A Study on Efficient Operation of Point of Sale System in CVS

Park, Keun Gyu(Major in Marketing Dept. of Business Administration, Graduate School of Chung-Ang University)

1. Purpose of Study

With the 21th century just ahead, domestic distribution industry is facing drastic change. Since 1980, due to the rise of the national income and change of consumption demand pattern, big environmental change has been made. And since the end of 1980s, according as the black ink in the balance of international payment began to show, the pressure from foreign countries for the opening of domestic market began to be harsh and domestic distribution market also came to face the pressure for opening.

These circumstances, as a part of strengthening competitiveness and modernization of distribution system, required the introduction of POS(point of sale) system.

POS system is that processes and transfers informations collected by optical register with automatic interpretation method by unit and other various informations occuring from purchasing and transportation stages. Namely, POS system can be defined as an integrated management information system of retailing.

Presently, POS system of convenience store is being used only for the exact calculation. Namely, because convenience stores concentrate on the functions such as registration of new goods, deletion of goods that are no longer produced and handling of purchasing acquaintances, they cannot afford to consider the operation of POS system and use of POS data. Even though the POS system was introduced, the rise of efficiency cannot be expected without efficient use of data which is occurred at selling point.

Accordingly, this study sets up a propose in operating POS system of convenience stores more effectively through analyzing the operational status of POS system of CVS companies, extracting operational problems and finding the solutions.

2. Method

To inquire current level of informationization of domestic distribution market, this study carried out 'literature study' and 'empirical study' together.

This study investigated general concepts of POS system through literature study first and then directly visited companies and had personal interviews.

Head offices of convenience stores that account for large portion in domestic retailing businesses and have big potential, more exactly speaking, head offices of seven convenience stores that have more than 70 shops were chosen as the subject companies of interview, They are LG Distribution(LG25), Bokwang(Family Mart), Taein Distribution(Lawsons), Miwon Trading(Ministop), Circle K Korea(Circle K), Dongyang Mart(By the way) and Korea Seven(Seven-Eleven).

Interviews are composed of three parts, first, general status of companies, second, operating status of POS system and third, operational problems of POS system.

Personal interview period was one month from September 1 to September 30, and interviews were made with merchandising department staffs for companies' general status, and with staffs of computer department for the POS system.

The method of analyzing interviews was comparison of the operation of POS system of head offices of seven convenience stores.

3. Research Findings

As to general status, the number of convenience stores of these seven companies accounted for 81%, 1,477 stores, of all convenience stores, and total sales amount of 1993 was one trillion and twenty billions and nine hundred millions won, the number of unit code was average 3,900 and goods that accounted for highest portion in sales were processed foods to 35.3%.

As for operational status of POS system, the reasons of introduction of POS system were efficient sales management, maximization of sales by analyzing data at the point of sales, improvement of customer service, suitable stock management and product movement analysis etc. Most of stores introduced POS system at the opening of stores, average scanning rate was about 89%, method of product information collection was made unit by unit and such data were transferred from stores to head office by on-line system, and cycle of data transmission is various according to companies.

The scope of network entry is usually composed of head office, direct management store, affiliated store, supplying company. And telephone line is being used as a communication line. But credit sales are not popularized so far, and the nenber of output report is various from 13 kinds to 74.

The problems in POS system operation are lack of knowledge for computer lack of control for employee's misappropriation, distrust of head office for POS maintenance & repair companies, difficulty of education of POS system operation, deterioration of confidence for data due to the improper scanning, and problems in hardware and software of POS system.

The solutions of the above problems are strengthening of education for personnels of direct management stores and affiliated stores, building confidence beween head office and maintenance & repair companies of POS system, bold investment into human resources of companies, support of government for localization of POS machinery, aggressive propulsion of distribution VAN construction, planning of efficient use of scan data, customer management through credit sales, and raise of source marking through spreading of KAN.

4. Discussion

This study grasped the point of operational status of POS system, extracted operational problems and found solutions of POS system through personal interviews against seven CVS companies. But there were many restrictions that obstructed more detailed studies. Especially staffs with anxiety about information leakage showed very sensitive reaction due to the deepening competition among CVS companies.

Further studies for problems in POS system of domestic CVS companies should be continued through a case study against a specific company and more concern for forming network of information through distribution VAN should be given.