Integrating POS Solutions

Speed of service is crucial, but with all the services that convenience stores offer today communication between machines is key.

By Howard Riell, Associate Editor.

Greater speed of service and reduced operational costs can both be achieved through new integrated point-of-sale (POS) solutions. Case in point: Kocolene Marketing LLC in Seymour, Ind., which is making systems integration a priority, and already reaping the benefits.

“It is definitely a goal we are working toward,” said Lance Gentry, Kocolene’s business alignment and automation manager for the company, which operates 12 Fast Max convenience stores and 19 Smokers Host tobacco stores. “Integrating the other devices, such as phone card terminals, check machines, lottery terminals and money order machines, right into the POS network lowers our transaction fees and speeds up customer service because it requires less training of our staff, since they only have to learn to operate one device instead of many different devices.”

This move toward POS integration—part of the company’s overall automation strategy—has been a major project at Kocolene for at least the last year and a half. Executives have not yet made a lot of headway in the POS area, however.

“It’s frankly very difficult,” Gentry admitted. “I don’t want to say the POS provider we have is not open to sharing their code, but they keep everything close to the vest. They require the vendor, such as the phone card terminal company, to jump through a lot of hoops to get their platform to integrate into the POS network.”

Gentry would not go so far as to say his POS supplier is uncooperative, only that they are dragging their feet. Part of the problem is some POS suppliers are still protective of what is integrated with their systems. “They give us enough of a carrot saying, ‘We’re going to work with that, but not this,’ or they’ll kind of pass the ball off to a phone card vendor saying, ‘They need to get in contact with us to make it work.’ You’re forced to go through a process and it takes a while, but progress is being made,” he said.

Indeed, Gentry has noticed a trend toward fuller cooperation over the past year or two. “Once you put some pressure on them all POS providers will be a little more open-minded and work a little bit quicker in getting these other devices integrated.”

Finding a POS solution with integration capabilities specific to your business is an enormous undertaking that shouldn’t be taken lightly.

“The POS is the heart of the store’s business—it drives your paperwork process, your pumps, your cash reconciliation and everything going on from a retail standpoint—so deciding on a POS is not an easy decision. And switching your POS from an old one to a new one is a very big undertaking,” said Jim Xenos, vice president and chief information officer of Love’s Travel Stops & Country Stores, which has more than 270 stores in 39 states.

Getting Results
There are two ways to go about integrating systems: fully integrate a device into the POS terminal or completely eliminate that piece of equipment.

“We prefer to eliminate the piece of equipment,” Gentry said. “If a phone card terminal can talk to the POS that doesn’t necessarily speed up our transaction time, but it does speed up our reconciliation time, plus the amount of time and research spent hunting down errors.”

Integration with the POS system provided what Gentry rightly referred to as indirect savings, some of which is frankly hard to put a pencil to.
“If you can eliminate equipment there are savings because a lot of the providers have monthly leases,” Gentry said. “You also have repair charges all the way down to the actual rolls of paper that you put in these other pieces of equipment. All of that has to be calculated accurately to get a true sense of your operating cost.”

Savings also accrue from more efficient training. “It saves you on training hours in that it doesn’t require as much when you conduct data training,” Gentry said. “And, of course, you spend less time researching any shortages or doing reconciliations.”

Operations, he added, become simpler for obvious reasons. “Anything we can automate—in terms of not having to go back and forth and manually compare a printout from the terminal to the printout from the POS—saves us some time,” Gentry said.

Evaluating Solutions
Kocolene Marketing is a little more than halfway through what is scheduled to be a three-year project.“The end of September will be our two-year mark, and it’s been quite a capital expense for us,” Gentry said. “It’s been one of the largest projects that we’ve undertaken in probably the last decade.”

Twelve months from today, Kocolene management would like to be able to integrate its check processing function as well as its phone/gift card sales and money order sales. “It’s going to be a challenge,” Gentry admitted.

What Gentry called one of the “really cool” side benefits of the automation process beyond the latest technology and updated software has been the changes to Kocolene’s business processes—the way it fundamentally operates.

“We’re challenging our staff and our employees at the home office to think differently,” Gentry said. “Before, they had a run sheet and they went through 10 steps.”

The new model encourages innovation in the face of a challenge, a reversal of what had been top-down management. “We’re really overhauling our company and our strategy of how we operate through this automation project,” Gentry said.

What that means is more valuable staff members are undergoing a major learning process. “They’re being asked to do things they’ve never been asked to do before,” Gentry said. “They’re being challenged. It’s frustrating, yet it’s exciting, as well. At the end of the day we’re going to have a more talented, capable and flexible staff because we went through this process.”

Will all of the time, money and effort ultimately prove to have been worth it in the end? “Every once in a while you ask yourself that,” Gentry concluded. “But when you step back and look at the big picture you have to stay up with technology and the times. It comes down to providing services our customers want, but also finding the right product mix at a competitive price. Integration will help us provide a more competitive price keeping our overhead and operating costs down. So when taking both of these factors into consideration, we have to take the time to evaluate the proven technologies that are out there and stay open to implementing them across the entire chain.”

Defining Progress

Achieving success in POS integration can prove difficult as many moving parts must come together in order to effectively communicate.
“It’s a lot less clear cut than having a timeline,” said Lance Gentry, business alignment and automation manager for Kocolene Marketing. “We are really working with three different parties: ourselves, the POS provider and the individual vendors, as well. In Indiana, which is where we have most of our locations, the state lottery, for example, will not integrate with POS providers, which is really a bummer. Lottery is where a lot of the headaches come in. There are a ton of transactions with that terminal.”

Thus, while Kocolene’s executive team would love to have a clear-cut corporate strategy of integrating all of its devices, Gentry explained, they have inevitably run into situations that impede progress. He would like to see those situations go away. “Hopefully, retailers like us will come together to lobby the lottery to change its policy on integration. But that would probably take a couple of months, at least.”

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