An Ideal Inventory Solution

Tim Balsimo, founder of Quality Pet Products, a wholesale distributor of pet foods to veterinary clinics and retail pet stores in six states, is a 20-year veteran of the pet food industry. Before starting Quality Pet Products, Balsimo owned a successful chain of pet stores that he sold in 2001. Based in Woodbury, Minnesota, Quality Pet Products carries more than 500 different pet foods in inventory to serve more than 400 customers in Minnesota, North Dakota, South Dakota, Wisconsin, Iowa, and Nebraska. "We purchase everything from our manufacturing partners in truckloads," says Balsimo, who offers customers a 24-hour delivery guarantee on all orders placed before 10 A.M. "We have customers from Rapid City to Green Bay," he says, meaning that the company must manage its inventory carefully to be able to meet its 24-hour delivery guarantee 100 percent of the time. As a former retail pet store owner, Balsimo understands how important fast delivery is to his customers and that the guarantee is one important way of differentiating his company from the competition.

As the company's customers base grew and stretched into a broader geographic area, Balsimo began looking for ways to improve his company's efficiency, manage its inventory investment more effectively, and improve the level of customer service it provides. He began shopping for comprehensive inventory tracking software that would integrate seamlessly with QuikeBooks, the popular accounting software package that Quality Pet Products uses. He also wanted to create a Web-based order-entry system for his customers that would funnel orders directly into the company's inventory control system. Finally, he wanted Quality Pet Products to earn certification from the American Institute of Baking (AIB), which requires a company to track every edible item that comes through its warehouse by lot number or bar code in case of a product recall. The software would have to keep track of every item in stock, pinpoint its location in the warehouse to maximize workers' efficiency when "picking" customers' orders, creating bills of lading, track shipment weights and delivery dates, and perform other essential inventory control functions. Balsimo found software that would perform these individual functions but not as a comprehensive package. "What was missing was the ability to handle serial and lot numbers," he says, both of which were crucial to earning AIB certification."[AIB certification] is a safety standard," explains Balsimo. "We must have a process to track every single item that is edible in and out of the warehouse by lot number or bar code."

Balsimo found Fishbowl Inventory and conducted a test to see whether the software could meet the company's needs and measure up to his expectations. After just one month of testing, Balsimo decided to completely implement Fishbowl Inventory. "It integrated with QuickBooks so well that we were able to move our {product} information quickly to Fishbowl," he says. "It took only a week or two to fine-tune everything. We were able to write a custom ordering report that takes into account our previous sales history, quantities on hand, and ‘what's on order' to develop our own ordering process based on our lead times."

According to Balsimo, Quality Pet Products new inventory control system has produced impressive results at a very reasonable price. "We've been able to make things run as efficiently as possible from order taking right on through to our picking and shipping process," he says. "The time it saves in daily operations is the equivalent of two office people per day-- 16 hours per day. It saves time, allows us to do more with less staff, integrates into one piece of software, and prevents us from having to set up more workstations or servers." The system also enabled Quality Pet Products to establish a convenient, integrated, Web-based customer order-entry system and to achieve its goal of becoming AIB compliant. Balsimo also is pleased that the company now boasts a 0.001 percent inventory variance, compared to the 1 to 2 percent variance that the typical pet food distributor has. "For us, the investment certainly was worth it," he says.

Answer the following questions and make sure you cite your work.

1) What benefits has Quality Pet Products reaped from improving its ability to manage its inventory more accurately?

2) Go to your favorite search engine and conduct a search of the most common problems that small businesses face when managing their inventory. What steps can entrepreneurs take to avoid these problems? Cite your source.