November 2008 | Case Studies | DC Solutions

Inventory Software Goes With the Flow

Tags: Warehousing

New software keeps a small start-up company's head above water.

Many people hit a point in their careers when they dream about quitting their jobs and striking out on their own. Most, however, never take that brave step and venture out of the comfort and security of steady employment. But that's just the step brothers Thomas and Scott Bennett took this year—and they haven't looked back.

Thomas and Scott spent years working for HD Supply Waterworks, a Texas-based water and wastewater utility supply house, and both hold degrees in industrial distribution, with business minors. They learned their industry inside and out, becoming experts in serving the needs of contractors and municipalities in all aspects of water and wastewater systems.

With more than 50 combined years in the water and wastewater systems industry, Thomas and Scott decided it was time to pursue the American dream and begin a start-up company. Aguaworks Pipe & Supply, based in Brownsville, Texas, is the result of that dream.

"We were both tired of being bought and sold by bigger companies," says Thomas. "We felt confident that our experience would allow us to launch a successful company."

Aguaworks is a distributor of all types of water and wastewater pipes and supplies. While new buildings are being constructed, Aguaworks is at work behind the scenes estimating and pricing the materials needed for the storm-water retention systems and sewer, water, and wastewater utility lines.

SMALL COMPANY, LARGE NEEDS

Even though Aguaworks started out small, as most new companies do, it has put sophisticated tools in place to ensure its service is on par with much larger companies. One key to maintaining that service level is the implementation of MSS/HD Hardgoods Distribution from Mincron, a Houston, Texas-based supplier of distribution and warehouse software solutions. MSS/HD Hardgoods Distribution serves as the foundation software for managing inventory, purchasing, forecasting, and other enterprise functions.

Aguaworks' 5,000-square-foot distribution center and an additional 2,000 square feet of office space are located on three acres of land. The Bennetts decided that a solid software backbone would be necessary to launch their company successfully.

"We were familiar with the Mincron system from our years at HD Supply," explains Thomas. "We knew implementing a sophisticated software system would be a financial stretch for us, but we also knew it would be worth it."

Because Thomas Bennett had worked with the Mincron system for 16 years, it was a natural choice for the new venture.

"We knew we wanted inventory management, accounting, and bidding features," he explains. "From our experience with Mincron, we knew we could get all those functions in one package. The software is designed to meet the needs of our type of business."

The software's features specifically apply to the hard goods industry and help transform data into knowledge that companies such as Aguaworks can use to make critical strategic decisions. The software provides flexibility and visibility, enabling users to provide top-notch customer service.

THE SYSTEM AT WORK

The Mincron system sends purchase orders received from Aguaworks customers directly to the vendor.

"Vendors create their order and tie a purchase order number to it," explains Thomas. "As we receive the material, we date the packing slip and it is instantly updated in our inventory."

The software includes a unique structure that uses customer profiles for pricing products. This allows Aguaworks to maximize margins while meeting a competitor's price or a customer's individual demand.

Another feature that has helped Aguaworks get off the ground is inventory analysis. The system analyzes inventory by factors such as item velocity, turn/earn ratios, and product movement. Aguaworks can use this information to identify fast- and slow-moving items or dead stock.

As orders are processed, they move on to shipping, where the software allows Aguaworks to check delivery dates with customers. The system immediately confirms the delivery date and updates inventory based on that information. It then automatically generates an invoice and sends it to the customer.

While Aguaworks doesn't use bar-coding at this stage, the system does assign product locations, which are printed on the pick tickets. "Once the information appears on the pick ticket, the products are reserved for that customer," says Thomas. "When the product is delivered to the customer, our inventory is updated."

The system allows Aguaworks to turn orders around the same day they are placed, if the inventory is in stock. And it's in stock most of the time because the system allows Aguaworks to set reorder points—once an item runs low, the system alerts the company to order more.

"Having the Mincron system in place played a major role in giving our business a running start," says Thomas. "Because we were already familiar with the system, we didn't need to spend time training. We've been able to spend more time with our customers from the get-go."

"Hard and durable goods distribution is Mincron's expertise," notes Jeff Allen, vice president of sales and marketing at Mincron. "Aguaworks had experience with the software; it was just a matter of making it fit correctly."

KEY BENEFITS

The Bennetts fully expect the system to deliver increased inventory turns, boost return-on-investment, and allow Aguaworks to provide the highest quality customer service—key to growing a new business.

"Customers benefit because when they call, we can let them know instantly if we have the product they want in inventory," Thomas says. "We can process the order immediately and deliver either the same or the next day, depending on the need. That also benefits customers because they don't have to carry a lot of inventory either."

Aguaworks is the first start-up application Mincron has been involved with. "This software was a good fit because Aguaworks doesn't have the resources that a large company has," says Allen. "We were able to implement the software quickly."

GROWTH SPURT

Aguaworks doesn't currently need all the features that the software can provide. But as the company grows, the software will allow operations to expand seamlessly. Eventually, Aguaworks will be able to support more than 500 users on the system.

"The software currently provides Aguaworks inventory visibility with true cost of goods sold, including freight costs and rebates down to the item level so it can manage its margins," says Allen. "The software will grow as the company grows."

The system has been a boon for a start-up like Aguaworks. "Many companies don't have inventory visibility when they get started," says Allen. "That can drag down profit, which slows growth."

For Aguaworks, there was no other option. "The system will grow with us," says Thomas Bennett. "It has been a great asset."