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Beyond nuts and bolts: Minnesota-based Fastenal connects with customers

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Catherine W. Idzerda
February 18, 2013

— Sell a company a bag of nuts and bolts, and it can run for a day.

Sell a company a bag of nuts and bolts, manage its inventory, help it make its manufacturing process leaner, troubleshoot problems, offer it same-day service and reduce its product loss by up to 40 percent, and you will be an integral part of its success.

That's the goal of Fastenal, the Winona, Minn.-based company with more than 2,600 stores nationwide and three manufacturing plants. The plants make a variety of small parts.

Last year, the company had sales of $3.2 billion and grows about 15 percent a year.

The company says it is successful because it connects with customers.

"We want to get close to customers," said Gary Rucinski, Fastenal district manager.

The business operates on several interconnected levels.

At the most basic level are Fastenal's stores, where the company sells everything from ordinary fasteners—nuts and bolts—to specialized supplies for construction and manufacturing.

These stores restrict their sales to professionals and companies. Customer traffic varies from location to location.

"Here in Delavan, we might have 15 people a day," Rucinski said. "In Janesville, it's more like 40 or 50 people."

If the store doesn't have a product, it can get it from one of its regional stores or order it for next-day delivery.

"We also have one of the best fleets of semis," Rucinski said. "The trucks are here in the morning before our employees are."

The second and arguably the most important level of the company is contracts and relationships with manufacturers and contractors such as Professional Power Products of Darien.

"About 80 percent of our business is delivered directly to our customers," Rucinski said.

For such companies, Fastenal provides a "vendor managed inventory system." Fastenal staff members visit businesses once or twice a week to make sure manufacturers have everything they need.

Manufacturers don't have to worry about down time due to the lack of a specialized product that has to be ordered. Nor do those manufacturers have to think about the hundreds of everyday hardware store items that are part of business—WD-40, duct tape, drill bits, heavy duty extension cords or OSHA-rated masks.

At another level of its business, Fastenal offers companies advice on how to reduce losses by engineering better systems.

"We can streamline their approach on how they operate," Rucinski said. "We have a ‘lean team' that can come in and do process mapping to make them more efficient."

Fastenal also has been a leader in an unusual niche market: product vending machines.

These machines operate like traditional snack machines. Products such as duct tape, WD-40, small drill bits, and small bags of fasteners are inserted between spiral metal coils. An employee punches in a code or uses a swipe card—which could be an employee badge—and the machine dispenses the item.

Fastenal has eliminated the most annoying facet of such machines: Products are never left dangling at the end of a coil that has stopped rotating. The coils don't stop turning until the product drops, breaking a laser beam at the bottom of the machine.

The company also has designed vending-machine style lockers for such items as power drills.

To date, the company has placed more than 20,000 vending machines in companies. Employees like them because they don't have to go looking for the staff person with the key to the supply closest or fill out request forms for everyday items.

Employers like the system because it saves them between 20 percent and 40 percent on supplies.

All of those levels of service work together and are connected by customer service, Rucinski said.

"What sets us apart is our people," Rucinski said.



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