Fastenal
The Vending Machine That Ate Procurement

A factory stops at two in the morning because nobody can find a four-dollar cutting blade, and the supply room is locked until six.

The cheapest thing in the building stops everything

Every factory keeps a cupboard of small items its workers burn through: gloves, drill bits, batteries, safety glasses, cutting blades. It sits in a locked room somebody opens during office hours. At two in the morning, that room might as well be in another country.

So the operator has to wake a supervisor who has a key or gives up and leaves the job for the day crew. Either way, a machine worth more than his house sits idle over a four-dollar blade.

Then people stop trusting the cupboard. A worker who once waited three days for gloves takes four boxes and keeps three in his locker, and nothing in the factory's records says those boxes exist. But that’s when Bob Kierlin showed up with a fix.

What Kierlin sketched in 1967

Bob Kierlin grew up in his father's car parts shop in Winona, Minnesota, watching customers drive from store to store hunting one particular bolt. He told Forbes in November 1992 what he had been chewing over since boyhood: "I wondered if you could put together a store with all the parts."

In 1967, he and four friends invested roughly $31,000 into Fastenal, planning to create a vending machine that dispensed nuts and bolts without a shop. Dan Florness, who runs the company today, has explained why it didn’t work. The best sellers in 1967 were steel rod and rebar, too big to drop out of a machine, and the technology to run one did not exist. (Encyclopedia.com)​

So they opened a shop, then two thousand more over the next forty years.

Ninety feet, and always open

Fastenal launched vending in 2008, and by 2010 the machines were going into large customers' factories.

Consider a snack machine painted industrial blue, standing beside the presses, stocked with blades, gloves, batteries, and safety glasses. Run that same two-minute morning breakdown through it: ninety feet of walking, a swipe of an ID badge, and the operator is back at his machine inside two minutes. The cabinet logs who took what, and when stock drops past a set level, it calls the nearest Fastenal branch by itself.

Getting physically closer to the customer beats getting cheaper.

Some items are never bought on price.

Sort your catalog by two questions.

• What does this item cost?
• What does the customer lose during the day they spend without it?

The items where the second number dwarfs the first are not really being bought on price. The buyer is paying for certainty, and a supplier who is ten percent cheaper wins nothing there. Fastenal grew revenue by more than 20% in every quarter of 2011 while selling nuts, bolts, and gloves, which are as close to commodities as products get. (Fool.com, 2025)​

Discounting usually lands on exactly these items because cheap things look like the safe place to give ground. A blade sitting next to an idle machine is where availability earns its premium, so that line deserves deeper stock and a held price.

Help them buy less and you get to supply everything

Fastenal's own sales material makes an odd promise to buyers: expect to get through about 30% fewer supplies once every item is signed out against a name. (Fastenal News Release, 2019) Hoarding stops when the stash in the locker becomes traceable.

This should be terrible for the company selling the supplies. In November 2012, Edward Jones analyst Logan Purk told the Star Tribune the reverse was happening and that customers with vending machines were growing at nearly twice the rate of everyone else Fastenal sold to.

Cutting a customer's spend on one line buys you an invitation to the next five. The cabinet that saves a plant a third of its glove budget is also the cabinet the plant now uses for batteries, blades, and everything else it once bought from three suppliers.

Underneath sits the real lock, which is the usage record. Whoever holds the data on what gets used, by whom, and how often ends up making the reorder decision, and leaving means pulling hardware off a wall, retraining the floor, and losing that history.

A store with no lease and no opening hours

Fastenal had been adding branches at roughly 14% a year, each one a lease, a counter, and a payroll. Vending changed that arithmetic. The company opened 122 stores in 2011, a growth of about 5%, while its installed machines went from 1,925 at the end of 2010 to 7,500 twelve months later, and vending's share of sales doubled to 16%.

Coverage grew while fixed costs remained unchanged. Ryan Merkel of William Blair described the rollout in 2012 as the largest land grab industrial distribution had seen in twenty years, and what was being grabbed was floor space in other people's factories. The count reached 88,327 devices by September 2019, passed 100,000 in 2024, and hit roughly 134,000 by late 2025. (Fool.com, 2025)​

None of it runs without people nearby. Two thousand branches, an owned truck fleet, and same-day availability were in place first, and branch managers still set their own local prices and stock. Automation at the customer's end works when somebody twenty minutes away can fix it, and Florness gave investors the buyer's version on a July 2024 Call: "We can help them dial their expenses down faster when their business slows down."

Where your product actually gets picked up

As a business enthusiast, here are some key takeaways:

1. Sort your catalogue by what absence costs

Split your products by what a customer loses in a day without each one, set against what the item costs them. Two hours with your sales lead. You have found something when a group of cheap items turns out to carry downtime costs a hundred times their price, because that group should never be the place you discount.

2. Measure the last hundred meters.

Work out the gap between where your product sits and where the customer actually uses it. Half a day, a map, and ten phone calls. The signal is an account where the last hundred meters inside the building take longer than the two hundred miles outside it.

3. Hand over the data they cannot see

Give one customer a report they cannot produce themselves, showing what they used, when, and which team used it. Two weeks of collecting and an hour to lay out. It worked when they forwarded it to somebody in their finance department.

4. Count what breaks without you

Count how many of your customer's daily routines break on Monday if you disappear on Sunday night. An hour with whoever runs their operations, asked plainly. Fewer than two and you are a line on a price comparison, and those get replaced by email.

Fastenal puts in around 110 of these cabinets a day. Each one takes a patch of floor next to a working machine, and a factory gives that space away exactly once.