Point-of-sale systems, warehouse management, branch logistics
A POS system, also known as a point of sale system, is a software that documents a specific financial transaction of a stock or inventory. In general, the POS system describes the entirety of all clients (hardware) and the associated software that are linked to an electronic or PC cash register; this now also includes end devices such as smartphones and tablets. There are two types of POS system: one for the hospitality industry and one for retail. While in the hospitality industry POS stands for Point of Service, in retail it refers to the point of sale, i.e. the place and process of sale, purchase, payment and so-called store logistics. This article deals exclusively with retail POS systems.
Components of a POS system
When inventory or services are sold, the central device used for payment processing is the cash register. Since its invention in 1879, it has been used to record certain commercial data, in particular to account for cash transactions and to create receipts. A distinction is made between open systems, which consist of standard hardware and operating system as well as POS software, and closed systems, in which the software generally does not use a free and open source code.
Hardware and software components of a POS system can be:
- Thermal receipt printer
- Barcode scanner (see pick-by-scan)
- Cash drawer
- Programmed POS keyboard
- Tablet, smartphone
- EFT payment terminal
- Label printer
- Customer display
- Interface to the distribution center (replenishment)
- Interface to the higher-level ERP system*
- POS system software
In general, ERP systems are only connected to the POS system for large stores with a linked online store. This enables the customer to order inventory online and pick it up locally at the store. The inventory is automatically synchronized when items are posted via the networked systems.
Connection of the POS systems / store logistics
The POS system, including the software, maps the commercial and documentary (receipt) transaction between the respective retailer and their customers. Such a system can be mobile or stationary. In most cases, an ERP system works in the background, either cloud-based or locally installed, which, if necessary, is directly connected to the financial accounting and materials management or merchandise management system (direct sales without intermediaries) – a modern POS system can therefore also trigger replenishment within a warehouse management software. The specific functions depend very much on the respective industry and the goods and services traded. For example, POS systems for the textile retail trade must manage sizes and colors (Stock Keeping Unit, SKU) so that automated reorders can be initiated at all.
- Another system combination is the variant in which the POS system triggers replenishment directly at the ERP. In other words, new goods have to be sent from the logistics center to the store. The ERP then orders the required inventory from the warehouse management system.
- Another variant could describe the local situation within the store itself. The store logistics system acts as a WMS and orders new goods for a designated sales area (see also space profitability), for example – the goods may already be in the store’s inventory; they are simply being added to for possible peak times.
The transition between the merchandise management system (MMS) and the ERP system is not clearly defined. The demarcation is usually based on the range of functions. If, for example, functions or modules are integrated in the area of controlling and materials management, it is more likely to be referred to as an ERP system than an MMS.
Becker, Jörg; Vering, Oliver; Winkelmann, Axel: Softwareauswahl und -einführung in Industrie und Handel. Vorgehen bei und Erfahrungen mit ERP- und Warenwirtschaftssystemen
Figure 1: A modern point-of-sale system is mobile and supported by either a tablet or a smartphone. An external printer and a debit/credit card reader complete the system.
In particular, store logistics will become more and more important in the future. Incoming goods, quality control and shelf sorting must be well organized. In addition, there is the handling of returns and classic empties. The problem: due to online retailing, retailers have to expect more and more losses; the classic margins of ten years ago are history – the slump in profits, however, is a reality and thus relevant to competition. The causes of out-of-stocks can be found predominantly in the sphere of influence of the retail stores. These include inaccurate sales forecasts, late or omitted orders, delays in shelf replenishment and inefficient clearance processes on the sales floor.
Introduction – ‘Management of store logistics in the food retail industry’ / Florian Hofer
If you look at the logistics chain from wholesale to retail – from the ramp to the customer shelf, the last “30 meters” seem insignificant. But it is precisely in these last few meters that high costs arise. Wholesale logistics usually ends with your responsibility at the branch ramp. The branch employees are not logisticians, but they bear the responsibility.
I.L.P-Management Consulting
What is important here is the merging of successful store logistics with the intra-logistics behind it. According to Florian Georg Hofer, the design of logistics concepts requires, on the one hand, the assurance of a market-oriented delivery service and, on the other hand, the fulfillment of performance within the framework of an economically justifiable effort. In his dissertation ‘Management of Store Logistics in Food Retail‘, he transfers exactly these requirements to store logistics – “in terms of providing the highest possible shelf availability, taking into account the associated costs”. In his opinion, “the two objectives are conflicting targets, and the efficient solution lies between the two extreme goals”.
Payment methods at the POS
In addition to traditional cash payments, there are numerous cashless options. These are also constantly offering technical innovations that simplify and accelerate the payment process and are also designed to provide customer data. This concerns a local assignment as well as shopping times, habits and preferences. The most common cashless payment methods include Girocard (formerly EC/Electronic Cash) and credit card (MasterCard, Visa, American Express). Companies are now also relying on click and collect (see cross-channel) in conjunction with the PayPal payment service: the customer purchases inventory online, pays via PayPal, and picks up the inventory directly at the point of sale (POS).
Summary
The totality of all hardware and software components integrated around a PC cash register or electronic cash register is referred to as a POS system. It can be used in mobile and stationary applications and is used to map and store the business transaction between the retailer and the customer. In addition, an ERP system can run in the background and be linked to the POS system, whereby a modern POS system can also trigger the replenishment within a warehouse management software. For this connection with the merchandise management system, a POS system must fulfill different functions depending on the industry and the goods traded, since it represents a relevant factor for efficient store logistics and the intralogistics behind it.
Teaserbild: Author – Travelarz / CC BY-SA 3.0 PL
Figure 1: Author – Travelarz / CC BY-SA 3.0 PL
If you are interested in topics related to e-commerce and networked merchandise management systems, then please also read the articles Multi-Channel and Omni-Channel.