How to successfully choose and implement a retail POS system steps 5&6

Step Five: the Utilization Plan

Now that you own it, make it work for you. Getting a return on your investment is a primary goal.

  • Purchasing is the cornerstone of system utilization. Once you have three or four months of sales history, you can use your system to generate suggested orders.
  • The top down approach is “Red Flags,” that is, focusing on the problem areas.
  • Reports are essential. Log your month numbers into a spreadsheet and use this as a tool to compare key numbers from month to month and last year for the same month. This will provide valuable information on trends and point to problem areas.

 Step Six: Ongoing Reports to Run   

These are some reports you may want to consider:

• Daily register reports: Over/short, customer count, average sale.

• Daily exception report of voids, returns, over rings.

• Daily and monthly gross margin by department, category.

• Monthly bottom 100 selling items. Evaluate these and get rid of them.

• Calculate your inventory turn every month.

• Monthly unit sales analysis show the number of items sold, a different perspective of inventory performance

• Monthly customer trend report the number of transactions and average ticket.

 Final Thoughts

The key element in utilizing a system is getting a return on your investment. This is an inexact science, however I feel by looking at critical information on a daily and monthly basis is an effective approach to this goal. The key information or key indicator approach recognizes that you have limited time and therefore should focus on information that can lead you to actionable decisions.

 So what’s the potential payback you can get from your system? Let’s calculate an ROI for a store doing $1,000,000 in annual sales:

1. Better cash control generates a .05 percent increase to the bottom line                $5,000

2. Pricing accuracy .05 percent                                                                                  $5,000

3. Gross margin management yields 1 percent                                                         $10,000                                             4. More effective inventory turn yields 1 percent                                                     $10,000

5. Life extension of customers is a bonus for aggressive retailers                          BONUS                         

                                                                                                   Total Gross ROI:   $30,000

I have used very conservative figures to develop this ROI example. My experience has shown a realistic return for a retailer who develops and adheres to a utilization plan for their system can reasonably be 3 to 4 percent of annual sales.

In the final analysis, don’t invest in technology unless you have a well thought out plan of what you need and how you plan to use it.