POS Systems Part 1

Charles Cain - Mar 11th 2010

Modern Point of Sale Terminal

Older computerized cash register

Depending on your technical aptitude and proclivities, choosing a Retail Point of Sale system may feel like a joy-ride of potential or a carnival fun-house full of trap doors, warped mirrors and grinning sales people. The simple truth is that a good Point of Sale (POS) system can be a cornerstone for your your business and a tremendous aid in managing work-flow and implementing reliable systems. A bad POS system can complicate and frustrate your operation and leave everyone (customers and employees) with a poor impression of your operation.

In this first installment I'll give you a little guidance into choosing a POS system. In Part 2 I'll tell you what I've chosen for Adagio and why.

First a little background. Without going into all the details of my work history, let me just say that I've spent many more years formally working in technology than I have in tea. I built, managed and sold technology solutions to Fortune 500 companies, small businesses and government agencies at various points of my career. I had the opportunity to apply all of this to tea a few years back when I set up TeaGschwendner's Point of Sale and Retail Management Systems in the US. Now I get to do it again for Adagio's move into retail.

I'll simplify a rather complex array of options into three basic components. A computer based Cash Register lets you ring up and track sales, charge appropriate taxes, accept credit cards, etc. A Retail Management System helps you run your business and manage "back office" things like employees and inventory. Most modern Point of Sale Systems include both of these components to some degree.

The system that's right for you depends in large part on the complexity of your business. For example, will you have one store or multiple stores? Will you sell wholesale? Will you sell online? You can purchase very simple computerized cash registers and handle all of the "Retail Management" manually, but there are some pretty cool systems out there that will make you much more efficient and allow you to focus more of your time on growing your business. Working on your business rather than in your business (or in this case in the back office). My goal is to be able to support multiple stores with minimal effort, streamline Adagio's wholesale sales process, and integrate at a basic level with our website (customer's, gift certificates, and coupons exist in-store and online).

The list below may appear intimidating, but I've cut out more than 2/3 of the features in my internal list for the sake of brevity. I need a system capable of handling - out of the box - every nuance and complexity of a serious retailer. Trying to explain what this means in a short blog posting is the hard part. :) Some of what I describe may be overkill for you, but here are brief descriptions of the key areas of functionality and what I'm looking for.

At the Point of Sale
	Advanced control of user rights - down to individual buttons or options on the screen. I want to be able to control what different levels of user (i.e. cashier vs. manager) are able to do. Powerful search tools Options for offering discounts and price adjustments Support for coupons, gift cards, vouchers, store credit, etc. Place multiple transactions on hold and retrieve them for processing Search for past transactions and re-print receipts Sell items by weight, case, set or kit Suggest relevant add-ons or up-sell items
Inventory Management
	Assign and view the following for each item: department, category, sub-category, multiple suppliers, multiple bar codes, similar or associated items, and pictures Store and view historic information on each item including costs and movement (sales/transfers/inventory adjustments) Calculate figure and store loaded cost information (including shipping and other user defined costs) and automatically re-calculate average cost every time new product is received Able to set min/max order levels including automatically based on sales history Integrate with General Ledger in accounting program to track all inventory movement and adjustments
Pricing
	Create price tables/matrices that allow multiple pricing levels Assign price levels based on customer type, department, category, etc. Mix and match quantity pricing with user-defined rules Maintain discount history with effective dates Support lot pricing (single, case, pallet, etc.) Support coupons, vouchers and complex discount schemes
Purchasing and Receiving
	Manual or automated generation of purchase orders based on available stock and reorder points Generation of purchase orders based on sale history Receive against purchase order Print price tags and bar codes at receiving Interface with inventory and General Ledger to update average cost of items, on-hand quantities and appropriate AP/AR accounts
Customer Management
	Store and view contact, billing and shipping information Store and view notes and preferences Able to connect purchases to customers for reporting and marketing Able to assign custom pricing or tax status by customer
Employee Management
	Tie every transaction and inventory action to individual employees Assign security access levels to employees Built-in time clock with reporting Messaging application for internal communications
Reporting
	Robust reporting tool with copious built-in reports. NOTE: My full list details more than 20 different required sales reports alone. Reporting is one of the most important aspects of your system. Remember, it's not just about the report engine! Compare what each system is capable of tracking. The more complex systems can give you a LOT more insight. Easy customization of reports and creation of new reports Automated report generation (email reports based on schedule) Able to assign custom pricing or tax status by customer
Multi-Store Support
	View detailed customer and inventory information at other stores and manage from Headquarters Transfer inventory between stores Manage products and pricing from Headquarters Ability to view, update and report on each store's data in real-time Automated and seamless integration between all systems. Data should never have to be entered twice!
General System Features
	Fully functional training mode (practice with offline store data) Extensive help menus that are context specific (clicking a help button on a screen shows you that information, not just the Help index) Extensively customizable screens and menus (i.e. ability to hide disallowed or disabled features) Network fail safe (able to keep ringing up sales while network is down) True client/server database for reliability and easy integration with other systems
Hardware Support
	Cash drawer Signature capture pad Scale Touch screen monitor Pole display/customer facing screen Receipt printer Bar code scanner Portable data terminal for physical inventory counting and invoicing/order entry

I'll leave you with one parting thought: Choose your battles. If you really enjoy tinkering with computers and configuring software then you can probably save 20% to 40% by piecing together your own system, skipping the training and taking other shortcuts. (That's assuming you get it right quickly and don't spend weeks trying to figure it out or end up paying someone to re-do it in the end.) If you're not a computer geek and will be more valuable working in other parts of your business, just accept that it's going to cost some real money to do it right and consider it a required business expense.

There are a LOT of options and price points out there. I've reviewed systems that would cost under $5,000 for a single store (hardware and software) and systems that cost over $50,000 for the first store. For my money, balancing all options and including all hardware, software, peripherals and professional services, I would expect to spend between $5,000 and $10,000 for a one-lane system in a single store location (Go below $5K and you're cutting off your nose to spite your face... in my opinion). If you're looking to be a little more aggressive, put a couple lanes in each store, and support more than one location you should be prepared to spend upwards of $15,000.

I've spent the last two months researching hardware and software vendors and have made my recommendations to Adagio Management. Once we've made our final decisions I'll share with you what we've selected and why. (Part 2 now available here.)

Adagio Teas
Twitter: @AdagioRetail