Article & Photo by Mary Carpenter
Issue: May 2022
The Fastenal story began in 1967 when Bob Kierlin, along with four friends, raised $30,000 and opened the first Fastenal store, a 1,000 square foot shop in his hometown of Winona, Minnesota. At the time it was the smallest of an estimated 10,000 fastener distributors in the U.S. By the mid-1990s it was the largest, and had expanded to become the leading industrial supply company in North America. Its success was earned “by going the extra mile for customers and providing the kind of service that kept them coming back,” the approach Kierlin called, “Growth Through Customer Service.”
Today Fastenal provides the world’s largest industrial vending program through its more than 3,200 in-market locations (a combination of public branches and customer-specific on-sites) in all 50 U.S. states, Canada, Mexico, Central and South America, Europe and Asia. Its 2021 sales exceeded $6 billion.
Fastenal offers expert consultation and inventory management services. In addition, it is a logistic provider and a distributor of industrial and construction products. Its regional distribution centers
work with local stores to anticipate customer demand and keep product flowing when and where it is needed.
To learn about how Fastenal has developed innovative solutions for its customers, I met with Brian St. Hilaire at the company’s Plattsburgh location. St. Hilaire, originally from Bangor in Northern New York, got his start with Fastenal when he did a summer internship while he was a student at Clarkson
University. Management was impressed and, when he graduated in 2000, he was offered a new company store in Massena. One thing led to another and in 2003 he moved to Plattsburgh to manage the local store. Eight years later he became the District Manager for Vermont, New Hampshire and Upstate New York. In 2021 an exciting new opportunity presented itself and St. Hilaire was named Fastenal’s Director of On-Site Development for North America.
I began our conversation by asking him what an on-site location was and how it benefited customers.
“A Fastenal On-Site offers technology solutions to monitor, track and control supplies and our experts help businesses reduce inventory, touches and supply chain waste, and increase productivity.
He continued, “Our lean experts listen, collaborate and develop unique solutions that meet each businesses’ needs. What we provide is not a price quote, but rather a plan for a more efficient operation. Our analysis, which can take anywhere from a day or two to more than a week for a large business, is free and, when finished, outlines one or more programs that will move the business to a new level of efficiency. We invite the company’s team to examine our proposals and to challenge us on any information we provide and any savings we propose.”
At an on-site location, Fastenal-owned inventory is stocked in anticipation of demand. “The inventory remains on our books until the customer’s personnel is ready to use it,” St. Hilaire explained.
Once Fastenal sets up an on-site operation, a dedicated support team (which can be a small as two or as large as 30 individuals depending on company needs) takes over management of a portion of the customer supply chain and creates a true partnership. “The goal is to move past the adversarial buyer/seller relationship to pursue common goals and shared successes,” St. Hilaire emphasized. “Our local team members become an integral part of the client’s operation.”
In 2015 Fastenal had under 100 on-site locations. Today there are 1,500 and plans are in place to develop 400 or more new sites each year. “Our goal is to be at 2,700 sites in three years,” St. Hilaire stated. (Interesting fact: 33 of Fastenal’s on-sites are located in Amazon facilities.)
The company’s on-site customers include a diverse group consisting of manufacturers, hospitals, municipalities, schools and universities, maintenance and repair facilities, and original equipment
Currently on-site locations represent 34% of Fastenal’s business and, at their present growth rate, are projected to eclipse the retail store model in the next decade.
“COVID-19 forced us to shut many of our showrooms and concentrate on our large customers,” St. Hilaire offered. “We chose to view the pandemic as an opportunity. We focused on what we were really good at — bringing experts to the table and providing solutions. There is no cookie cutter approach. Each business’ needs are unique.”
In the last 18 months, the greatest supply chain issue for customers across all industries has been the ability to obtain product. “We’ve needed to be totally involved and creative in order to keep production moving,” St. Hilaire observed. “We built new supply chains for parts and, in many cases, went into storerooms and warehouses and took ownership of our customers’ inventory processes. We did the data analysis to help them better understand how we can reduce long term risk in their supply chain.”
St. Hilaire is bullish on Fastenal’s on-site program. “Our work is innovative and brings our expertise to companies both large and small. We help our clients lower their number of transactions, reduce touches, expedite accounting, and cut down on the number of bills they receive. In addition, we provide coaching on best-in-industry practices and hands on support to implement them.”
Asked to project future growth opportunities for the on-site program, St. Hilaire estimated there are at least 20-30,000 companies in the U.S. and 60-70,000 internationally that could benefit from what Fastenal has to offer. Opportunities for that kind of growth should keep Brian St. Hilaire and Fastenal working hard and enjoying continued success.
613 Route 3, Suite 200
Plattsburgh, NY 12901
Fastenal went public in 1987 with an initial offering at $9/share. (FAST) Through six stock splits its share price in 2020, at the start of the pandemic, was just under $33/share. In early April, the company’s stock was trading at nearly $60/share with over a $34 billion market cap.
According to ValueWalk, a well-respected nonpartisan website that provides coverage on value investing, “Fastenal’s phenomenal success lies in its competitive advantage. It offers a broader range of products at a lower cost than virtually all of its competitors. And its distribution network is unparalleled. The company maintains thousands of vending machines and local shops that supply parts nearly instantaneously, keeping manufacturing floor downtime to a minimum.”