Fastenal Company (Fastenal), together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies. The company distributes these supplies through a network of branches and Onsite locations. Collectively, the company refers to its branches and Onsite locations as in-market locations.
The company began with a marketing strategy of supplying threaded fasteners to customers through a branch network in small, medium, and, in subsequent years, large cities. Th...
Fastenal Company (Fastenal), together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies. The company distributes these supplies through a network of branches and Onsite locations. Collectively, the company refers to its branches and Onsite locations as in-market locations.
The company began with a marketing strategy of supplying threaded fasteners to customers through a branch network in small, medium, and, in subsequent years, large cities. The company sells a broader range of industrial and construction supplies spanning more than nine major product lines through a global network of in-market locations utilizing diverse technologies, such as vending devices, bin stock devices, and eBusiness. The large majority of its transactions are business-to-business. The company provides additional descriptions of its product lines and market channels later in this document. At the end of 2024, the company had 3,628 in-market locations in 25 countries supported by distribution centers in North America, the United States (U.S.), Canada, and Mexico; Asia; and Europe.
Channels to Market
The company engages its customers primarily through branch and Onsite locations. Branches and Onsites exist very close to its customers, usually within miles of, and often within or immediately proximate to, its customers' physical operations. Together, these constitute the company’s 'in-market' network. Many of the company’s customers engage with it through eBusiness, but in most cases these customers are utilizing eBusiness to supplement its service through its other channels.
The distinctions between the company’s branch and Onsite locations are as follows:
Branch locations typically service a wide variety and number of customers, ranging from the local operations of large, national account customers to smaller local businesses. Locations are selected primarily based on their proximity to the company’s distribution network and employment and production data for manufacturing and non-residential construction companies. The company stocks all branches with inventory drawn from all of its product lines and tailored by its district and branch personnel to the needs of the local customer base. Since Fastenal's founding and through 2013, branch openings were a primary growth driver for the company.
Onsite locations. In this model, the company provides dedicated sales and service to a single customer from a location that is physically within, or strategically proximate to, the customer's facility, with inventory that is specific to the customer's needs. In many cases, the company is shifting sales with the customer from an existing branch location, though it also sees new customer opportunities arise as a result of its Onsite capabilities.
Business Tools
Fastenal Managed Inventory (FMI)
Over time, the company has invested in and developed various technologies that allow it to put physical product closer to the point of use in a customer location, increase the visibility of a customer's supply chain (to the customer, as well as its personnel), and/or improve the ability to monitor or control usage.
Industrial vending (FASTVend) was introduced to provide the company’s customers with improved product monitoring and control. The company’s industrial vending portfolio consists of 20 different vending devices, with 16 of these being in either a helix or locker format. The company’s most utilized models include the helix-based FAST 5000 and its 12- and 18-door lockers; combined, these comprise approximately 64% of its installed base of devices. These are either configurable or are available in multiple configurations to accommodate the various sizes and forms of products that will be dispensed to match the unique needs of the company customers.
Bin stock (FASTStock and FASTBin) programs, where product is held in bins in a customer facility, are similar to the company’s vending business in that it involves moving product closer to the point of customer use within their facilities. Such programs have existed in the industrial supply industry for a considerable time, with open bins being clustered in a racking system, each of which holds original equipment manufacturing (OEM) fasteners, maintenance, repair, and operations (MRO) fasteners, and/or non-fastener products that are consumed in the customers' operations. Historically, these bins were simply plastic and metal containers that held product and were visually inspected by the company’s customers or Fastenal personnel to determine replenishment need. These bins in some cases are organized and labeled into customized digital plan-o-grams, which the company calls FASTStock and allow for the scanning of product when it is at a minimum desired level. However, in 2019 the company introduced its FASTBin technology. FASTBin is the evolution of FASTStock into a set of electronic inventory management solutions that automate process controls by providing 24/7 continuous inventory monitoring, real-time inventory visibility, and automatic replenishment of bin stock parts.
These technologies come in four forms scales that utilize a high-precision weight sensor system to measure the exact quantity on hand in real time, notifying Fastenal to replenish when inventory hits an established minimum; infrared (IR) that uses IR sensors lining individual bins to provide real-time visibility of approximate quantity and inventory values, notifying Fastenal to replenish when inventory hits an established minimum threshold; RFID, which is a Kanban system that utilizes RFID tags so that when an empty bin is removed from the rack and placed in a replenishment zone (also part of the same racking system), a notification is sent to Fastenal to refill the order; and FASTClick, which is an electronic button utilized on products or in locations that do not lend themselves to a vending- or bin-based solution that allows a customer to signal they would like a replenishment activity without the need of a Fastenal representative. These technologies provide superior monitoring capabilities and immediate visibility to consumption changes, allowing for a lean supply chain, reducing risk of stock-outs, and providing a more efficient labor model for both the customer and the supplier.
The company’s weighted Fastenal Managed Inventory (FMI) measure combines signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device.
