Wednesday, August 28, 2013

Point of Sale Rabbit Hole (tradecraft)

Two weeks ago today, we deployed a new point-of-sale system called Lightspeed. It has been quite a ride, as we adapt to a completely new POS, which can best be described as the operating system for our business. It's critical in everything we do. You see it as a customer as a glorified cash register, but the real power is in inventory and ordering product.

With 17,000 items in our system, there is a hard won business intelligence in knowing what we have, what to order, and when. The POS handles all that, but only by our constant monitoring of every transaction. Do I still want this item? Can I tweak the quantity based on popularity? Can I infer a turn rate based on sales history that allows me to order an optimum quantity for the shelf? Inventory is a zero sum game, so every new item must have a corresponding item (or value) that goes away, and the POS is the tool to acquire that knowledge. In many ways, we're starting over with a new system, as our sales history starts the day of implementation. Budgeting will be guesswork for a while.

So how is it going? It turns out that just about everyone who has switched to a new POS has the same problem: database imports. We're no exception here, as we struggle with missing entries, corrupt entries, and the biggest issue, translating the ordering values from the old system to the new system.

For example, in our old system, there's a logic that says, "When you reach quantity X, buy up to quantity Y." When Settlers of Catan reaches 2 copies, buy up to 5  (X=2, Y=3). The default for the new system is "When you reach quantity X, buy an additional Y." "X" and "Y" still have the same numbers, but they mean different things. It now means, when Settlers of Catan reaches 2 copies, buy 5 more copies. That puts 7 on the shelf instead of 5. You can see how those are different, with one system saying purchase three copies and the new one attempting to buy five. It seems like a small issue, until it's system wide and you're staring at a $20,000 purchase order for things you don't need (with all the things you do need hidden within).

So the database transition has been maddening. The imports often take overnight and the tweaking has taken days of man hours. On top of that, everyone is learning to use a Mac. Geeky doesn't always translate to technical, so there's some frustration in even the simple things, like navigating the countless windows that seem to arrange themselves willy nilly on the desktop. Then there are things like printing, which we knew going in was going to be an issue. The Mac doesn't quite print properly through the Windows server and putting the ancient printer directly on the network has been troublesome. In many cases, I confess, we bought our way out of our problems, with a new Time Vault for local backups and a new laser printer in the cash wrap area.

As for Lightspeed itself, the issue with an existing business is translating how you used to do things into a new system; business process. How can I force this piece of technology to do my bidding and comply with my work flow? Well, that work flow is often very much a function of previous tools, and it became apparent on "training day" that to take full advantage of the new system, we would have to adapt our processes to it. That right there is the main reason businesses don't proceed on a new POS deployment. Changing your business process is not something most owners are willing to do for anyone, at least if they're successful.

On the positive side, there are things that Lightspeed has greatly improved for us. For example, special orders are much improved. Rather than our work around for the old system, where we sold you an item that didn't exist, creating a negative quantity in our system, and typing your name in an Excel spreadsheet (that always seemed to lose data), we have an actual Order system. We take your order, hand you a full page order receipt (with that new printer), and the system informs us special order items are ready to be generated into a purchase order. Then it conveniently tells us what orders have arrived, are outstanding or haven't been dealt with. It's a beautiful system and we've almost learned to trust it. There's a notebook nearby with some printed order sheets, because only half the staff has discovered the beauty of this system. Training will be a topic for discussion at our next meeting.

Special orders are the Holy Grail of game stores. Doing them properly is maddeningly complex because it's essentially an interrupt in the ordering system. Many game stores won't take them, while most stores do them poorly.  Doing them right consistently is pretty hard, and my guess is we did them right about 90% of the time with our old process. Although my son's school thinks 90% is a great rate of success for educating children (Only 10% of children left behind), I consider it a failure in anything I do that's business related. This new system should bump that number up.

The new system also allows us to have store credit. We use a voucher system where you pay $5 for an event and get a $5 gift certificate. To do this, we print out little serialized vouchers that get handed to customers. It's a fiddly little system that's time consuming and results in hassle when the customer redeems them, often in a stack from a month or two of saving them up. It's about as time consuming as if they had paid with pennies, and it was our idea, so we can hardly complain. Now we can do away with paper and instead apply a credit directly to their account record, which they can redeem at any time. There's no loss of paper vouchers and the process is much faster.

Customer loyalty programs exist for Lightspeed, and we'll be looking at them going forward, once the system is stable. There are systems that replicate exactly what we had before, as well as nationalized, subscription based systems like Five Stars, which allows for customer loyalty across businesses. Whatever we choose, we have to avoid the pitfalls of the last system, namely, eating into the profits of the business at an unhealthy level. It will also require that actual targeted marketing occur with POS generated sales data. Users will have to agree to participate, if they want the benefit.

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