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Fastenal makes progress with its digital distribution strategy

As global supply chains improve, Fastenal has been able to reduce its available inventory year-over-year by removing inventory from its network for about three weeks, Florness told investors. “We believe that technology investments and structural changes in our go-to-market approach have enhanced our company’s long-term operational leverage and asset intensity,” the company said in its second-quarter earnings presentation.

Fastenal has expanded its digital retail operations over the past year to include e-commerce, inventory management services and other technology solutions. The strategy was to use data to improve order fulfillment efficiency and supply chain visibility.

Although graduation rates are below the pandemic’s record levels, “there’s still a long way to go,” Holden Lewis, chief financial officer and senior executive vice president, said in a phone call.

“If we think about how far into the future we had to think about our buying behavior during the pandemic when restrictions were in place, we probably doubled our ordering window,” Lewis said. “There is still more scope to get closer to where we were before the pandemic. I don’t know if we’re going to be able to do that.”

In terms of capital, the company is also spending more on plant operations, giving Fastenal more control over logistics and being less dependent on suppliers. “We did, or at least they are. In this process, route consolidation and route replanning will be done, which I believe will result in efficiencies for the business,” said Lewis.

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