Digital Solutions
The company also invests in digital solutions that aim to deliver strategic value for its customers, leverage local inventory for same-day solutions, and provide efficient service. While there is a transactional element to the company’s digital services, many of the solutions it invests in are intended to add value to customers by illuminating various elements of their supply chain. In many cases, this provides insights that allow the company to migrate transactional, 'non-sticky' (and traditionally high cost) online spend into a 'sticky' managed setting (such as its FMI programs). These solutions take many forms:
Transactional: The company’s eBusiness includes eProcurement activities, which are integrated transactions, including electronic data interchange (EDI), and eCommerce (transactional website sales), which provide a means for its customers to effectively and efficiently procure maintenance, repair, and operations (MRO) and unplanned spend. While there is a retail component to the company’s transactional digital services, most of the sales attributable to this is with its traditional customer base, nearly all of which purchase digitally as a supplement to other channels and tools it utilizes with Fastenal. The company attributes the sales generated from a customer location through its transactional platforms to the in-market location traditionally servicing this customer location.
Analytics. Data analytics provide customers with detailed insights into their business operations. FAST360° offers a comprehensive view of inventory and spending, allowing users to visualize product organization and analyze spending trends. FAST360° Analytics uses Microsoft Power BI to offer stakeholders visualization tools for analyzing spend, supply channels, and cost savings. FAST360° acts as the bridge between the company’s fulfillment operations and a customer's view into its managed service model and provides its customers with one central source of information. These platforms empower users to make data-driven decisions, optimize operations, and improve efficiency by providing actionable insights into Fastenal-managed inventory and spending. By incorporating visual representations of complex data into standardized and tailored reporting templates, the team collaborates with Fastenal's customers and business leaders to turn insights into action.
Digital Visibility. Certain of the company’s digital capabilities are intended to produce operational efficiencies for its customers and the company and/or to deliver strategic value by illuminating customer supply chain operations. For instance, the company has developed, and continue to develop, 'Mobility' applications, one example of which is its Vending App, which provides a number of benefits. It provides easy, real-time information pertaining to a customer's local inventory position within their point-of-use devices. It incorporates customer usage data to recommend optimized parts and quantity for specific devices, which improves customer inventories while reducing the risk of stock-outs. Moving the company’s fulfillment process from a vending device-based keypad function to a tablet or scanning interaction improves the restock process (reduced risk of product outages), reducing time consumed (greater efficiency) while improving accuracy (improved quality assurance). The company will continue to build out its suite of Mobility applications. EDI is the connectivity between its system and its customers' procurement systems – whether a direct integration into their Enterprise Resource Planning system or through a third-party procurement network or marketplace. These solutions provide a system-to-system exchange of electronic procurement documents (such as purchase orders, advanced shipping notices, and invoices for direct and indirect spend). The company’s eProcurement Solutions provide a bridge between its managed replenishment activity and its customers' procurement systems – creating an efficient, accurate and streamlined procure-to-pay process.
Crib Management: The company hosts FASTCrib, a cloud-based software tool designed to provide customers with visibility and control of their entire supply chain. It is an integrated platform that maintains customer-specific product catalogs, provides control and tracking of inventory levels, streamlines and consolidates procurement processes, and enables rich visualization and reporting in an environment with robust user controls. It also has modules for asset tracking and integrates into the company’s FMI suite. FASTCrib creates a one-stop, just-in-time supply chain management capability for all of the products and services consumed by its customers, whether provided directly by Fastenal or other vendors.
Digital Footprint
The company’s digital products and services are consisted of sales through FMI (FASTStock, FASTBin, and FASTVend) plus that proportion of its eBusiness sales that do not represent billings of FMI services (collectively, its Digital Footprint). The company’s data that is created through its digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both the company and its customers. As a result, the company’s opportunity to grow its business will be enhanced through the continued development and expansion of its digital capabilities. The company’s Digital Footprint represented 60.4% of sales in 2024.
The company expects to continue to build out and develop its digital solutions over time. The company’s greatest opportunity lies with the deployment of efficient and effective supply chain programs. The company is focused on addressing the four key components: people, products, processes, and technology, to support this model.
Distribution Network
The company operates 15 regional distribution centers in North America: U.S., Canada, and Mexico. The company also operates distribution center in Asia and distribution centers in Europe. The distribution centers in Indiana and Kansas also serve as 'master' hubs, with those in California and North Carolina serving as 'secondary' hubs to support the needs of the in-market locations in their geographic regions, as well as to provide a broader selection of products for the in-market locations serviced by the other distribution centers. The company operates North American distribution centers with automated storage and retrieval systems (ASRS).
The company also utilizes a network of Local Inventory Fulfillment Terminals (LIFTs) which reside within its existing distribution centers and are intended to support areas that have a dense population of FMI devices. Traditionally, branch personnel were solely responsible for stocking and packaging FMI-related inventory, delivering to a customer's location, and refilling the customer's devices. As the company sales through FMI devices have grown, this approach resulted in redundant inventory in a territory and a greater proportion of its sales personnel's time being spent on non-sales activities, an issue it is mitigating through LIFTs. The company primarily utilizes a 'drop-and-deliver' model wherein a LIFT is responsible for stocking and packaging FMI supplies, producing inventory and accuracy benefits, and delivering them to the business unit, where delivery and replenishment is then performed by local district or branch personnel. In a minority of cases the company deploys a 'drop-and-scatter' model, wherein delivery and replenishment is also performed by LIFT personnel.
