Fastenal: Revolutionizing Industrial Supply with Customer-Centric Innovation

When Bob Kierlin opened the first Fastenal retail location in Winona, Minn., in 1967, his goals were simple: keep customers coming back with unparalleled service. With more than 2,500 stores today in 13 countries and more than 3,000 onsite industrial vending machines in operation, Kier­lin’s vision of “growth through customer service” for his industrial supply store certainly has been met.

“What sets us apart is our locality to the customers,” says Cory Jansen, executive vice president of operations for Fastenal. “We open local stores and service local customers with local expertise. At the same time, we’re a national company with nat­ional buying power that happens to operate in a local fashion.”

Fastenal says each of its retail locations is a one-stop source for millions of available products backed by the company’s corporate distribution, manufacturing and sourcing strength. However, each store tailors its inventory to service and meet the needs of local customers.

The North American stores are serviced by Fastenal’s fleet of semis, straight trucks and sprinters through a network of 14 regional distribution centers. These include master distribution centers in Indianapolis and Modesto, Calif.

With this local focus and comprehensive buying power, Fastenal is in an enviable position to serve clients throughout North America. Now that so many manufacturers are concentrating on improving efficiency across their operations, Russ Rubie, vice president of FAST Solutions, believes Fastenal’s business model is best situated to handle these demands.

“Some of the changes we’re seeing are customers looking to eliminate waste and increase productivity through just-in-time inventory management,” Rubie says. “Fastenal is set up in North America and globally to do that with our sales approach.”

Fastenal also offers a variety of sustainable products to help its customers operate in an environmentally friendly fashion. The company says green initiatives are tied to the larger issue of corporate responsibility.

On-Site Vending

As Jansen tells the story, Kierlin had another goal in mind when he started his business.

“He worked in a hardware store at the time and he was amazed at all the customers who came in for a nut and bolt,” Jansen says. “He came up with the idea of distributing nuts and bolts through vending machines, but he found it very expensive.”

Today’s generation of Fastenal management has brought Kierlin’s vision to reality in the last three years through the FAST (Fastenal Auto­mated Sup­ply Technology) industrial vending system.

The system is an instant solution for any company looking to reduce consumption, increase productivity and eliminate inventory, and leads to overall cost savings. Each machine is custom-built to fit an individual customer’s needs, whether they include mission-critical, high-cost or high-usage products. For items too large to fit in the base FAST 5000 vending machine, Fastenal offers its FAST Auto Locker, which provides controlled access to items like power tools, hard hats and aerosol cans.

Integrated Technologies

The FAST 5000 is an internet appliance integrated with vending technology. Employees access items in the vending machine by swiping their ID cards or entering a code.

This allows managers to monitor every transaction anytime and anywhere. Operators can log in to Fast­enal’s server to adjust the machine’s access controls, monitor in-depth usage information, create automated reports and opt to receive automated alerts about any critical activities. When stock for an item runs low, the local Fastenal store receives an automated alert and comes out to fill the machine, eliminating stock-outs and excess paperwork.

Though the units themselves are what industrial clients and their em­ployees see every day, it takes a great deal of logistics operations to en­sure the system works properly. Fastenal describes this network support de­partment as its “machine behind the machine.”

The “machine” includes:

  • A local sales force – Machines are restocked and maintained by a representative from a Fastenal store closest to a customer’s facility.
  • Regional sales support – A fleet of display vans allows Fastenal to bring the machines and trained FAST specialists to a facility for instant hands-on demos and information sessions.
  • Regional build centers – Fastenal operates regional FAST build centers throughout North America to provide local machine configuration, delivery, installation, training, product testing, and ongoing service and support.
  • National distribution and transportation – Each FAST machine is backed by Fastenal’s distribution system of more than 2,500 local stores, 14 regional distribution centers, and nearly 6,000 company-owned delivery vehicles.
  • National hardware and software call center – Experienced technicians are on call to answer customer questions about hardware or software issues.

“To have the ‘machine behind the machine’ is huge, and that is how the customer puts the pieces together,” Jansen says.

Creating Accountability

The mission behind the FAST 5000 system is to help Fastenal customers better manage inventory instantly. FAST 5000 units can reduce consumption and spending, improve pro­duct­ivity, decrease inventory, eliminate processing and administrative costs, and reduce labor costs as well.

One of the most important aspects of the system is the accountability it creates within a work force. This leads to a direct savings for clients by reducing the amount of inventory consumed in a facility, with many of its customers cutting consumption by 30 percent or more, according to the company.

“When people think of vending machines, the first thing they think of is snacks and candy where you make a selection that comes up, which seems simple,” Jansen explains. “In industrial supply, having accountability isn’t as simple.”

Not only has Fastenal managed to make this as simple as possible, but it has spent the last four years driving down the cost of industrial vending technology. When they first came to market, industrial vending units were expensive, so only the largest among Fastenal’s clients could afford the technology. Jansen says the company partnered with its manufacturer and software suppliers to drive costs out of the machines so customers of all sizes could afford to keep them in their facility.

Consumer Response

Customers quickly are catching on to the benefits FAST machines offer. In 2010, Fastenal signed agreements to install 255 vending machines in the first quarter. For first quarter 2011, that number grew to 1,405. By year’s end, Jansen expects to have several thousand machines in operation.

Fastenal certainly hasn’t reached capacity with its vending machines thus far, according to Jansen. In fact, since the technology for the FAST 5000 is so new, there is no telling what is on the horizon at this point.

“We look at this as a cross-country race – it is so early in the race, we’re not sure where the technology is going,” Jansen says. “The manufacturing community is taking a step in the right direction by challenging the way we do business today, and our salespeople in the field are up for it. This year, we are going to continue to develop solutions so the entire marketplace gets better at doing the things they do.”