What Is POS Data and How Can It Increase Forecasting Accuracy?
A Point of Sale (POS) system records the data every time a business makes a sale. In most cases, this would refer to their cash registers or other machines where customers can complete their transactions using their payment cards.
Today, these systems have evolved to record hourly sales volumes and track inventory counts simultaneously. By monitoring the demand and stock levels, problems such as over-spending, product shortages, and excess waste can be easily avoided.
Analyzing data from the POS system will allow businesses to forecast and anticipate trends before they even happen. Storing this precious information and utilizing it for future decision-making purposes will optimize store management, improve customer relations, boost reputation, and therefore increase sales.
Advantages of POS Data
Keeping track of inventory levels and making sure that popular items are kept in stock is vital to maintaining maximum profitability. An efficient POS system can identify sales trends for specific items, and therefore help businesses adapt to changes in demand.
Most companies that use old-fashioned spreadsheets to handle POS data fail to reap the full potential of this information, as manual efforts to enter and analyze this information can be time-consuming and leave much to chance for human error.
The reason for this lack of data utilization is simple most businesses are simply unaware of how to organize the information from their POS systems.
Thankfully, getting a handle on such valuable information has never been easier. Instead of using spreadsheets that will simply archive the data, tools such as forecasting software will allow management to make this quantitative information far more useful. Modern, cloud-based POS systems will also seamlessly integrate with forecasting software so there is no need for any manual data collection.
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Using POS Data
It is easy to underestimate the power of utilizing POS data. However, when businesses use this information to their advantage, they can make smarter decisions when preparing for the future, while optimizing day-to-day practices.
Here is how this information can be applied to forecast trends in demand and sales-
- Building predictive models - The heart of any business is the POS system and its abundance of data and information. POS data can be used to identify the spending habits of customers and isolate products that are popular so your inventory always reflects the level of demand.
- Making loyalty programs shine - The spending habits of customers are instantly tracked with a modern, cloud-based POS system. This information can then be used to the company's advantage by creating incentive programs to encourage customers to come back.
- Saving time while increasing productivity - By using POS data and forecasting software for data entry, management will have more time to tend to other business needs, like creating market strategies. Upgrading to automation from manual data collection and calculation speeds up the process, saving the company time and effort.
- Making workforce adjustments - No business wants to be overstaffed or understaffed. The former would mean decreased productivity and inefficient use of labor costs; the latter leads to decreased customer satisfaction and upset employees. Automated POS data analytics allow a company to tailor its staffing plan to the expected foot traffic, avoiding overspending on labor costs and reducing the amount of dissatisfied customers.
- Identifying market trends - It is vital to understand if and when the overall demand for a product or service is changing. Pairing automated POS data and forecasting software can help businesses cope with fluctuations in the market and better prepare for future sales trends that may affect business.
Instilling these changes using POS information will optimize business practices by cutting down on the total cost of operation.
Examples of long-term and short-term benefits of forecasting using POS data include-
- Maximized profits - If a business has more than one location, it can be a challenge to determine which location is generating more traffic, or experiencing higher sales volume. It is vital to understand which locations are bringing in sustainable profits so that the necessary resources can go to the right areas. With accurate forecasts, this can be done instantly and with minimal effort.
- Optimized inventory control - Anyone who has ever worked in the restaurant or the retail industry understands that some items will inevitably be more popular than others. Additionally, many items will see a shift in their popularity based on external factors such as the season or weather. For example in the event of a big storm, an outdoor cafe can expect to see a fall in foot traffic. POS information can help a company create predictions based on historical trends and make sure that specific products don't run out of stock.
- Eliminating waste - If sales and demand are starting to lag, the store management team should be notified as soon as possible. Maintaining profitability means ensuring stock levels remain at the most optimal point. By only ordering what is absolutely necessary, businesses can limit the amount of waste or unsold inventory.
Businesses that adopt new POS analyzing technology, such as forecasting software, will be in a position to gain a competitive edge and boosts in profits through optimized business operations.
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