| The term point-of-sale is used to describe a variety of | | | | these computers were in place, the rapid evolution of |
| things. This can include the checkout counter in a store | | | | today’s sophisticated retail management systems |
| or a place where transactions occur. More frequently, | | | | began. |
| the phrase refers to a computerized cash register. | | | | The next step in the point-of-sale evolution was the |
| The commonly used abbreviation for point-of-sale is | | | | addition of automatic pricing. Rather than entering a |
| POS. Each letter in the abbreviation is pronounced | | | | department code and then the price of an item, |
| individually (e.g. P-O-S) versus pronouncing the | | | | cashiers could now enter the SKU (Stocking Keeping |
| abbreviation itself (e.g. paws). | | | | Unit) of the item and the point-of-sale would retrieve |
| When computers were first invented, large retailers | | | | the price. Automatic Pricing saved retailers money by |
| were the first to implement point-of-sale systems to | | | | removing the need to place a physical price tag on |
| help automate many of the tasks involved with | | | | each item and in reducing pricing errors made by |
| operating a retail store. These computers were very | | | | cashiers. |
| large and expensive. This limited the adoption of | | | | Since the point-of-sale system was now keeping an |
| point-of-sale systems to large retailers such as | | | | individual record for each inventory item, retailers |
| grocery chains. The introduction of low cost personal | | | | wanted to maintain their stocking levels in the |
| computers during the 1980s allowed retail stores of all | | | | computer. This ushered in the era of real-time |
| sizes to improve efficiencies with the help of pos | | | | perpetual inventory. By placing a bar code that |
| systems. | | | | represented the SKU on each inventory item, the On |
| A common point-of-sale system includes a computer, | | | | Hand quantity of inventory was automatically reduced |
| cash drawer, receipt printer, pole display, bar code | | | | each time it was scanned at the point-of-sale. This |
| scanner, magnetic swipe reader, modem and | | | | feature allowed retailers to query their point-of-sale |
| point-of-sale software. Each piece provides the | | | | systems for up-to-date balances at a moment’s |
| following functionality: | | | | notice. |
| - Personal Computer – Operates the POS | | | | Once inventory stocking levels and retail pricing were |
| software and provides hardware interfaces for | | | | being managed by the point-of-sale system, the next |
| devices such as printers, credit card readers and so | | | | logical step was to add purchasing and receiving |
| on. | | | | modules to complete the inventory management loop. |
| - Cash Drawer – A lock box that stores cash and | | | | This closed loop inventory automation allowed a |
| is triggered to open by the pos software. | | | | retailer to: |
| - Receipt Printer – Prints a paper copy of the sales | | | | |
| transaction for the customer. | | | | 1. Issue purchase orders to buy goods |
| - Pole Display – LED display that faces the | | | | 2. Create inventory records and SKUs via the |
| customer and shows each item and price scan. | | | | purchase order |
| - Bar Code Scanner – A laser type of device (gun | | | | 3. Receive goods against the purchase order |
| style, counter style) that when triggered over a bar | | | | 4. On hand stock levels are increased based upon |
| code, converts bar code lines into numbers. This | | | | receiving |
| number or SKU (Stock Keeping Unit) is then | | | | 5. Print price tag with bar codes |
| transmitted back to the pos computer for automatic | | | | 6. Sell the goods via the point-of-sale cash register |
| price lookup. | | | | 7. On hand stock levels are depleted based upon SKU |
| - Magnetic Swipe Reader – Reads the magnetic | | | | scans |
| strip on the back of a credit or debit card. The | | | | 8. Perpetual Inventory is automatically maintained |
| information stored on the magnetic strip includes the | | | | 9. Generate reports on sales, inventory levels, |
| credit card number, expiration date, customer name, | | | | purchases, and receiving |
| and address. The information is transmitted to a credit | | | | 10. Manage inventory buying and markdown behavior |
| card processing network through the point-of-sale | | | | based upon sales trends |
| system for payment of merchandise. | | | | As you can see, the simple point-of-sale system grew |
| - Modem – Allows the point-of-sale computer to | | | | into a powerful information system for managers and |
| communicate with bank credit card processing centers | | | | store owners. Today, point-of-sale systems continue |
| and to other locations of the store chain. | | | | to innovate and some even include: |
| - Point of Sale Software – Software that runs on | | | | - eCommerce integration |
| the computer, controls the various devices, and | | | | - Integrated accounting |
| performs traditional cash register functions such as | | | | - CRM – Customer Relationship Module |
| ringing a sale. | | | | - Electronic payment processing |
| Today’s point-of-sale software contains many | | | | - Gift card management |
| more features in addition to the computerized cash | | | | - Service order management |
| register. As a result, the term POS System is slowly | | | | - Marketing |
| being replaced with the phrase Retail Management | | | | - Revolving accounts receivable |
| System. POS is now commonly referred to as only | | | | - Customer traffic counters |
| the cash register feature within a retail management | | | | - Integrated video surveillance |
| system. | | | | - Open To Buy planning |
| When point-of-sale systems were first introduced, their | | | | - Linear inventory modeling |
| sole function was to ring sales by department codes. | | | | - Special order management |
| This simple automation allowed retailers to view their | | | | - EDI (electronic ordering) |
| daily sales summarized by department. The | | | | - And much more… |
| automation saved a retailer many hours in determining | | | | As retail management systems continue to add more |
| which departments contained the best selling items | | | | robust features, the term point-of-sale will continue to |
| and how many sales dollars were generated. Once | | | | refer to just a module within the overall system. |