POS As The Great Protector

Written by Evan Schuman
April 8th, 2009

The POS system is the Rodney Dangerfield of the retail IT world: It gets no respect. (Could have gone back yet further and said it was the Red Buttons of the retail IT world because it never gets a dinner, but that’s an even more obscure pop culture reference.)

Chains are just starting to see the business ROI potential of POS—especially when working with CRM—to fuel upsells and to legitimately increase loyalty. But few look at POS as a potential protector and a protector against some potentially very large expenses. Consider four items from the last few days:

  • A survey published Tuesday (April 7) in Texas found that “CVS drugstores in Dallas and Houston may be among the drug store chain’s worst for selling expired products according to the results of a survey announced today by community advocates outside a CVS drugstore where expired products were sold. More than 90 percent of CVS drugstores surveyed over the last few weeks in the Dallas/Fort Worth and Houston areas are selling expired products, including over-the-counter pain medication that was more than four years past its expiration date, and year-old infant formula, both recently purchased in a Fort Worth CVS store. Inspectors purchased milk at a CVS in Terrell that was more than two months past its expiration date.”
  • A statement issued Tuesday (April 7) by the U.S. Consumer Product Safety Commission: Some 14 retailers—including Bon-Ton and TJX units Marshalls, TJMaxx and Bob’s Stores—agreed to pay $1,055,000 in civil penalties because they “knowingly failed to report to the CPSC immediately, as required by federal law, that children’s hooded sweatshirts or jackets they sold had drawstrings at the hood and/or neck. Children’s upper outerwear with drawstrings, including sweatshirts or jackets, pose a strangulation hazard that can cause death to children.”
  • A statement this week from a Washington grocery chain that is using POS to credit money to consumers if products they buy go on sale within a week of their shopping trips. Indeed, the chain’s CRM/POS package is paying them a reward on top of the amount of the price reduction.
  • Macy’s this week is having to argue against a POS/CRM subpoena from the Los Angeles District Attorney’s office. Macy’s is being charged criminally in connection with a case where the chain is accused of selling children’s jewelry contaminated with what authorities said is a “potentially toxic” and “high levels” of lead, but had labeled it as lead-free.

    What all of these situations have in common is that these were negative situations that POS could have addressed and perhaps protected them from. The expired items problem. There are non-POS supply chain tactics that could have flagged those items in the store and had them removed at the expiration point. But a POS could do the next best thing and prevent expired items from being purchased. This would require marrying expiration data with the SKU, but it’s a do-able task.

    The hooded issue could have also been POS-helped, as that data could have been integrated with reporting requirements more aggressively. The Washington chain is getting creative about how to use CRM so they have already been using it for protection. Macy’s is a somewhat different case, as the alleged problem wasn’t known at the time of purchase, rendering POS incapable of protection. But months later, it is POS data that may ultimately protect the consumers by allowing them to be notified, especially if they used their loyalty card.

    In these days of economic hardship, extensive investments in new equipment is hardly ideal. But a little programming creativity to get non-traditional value out of existing equipment, that might be just what the economist ordered.

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    4 Comments | Read POS As The Great Protector

    1. A reader Says:

      You said, “a POS could do the next best thing and prevent expired items from being purchased. This would require marrying expiration data with the SKU, but it’s a do-able task.”

      That’s not achievable with current implementations. Products (such as milk) are tagged only with UPC barcodes. UPC (even when translated to SKU) only indicates the type of product, not the instance of a particular carton. To get to that level of detail in today’s world, individual UPCs and SKUs would need to be created for each possible expiration date — a monumental task that would likely break every stockroom, planogram, signing, and pricing application in existence. The most a POS register could do today would be to recognize products with expiration dates, and prompt the cashier to validate them before selling — slowing checkout lines to a near-crawl.

      However, starting in January 2010 this will all become possible with the advent of GS1 DataBar, which will provide POS scannable fields for expiration dates, lots, and serial numbers, and will permit every step of the supply chain to identify and remove expired or recalled products.

      Theoretically it could be solved today with RFID, where each package is tagged individually and can be identified. But milk and other liquid products attenuate RFID signals and are particularly difficult to accurately scan (not to mention the costs of RFID tagging and the changes required in the supply chain.) GS1 should prove to be much cheaper, and almost as effective.

    2. MIS Dude Says:

      If store employees would just do their job and remove and not sell expired products there wouldn’t be a problem. Punish employees who don’t do their job and hire more quality workers. This seems like the classic case of having the computer do one more thing that the incompentent un-company-motivated employee won’t do– and this is coming from an techno-geek IT guy that would not be involved with required POS changes. How about saving lawsuit money on creating better procedures? Better procedures cost less than lawsuits and POS changes. Have employees check consumables for expiration. And have a streamlined quick procedure (not lots of layers of communication) when there is a recall and something needs to be pulled off the shelf. That sounds better to me than a POS that would alert the cashier to not let the customer buy the item. And if the POS alerts the cashier, I can just imagine how many false positives this constantly updated system would generate. The cashier gal says to me, “Sorry sir, you cannot buy this item because the ‘system’ won’t let me sell it to you. Let me [waste your time and] try to find the head cashier to correct this.”

    3. Joe Rosolanko Says:

      Our CFO has joked (sort of) that POS should stand for Plenty Of Spending as it seems to be a continual investment of company revenue. Good point on GS1 DataBar. I hope to leverage this for electronic product registration requirements that today involve costly and inefficient manual procedures in the stores.

    4. POS Says:

      A POS systems can be your first line of defense (especially if you have sales people who keep on slacking off in the job.)


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