How to choose the right POS system for your store:
Choosing the right point–of- sale (P.O.S.) system for your store can be a confusing project. Where do you start? What questions should you ask? How much technical expertise do you need? There are common questions, so let’s examine the process.
As a retailer you must recognize the need for continuous improvement in your business to survive and grow. In today’s competitive environment the right technology is absolutely an essential tool for providing critical information essential for your survival and growth.
Step One: Before You Start
Address the following issues/questions:
- Why are you investing in a new system?
- Who should be involved in the project
- What are you trying to accomplish?
Is your store ready to take the step?
- Are there any internal cultural issues that you need to address? The way people think is more important than the tools you provide for them.
- Establish a budget for the project; 2-3 percent of retail sales is a good rule of thumb.
- Should you buy or lease? Determine how you are going to pay for the system early in the process. Your accountant can advise you on what works best for your business.
POS is not sufficient: The goal is to achieve true front to back inventory management system and customer tracking system.
Step Two: Planning
Evaluate software vendors and select the right system for your store:
- Develop a systems requirements document for all the functions you need, differentiating between critical and nice to have features.
- Produce a document detailing how you currently manage inventory, P.O.S., purchasing & receiving, labeling product, and customer information. This is the blueprint for your system requirements, and is used to score and evaluate the software vendors when they demonstrate their software.
- Invite no more than three vendors to demo their systems. Score each vendor against your needs document.
- Provide a demo format to the vendors that are invited. This ensures you control the demo and see the features that are important to your business. It also provides a standard format to score each vendor.
- Involve your key people. Their input is critical. People on the front line can either be an asset or impediment to the project. They need to feel they helped choose the system they are going to use.•
- Quote comparison. All vendors must provide an itemized price quotation. These should be put into an Excel spreadsheet and compared by line item.
- The total cost of ownership. Support contracts, supplies and a cost provision for replacement equipment needed during the first five years of ownership should be factored into the total cost of ownership equation.
Let the vendor make money, it’s a partnership. Negotiate with the vendor for price concessions that are reasonable for both parties. Vendors are more likely to give price concessions on soft cost items such as training and support. These are real cost items to the retailer but to the vendor they factored into their normal overhead costs. Examples would be extra training days, or extending your support contact an additional six months.
Once you have picked a vendor, do the following:
- Get at least five references, two for new installations and three that have been using the system a minimum of two years. Ask them about the vendor’s responsiveness and problem resolution. If they had any problems, get the vendor’s side of the story.
- Ask yourself: Has the vendor demonstrated a clear understanding of your business and your system requirements?
- Did they articulate a coherent Return on Investment (ROI) strategy for you on how to get a pay back from your system?
- Did they come prepared to follow your demo format and stick to the basics: “the steak, not the sizzle”?
Step Four: The Implementation Plan
A tightly executed implementation will help you avoid the normal pitfalls that cause frustration and needless time delays.
- Establish a time line backward form the date you want to be online.
- The critical issue is the inventory database, specifically where will you get the inventory data and how will the information be input into the system. Develop a template with departments, categories, seasons and so on to help your organize your inventory.
- Develop a training syllabus with the vendor, detailing what will be covered and who will be trained. This will allow you to better schedule your people.
- Schedule training in phases. If you negotiated for additional training days, save a few to use two or three months after you have been using the system. This can be extremely valuable!
- The database, is it ready for P.O.S.? Once the database is built, scan check for accuracy and for price accuracy.
A well organized process in choosing a new POS system will ensure a successful outcome.
Dick Calio of R.J. Calio Consulting LLC has been in retail technology for 25 years, and has been involved in the installation of more than 500 systems.