6 ICT Applications – Point of Sale (POS) Terminals
Learning Objective
Know and understand how POS terminals work, including how they update stock files automatically and generate new stock orders automatically.
1. What is a POS Terminal?
A Point of Sale (POS) terminal is a computer‑based system used in retail and hospitality environments to record sales transactions. It typically includes:
Barcode scanner
Touch screen or keyboard
Receipt printer
Cash drawer
Network connection to a central database
2. Core Functions of a POS System
Capture sales data (items, quantity, price, discounts).
Trigger automatic re‑ordering when stock falls below a set level.
3. Automatic Stock File Updating
When a sale is completed, the POS sends the transaction details to the inventory database. The process can be described as:
Step
Action
Result
1
Item barcode scanned
Item ID and quantity captured
2
POS writes transaction to database
Sales record created
3
Database subtracts quantity from stock file
Current stock level updated instantly
4
Stock level checked against reorder point
If below, trigger automatic order (see section 4)
4. Automatic Ordering of New Stock
Many POS systems include a “re‑order” function that can generate purchase orders without manual intervention.
Each product has a re‑order point (minimum quantity) set in the stock file.
After a sale, the system compares the new stock level with the re‑order point.
If the level is below the point, the POS creates a purchase order (PO) containing:
Product code
Quantity required to reach the preferred stock level
Supplier details
The PO can be:
Sent automatically by email or EDI to the supplier.
Saved for manual review and approval.
5. Example Workflow
Consider a small clothing store that uses a POS system.
Event
POS Action
Database Change
Customer buys 3 T‑shirts (SKU 101)
Scans 3 barcodes, confirms sale
Stock for SKU 101 reduced by 3
Stock for SKU 101 falls to 2 (re‑order point = 5)
POS generates PO for 8 more units
PO stored in “Pending Orders” table
Supplier receives PO and ships 8 units
POS receives delivery note, updates stock
Stock for SKU 101 increased to 10
6. Benefits of Automatic Stock Management
Reduces manual data entry errors.
Ensures stock levels are always up‑to‑date.
Prevents stock‑outs and lost sales.
Saves time for staff to focus on customer service.
Provides accurate data for financial reporting.
7. Key Terms
POS Terminal: Hardware and software used to record sales.
Stock File: Digital record of inventory quantities.
Re‑order Point: Minimum quantity that triggers a new order.
Purchase Order (PO): Document sent to a supplier requesting goods.
EDI: Electronic Data Interchange – automated exchange of business documents.
8. Summary
POS terminals are central to modern retail operations. By linking sales directly to inventory databases, they automatically update stock files and can generate purchase orders when stock falls below a predefined level. This integration streamlines business processes, reduces errors, and helps maintain optimal stock levels.
Suggested diagram: Flowchart showing the interaction between POS terminal, inventory database, and supplier ordering system.