productivity of employees
• With centralized system, the company wide data can be stored and accessed from the single place which makes data management easy and effective

Use of a centralized POS system has many benefits including enhanced capability for the decision making in managers which is facilitated in following ways:

• As all sales data, inventory records, and employee data are recorded through POS, the managers can understand what is happening in the company and can take decisions on when to place orders for stocking items, which products to sell more to get more profitability, and so on.
• The reports generated by the system on the basis of historical sales data would help managers understand how the retail shop had been performing and identify opportunities for exploration which would help them build strategies for production management and marketing
• POS system processed data would help company answer operational questions like the following:
  • Which products are giving least profits to the company?
  • Which products are giving most profitability to the company?
  • Which products are selling most in the store?(Michael, 2016)
  • What should be the frequency for ordering items that are selling more?
  • When should the product be replenished to ensure it is available at the time of sales?
  • Which promotional schemes are working more with the customers of the store?
  • What tasks have been delegated to whom and what is the status of the same?
  • What schemes out of those run by the company are giving results and which are not?(Mukharji, et al., 2011)

While POS system gives a variety of operational and management advantages to the organisation, it also poses certain risks that have to be managed such as the following:

• As the system is connected to the internet, the data that is obtained from the customers through their credit card swipes can be exposed to the hackers who may try to steal or confiscate the private or confidential data online. Sufficient security measures would be needed to protect the POS data from hackers.
• The POS system allows the company to record the confidential data of the customer and this data can be misused if it goes into wrong hands.
• The company can also have insider threats from the people who could be misusing the customer data

Dynamic Capability Theory and Competitive Advantage in Retail Industry

Security of the POS system can be enhanced using several strategies like using end-to-end data encryption, installing an antivirus solution on the POS system, locking the systems when not in use, ensure the compliance of the system with Payment Card Industry Data Security standard, and hire security experts to keep things updated (MARTINEZ, 2016).

Based on the study of the POS system of the company, certain recommendations can be made to ensure that company is able to make the best use of POS  systems and gain a sustainable competitive advantage. These include:

• POS can be used with a Wireless LAN as it would help multiple POS systems connect over the wireless network and the hassle of maintaining and managing wires would be eliminated.
• The staff can be trained based on the regular insights obtained from the sales and inventory and sales data such that they can be made to perform better by making them understand the changing customer requirements to serve them better
• Managers can use the sales data insights to take decisions related to offers in the retail store, marketing consumers, bundling items for sales, products to focus more on to gain profitability, and placing them at locations where they sell most
• The system can make the people accountable and responsible for their work if the task delegation is done no manually but through the POS system as it would record everything and thus, build transparency in the organization
• Company can set the stock refresh schedules based on the sales and inventory data such that the orders are fulfilled as per the consumer demand on time so that the products that customers are looking for in the store can always be made available without fail.
• Staff can use the POS system to communicate status updates, ideas, and experiences such that they are all the same page and can take better decisions.
• The company must take appropriate security measures to ensure that the customer data is protected. These measures could be data encryption and antivirus installation

Conclusions

This report was prepared to explore the case of For Seasons Greenhouse and nursery to understand how small retail organisations make use of technology to gain competitive advantages. A POS system was installed in the company that reduced the manual work that company used to do and automated several tasks such as sales data recording, inventory updates, and task delegation. This brought several advantages to the company such as increase in accuracy of prediction for inventory management, better decision making about operations with the availability of real time insights, real tie update of data allowing all staff to have the latest status of inventory and other things in hand. There were also some privacy, confidentiality, and security risks identified that were recommended to be taken care of by taking steps like antivirus installation and data encryption. Recommendations that were made for the company to take the best advantage of a POS system included use of POS for task delegation to bring transparency, scheduling of orders based on the buying patters, use of data analysis to take important decisions related to inventory ordering, customer offers, and more.

References

Consuegra, O. I., 2006. Own labels in the United Kingdom: A source of competitive advantage in retail business, s.l.: Pensamiento & Gestión.

Ivanov, G. & Mayorova, E., 2015. Intangible Assets and Competitive Advantage in Retail: Case Study from Russia. Asian Social Science;, 11(12), pp. 38-45.

MARTINEZ, J., 2016. 6 Steps to Securing Your Point-of-Sale System, s.l.: PC MAG.

Michael, 2016. 20 Inventory Management Questions You Should Be Asking. [Online]
Available at: https://www.action-storage.com/blog/retail/20-inventory-management-questions/
[Accessed 19 May 2018].

Mukharji, P. et al., 2011. Inventory management: 10 questions to diagnose your inventory health, s.l.: Bain & Company.

Sampath, G., 2016. Exploring the Significance of Strategic Agility in Building Sustainable Competitive Advantage for Retail Banks, s.l.: NMIMS.

Sirolikar, P. & Haridas, S., 2016. Competitive Advantage for Business Organizations using Cloud Business Intelligence: A Case of Retail Industry in India Pavitra Sirolikar, s.l.: Symbiosis International .