Between summarizing quarterly earnings reports, company news updates and occasionally having brief interviews, I’ve produced dozens and dozens of editorial content pieces focused on Fastenal in more than seven years covering the distribution sector, including one last week.
But while reporting on and analyzing company stats and information is useful for readers, it doesn’t quite compare with the value of learning the company from the inside. I was able to do just that by attending Fastenal Expo this week in Nashville. There, I was fully immersed in all things Fastenal and granted access to any facet of the constantly-innovating distributor that I was curious about.
I’ve always found Fastenal to be very media-friendly and easy to work with for trade publications, and Fastenal Expo 2022 took that to another level. I represented the only trade publication at the event — which in a way was a bit odd, since there has always been at least one other publication at every industry event I’ve been to; but it was also flattering from an exclusivity standpoint.
During the show, Fastenal was able to carve out numerous time slots for me to have one-on-one interviews with various executives, including CEO Dan Florness. It’s not every day that you get to interview the CEO of a $6-billion-revenue company, but Fastenal made it easy, and not just because Florness is a fellow Wisconsinite. I had other great conversations with executive vice president of sales operations Terry Owen, EVP of information technology John Soderberg, as well as other vice presidents and company directors who didn’t shy away from any of my questions.
— MDMMike (@MDMEditorMike) April 19, 2022
Given all that aforementioned reporting I’ve done on the company, I went into the expo with a good, high-level understanding of the scale of Fastenal and its capabilities. But I came out of it with much deeper knowledge of the nuts and bolts of the how and why behind the company’s various departments, and, most importantly, its drive to put its products and solutions ever-closer to its customers.
The tagline of the expo was “Solutions for Your Supply Chain.” Like the Industrial Supply Association’s ISA22 convention the week before, this year’s Fastenal Expo was considerably downsized from past years, with several executives noting by about half. Held in-person for the first time since 2019, the show had a heightened focus on the company’s supply chain solutions rather than just the 120 customer booths as the main star attraction.
With it being my first time at the event, I wouldn’t have known about Fastenal Expo 2022’s smaller scale if it weren’t for executives telling me so. The expo portion, training and speaking sessions seemed appropriately sized within a wing of the expansive and cavernous Gaylord Opryland Resort & Convention Center on the outskirts of Nashville. There was plenty of good energy from Fastenal’s blue-shirted team members who were everywhere, along with its supplier customers who looked happy to be there after a three-year absence.
The Fastenal employees in attendance were of upper management, and on the expo floor, they manned six company “Pod” exhibits — each focusing on a different solutions aspect of the company’s end-to-end supply chain network.
On the seminar side, Fastenal held a dozen sessions Tuesday, Wednesday and Thursday — many of them repeating multiple days — giving customers plenty of opportunity to learn all about the company’s supply chain capabilities. These seminars ranged from what a strategic partnership looks like, to total cost of ownership analysis, to managing supply chain risk, to the company’s impressive manufacturing abilities. One of those repeating sessions was an executive roundtable with the company’s sales leadership, and it was great to see them address to a packed small room the pre-submitted questions I sent in — one of them about how the company is navigating the challenging labor market, and one about if the company has a branch count figure in mind that it’d like to settle into in the near future.
“We Spend More on Getting Closer”
Florness and CFO Holden Lewis opened Wednesday’s itinerary with a keynote in which they emphasized Fastenal Expo 2022’s central message of how the company continues to invest in innovations that bring its products and solutions closer to the customer. It was a reassuring theme in a time when many distributors are navigating how to grow their digital offerings while maintaining the relationships they’ve relied on for so long.
“Some companies have managed through disruption by pulling away from the marketplace — directing customers to order online and lowering your overhead,” Florness told the ballroom crowd of customers and Fastenal managers. “But sometimes you don’t know everything you need when you’re ordering. We’ve done the opposite. We’ve gotten closer to the customer.”
Lewis then shared some key statistics that back up that company message. He said Fastenal’s budget for capital expenditures and technology investments is “approaching $350 million” — which he noted is about 6% of the company’s total revenue and more than the revenue of most of the top 50 distributors in the industrial products marketplace. That spending goes towards innovations in the company’s automated distribution centers, captive manufacturing and trucking fleet, information technology investments and more.
“We spend more on getting closer to our customers than our peers do,” Lewis said. “We invest more in the tools that allow us to move product where you need it.”
Pretty cool – On the show floor here at #FastenalExpo, Fastenal is showing eight different live feeds of manufacturing and distribution operations at various company facilities pic.twitter.com/nx6kVnnywL
— MDMMike (@MDMEditorMike) April 20, 2022
Beyond that, Lewis said about 55% of Fastenal’s inventory is out in the field — in its branch network and Onsite locations within customer facilities. Meanwhile, only about 10% of Fastenal’s total capital is debt, while he said that figure averages around 30% among its peers/competitors.
“That allows us to be really reactive to the needs of the marketplace,” Lewis told the audience.
And it’s not just products that Fastenal is putting closer to the customer, it’s Blue Team members. Lewis emphasized that 73% of Fastenal’s 21,000+ employees directly serve customers through various touchpoints. That’s over 15,000 team members directly interacting with customers on a daily basis. And not through emails or call centers, Lewis noted, as 85% of those members are within a customer facility or a 30-minute drive of one.
“I don’t believe any others can boast the same,” the CFO said.
MDM Goes Behind-the-Scenes of Fastenal
While I was only at Fastenal Expo for a day and a half, I learned a ton more about the company and its unique value proposition in the extremely fragmented industrial supply market. This was just a high-level overview of what I took in at the event. I plan to roll out a series of MDM Premium coverage pieces that focus on my different one-on-one interviews with the company’s executives, so stay tuned, as this only kicks if off. So if you’ve ever been curious about the inner workings of one of the largest market movers in distribution, there’s never been a better time to be a Premium subscriber.