Information Systems
The company’s Information Systems teams develops, implements, secures, and maintains the computer-based technology used to support business functions within Fastenal. Corporate, digital, distribution center, and vending systems are primarily supported from central locations, while each selling location uses a locally installed Point-Of-Sale system. The systems consist of custom in-house developed, purchased, and subscription licensed software. A dedicated Wide Area Network is used to provide connectivity between systems and authorized users.
Trademarks and Service Marks
The company conducts business under various trademarks and service marks, and it utilizes a variety of designs and taglines in connection with each of these marks, including Where Industry Meets Innovation. The company considers the 'Fastenal' name and its other trademarks and service marks to be valuable to its business.
Products
Fastenal was founded as a distributor of fasteners and related industrial and construction supplies. This includes threaded fasteners, bolts, nuts, screws, studs, and related washers, as well as miscellaneous supplies and hardware, such as pins, machinery keys, concrete anchors, metal framing systems, wire rope, strut, rivets, and related accessories. The company’s fastener product line, which is primarily sold under the Fastenal product name, represented 30.7% of its consolidated sales in 2024.
Fastener distribution is complex. In most cases, the product has low per unit value but high per unit weight. This presents challenges in moving product from suppliers, most of whom are outside of North America, to the company’s distribution centers, as well as from its distribution centers to its in-market and customer locations. At the same time, fasteners are ubiquitous in manufactured products, construction projects, and maintenance and repair while also exhibiting great geometric variability based on use and application. In many cases, a fastener is a critical part in machine uptime and/or effective use.
The largest category of non-fastener products is the company’s safety supplies product line, which accounted for 22.2% of its consolidated sales in 2024. The company plans to continue to add other product lines in the future.
Prior to 2023, each of the company’s product categories tended to have its own private label. In 2023, the company consolidated these into two labels: Body Guard, which is its long-standing brand for North American safety supplies, and ORMADUS, which is its global brand encompassing the remainder of its product offerings. These private label brands represented approximately 12% of the company’s consolidated sales in 2024.
The company’s value proposition is focused on improving the operating effectiveness and reducing the total cost of ownership of its customer's supply chains.
Approximately 70% to 75% of the company’s customers are in manufacturing end markets, which encompasses heavy machinery, fabricated products, process industries (oil & gas, petrochemical, mining, pulp and paper, etc.), and transportation components (automotive, aerospace, etc.). The company provides both the OEM and MRO needs of these customers. The remaining 25% to 30% of its customers fall primarily into non-residential construction (general and commercial contractors), reseller (retail and wholesale trades, dealers, and rental businesses), transportation services (air, train, maritime or truck transport, as well as warehousing and fulfillment centers), and state and local government entities, including schools, school districts, and universities.
Based on the company’s customer profile being oriented toward manufacturing, its business has historically been cyclical. First, the company has a large number of customers that serve a wide range of segments within the broader manufacturing market.
The company’s contractual programs fall into three broad categories:
National accounts represent the largest proportion of the company’s contract business, accounting for 63% of its consolidated sales in 2024. This program is aimed at multi-location customers where the scale and scope of the OEM and MRO products that need to be managed are very complex and costly. The company’s broad product offering coupled with its local presence as part of a national and increasingly international footprint, its ability to provide a consistent level of high-touch service, and its ancillary capabilities around manufacturing, quality control, and product knowledge, are attractive to these multi-site customers.
Local and regional contracts tend to establish terms and conditions for a customer's locations that have a more limited geographic scope, typically falling within an individual district or region.
Government contracts establish Fastenal as an approved supplier of MRO products to facilities managed by local, state, or municipal authorities.
Customers often has more than one active account at a single in-market location, reflecting their utilization of different Fastenal services, and frequently have active accounts at many in-market locations across the company’s global network.
Direct marketing continues to be the backbone of the company’s business through its local in-market selling personnel, as well as its non-branch selling personnel. The company supports its sales team with multi-channel marketing, including direct mail and digital marketing, print and radio advertising, targeted campaigns, promotional flyers, and events. The company’s national advertising has been focused on a NASCAR sponsorship serving as a primary partner of Roush Fenway Keselowski Racing, which stands as one of the longest tenured brands in NASCAR. In 2020, the company’s sports marketing efforts were extended when the National Hockey League (NHL) awarded it as the preferred MRO supplier of the sport.
Seasonality
Seasonality has some impact on the company’s sales. The first and fourth quarters of each year are typically the company’s lower volume periods, given their overlap with winter months in North America during which its direct and indirect sales to customers in the non-residential construction market typically slow due to inclement weather. The fourth quarter also tends to be more greatly affected by the Thanksgiving (October in Canada and November in the U.S.), Christmas, and New Year holiday periods, due to plant shutdowns. In contrast, the second and third quarters of each year typically have higher sales due to stronger non-residential construction activity and relatively fewer holidays (although Good Friday will sometimes fall in the second quarter and the 4th of July will always fall in the third quarter).
History
Fastenal Company was founded in 1967. The company was incorporated in 1968.
