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What is the ideal IT system for retailers?

Dr Alexander Wells, Head of Business Applications at SG Solutions Limited.

Whatever the size of your business, there is a solution out there that could well provide you with the efficiency gains, visibility and controls to help you improve your performance and grow to the next level.

Whatever the size of your business, there is a solution out there that could well provide you with the efficiency gains, visibility and controls to help you improve your performance and grow to the next level.

Choosing the ideal system depends on the size and complexity of the retail organisation in question.

In Malta, there are many small retail outlets, often run by just one owner, or supported by family members. So the complexity of the business is relatively straightforward: they buy and they sell, and as long as they can do that, and have summary information on their purchases and sales then it’s enough.

Many sole traders need little more than a cash register to provide the legal fiscal receipt to customers, and total up their daily takings. This is then used for their VAT returns, and passed on to their accountant or bookkeeper. Often, the stock purchases are logged in a hard-copy purchase ledger and profitability is calculated manually.

Yes, there’s a fair bit of manual work, which takes time, but, for the sole trader where IT investment might be quite a barrier for them, it can suffice.

At the next level, we can consider the single outlet, with a business owner and between two and 10 staff, maybe with multiple point-of-sale stations for transacting sales. Restaurants, grocers, pharmacies, hardware stores would typically fall into this category. For such businesses, there is more division of labour between the staff, more complexity in their business processes, so a higher need for traceability and increased efficiency.

Here, just having one or more cash registers really isn’t ideal, there’s too much manual work to do to keep on top of the business. This is where the point-of-sale station comes in. Some of the benefits include: touch-screen entry for fast menu selection; flexible screen layouts adapted to your own business offerings; linked kitchen printers for restaurant orders; item barcode scanning for fast, error-free item entry; tracking sales by staff (with clock-in, clock-out); linked handheld mobile devices to take orders at tables (for restaurants); extended sales reporting, by item categories, even by PLU (stock item); and report export facilities, which can then be used for the accounting processes.

Extensive reporting is available and this allows you to view your business performance

Larger retailers need to extend the IT automation to their back office functions, their auditors will demand good traceability and control of stocks and purchases, and a detailed management accounting report, ideally generated to a large degree by the system itself. This may create a problem.

Many such retailers already have some form of accounting software in place, so how do they get their POS stations to “talk” to the accounting package? And even if they manage to get the two systems integrated, what if something goes wrong, is it a problem for the POS station provider to solve or the accounting package supplier to solve? Also, it can be quite costly to integrate two systems, as it can require a fair amount of chargeable IT labour.

All is not lost! There are POS solutions out there that have extended functionality – ranging from extensive back-office reporting, purchasing and inventory management, full accounting capability even with full ERP (enterprise resourcing planning). You can also choose to go cloud-based (but do take care to ensure your POS stations are not dependent on an internet connection to transact sales, or you could have problems if the internet becomes slow, or is not available for any reason). So as a large retailer, what do you actually get for your business investment in such functionality?

First there is the purchase and inventory management, which allows you to place purchase orders in the system, matching goods receipt, entering purchase costs, reporting on gross margin (sales net cost of sales), track inventory levels, perform stock takes.

Also included is back-office reporting. As the sales transactions will flow from the POS stations into your back-office system (usually just a PC) automatically, there can be extensive reporting available to view your business performance. You can look at your top 10 sellers, your biggest/lowest margin earners, sales by time of day, items approaching expiry and more.

The system also allows for cloud back-office. Deploying the back-office features into the cloud, means you don’t need to dedicate a PC, you don’t need to worry about database back-ups, plus, you can access your data from anywhere where there is an internet connection, and on any device (even your smartphone).

Another advantage is accounts management. Having an integrated accounting management feature in your POS solution, means all of your sales and purchases will automatically post against your charts of accounts. Plus, you can post other types of accounts transactions, so you arrive at a true profit and loss position. You can also plan the settlements with your suppliers, and chase up your debtors based on reports available in the system.

For organisations of more than 50 staff, often with multiple locations, ERP solutions offer various features to support the complex processes and workflows of such businesses. All in one system. These are particularly relevant, when the business can purchase just the features that are perfect for them.

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