Measuring the effect of a new point of sale system on the performance of drugstore operations

Abstract

A new electronic point of sale (POS) system was deployed by a Hong Kong drugstore-chain in eight of its drugstores as the first stage of a company-wide introduction of POS automation. The management wanted to know if the new system had a significant impact on the performances of the drugstores where the new POS system was deployed. We explain in this paper the computation of ratings that gauge the relative performances of the drugstores using a new procedure called operational competitiveness rating analysis (OCRA). We used these ratings to determine whether the drugstore operations improved significantly after the deployment of POS. A full discussion of OCRA's development and its computational procedure is also provided. Scope and purpose The aim of this paper is to demonstrate, using a new performance measurement procedure called operational competitiveness rating analysis (OCRA), how the impact of a new electronic point of sale (POS) system on the performance of a drugstore can be gauged. A case is presented involving a drugstore-chain in Hong Kong. Data on costs and revenue were collected, before and after the deployment of a POS system, from eight of the drugstores of the chain, spanning a period of 18 months. Computation of relative performance ratings for the drugstores using OCRA is explained. The drugstores were ranked by their performance ratings and a rank test was applied to determine if the average rank was significantly higher after the deployment of the POS system. It was evident that while there was a general improvement in the performance of the drugstores over the 18-month period, performance improved significantly after the deployment of the POS system. The paper also provides a full description of the development and computational procedure of the OCRA approach, and concludes with a brief discussion of its desirable properties as a performance measurement tool.