Fastenal reported an increase in e-business sales in the second quarter, driven largely by its digital procurement channels, CEO Daniel Florness said in a Q2 earnings call.
The company’s e-business is composed of two verticals: its website presence and its electronic procurement offerings, which digitize the procurement process.
E-procurement for Fastenal comes either via direct integration with a customer’s ERP system or by connecting to a procurement software like SAP Ariba that a customer uses, VP of eCommerce Kirk Talmontas told Supply Chain Dive in an interview.
Direct integration with a customer’s ERP system is completed by electronic data interchange. The integration then digitizes the traditional procurement process to drive efficiencies and accuracy, Talmontas said.
Through the direct integration, Fastenal can reduce costs for its customers by managing inventory within their own facilities using its FASTBin and FASTVend technology.
FASTBin complements a traditional just-in-time inventory system, according to Talmontas. The technology uses infrared technology to monitor inventory levels for items like fasteners and fittings, and collects data points based off of usage tied to forecasting.
The FASTVend program uses industrial vending machines that dispense safety glasses, batteries and other pieces of customer inventory. End-users access products using a badge to scan and dispense, with the resulting information collected by Fastenal to help it meet customer supply needs.
“Not only are we a great supplier and supply chain partner to our customers, we can help them dial their expenses down faster when their business slows down and it just doesn't pile up because everything is on autopilot, and I believe that makes us a better partner,” Florness said on the Q2 earnings call.
As it benefits from its electronic procurement efforts, Fastenal reported a decline in Q2 inventory levels.
“Inventories were down 3.9%, which continues to reflect primarily the softer marketplace, the reduction of inventory layers built a year ago to manage supply constraints, and modest inventory deflation,” CFO Holden Lewis said on the call.
Fastenal has also worked to expand and diversify its pool of suppliers to pivot from potential tariff-led disruptions, according to a Q1 earnings call.
