Two decades later, a crazy idea is still going strong

The ability to collaborate directly with global factories would have been a pipe dream in Fastenal’s early days. But founder Bob Kierlin was quick to recognize the opportunity to be gained by importing product from the Asia Pacific region, but initially that product had to pass through several “middle men” before it ended up on Fastenal’s shelves.

At first, we had to buy from master distributors in the U.S., companies like Heads and Threads who would purchase the product in bulk from Asia-based trading companies, mark up their mark-up, and then sell it to Fastenal. As the company grew, we were able to cut a step out of the supply chain by buying bulk quantities (generally a truckload at a time) from the trading companies in Asia, Southeast Asia, and India.

After getting involved in the operations side of the business, Will Oberton began to talk with Nick Lundquist. (Both men went on to serve on the Board of Directors.) Their goal: bypass the trading companies and buy direct from the factories. This would help lower prices AND ensure the quality that was needed. ?

“It really stemmed from Nick’s mindset that it if you could do it yourself, you should go ahead and do it because of the opportunity to learn,” said Will. “He was always asking, ‘Why would we want to give our money to some other company when we can develop a direct relationship with the manufacturer?’ To me, that just made all the sense in the world.”

The idea inspired Will to strike up a conversation with Joe Cheng at the 1995 Industrial Fastener & Mill Supply Expo in Columbus, Ohio. Mr. Cheng, proprietor of the Super Cheng fastener plant in Taiwan, said that if Will would come and visit, he would set up meetings with 15 to 20 factories in the area.

Shortly thereafter, Will hopped on a plane and spent two weeks visiting three or four factories a day. As Will recalls, “I spent the whole time with people I’d never met before, including factories where they spoke no English, but I learned a tremendous amount. In fact, at least four of the factories I visited are Fastenal’s major suppliers today.”

The trip was followed by countless others, including regular visits from Scott Camp and Dale Zeinert from Fastenal’s purchasing department, who helped nurture some early factory relationships. The venture became more focused in 2000 when a single employee, Delbert Hayes, was set up in Taiwan full time to deal with factories and freight forwarders.

Within a year or so, three more people came on board: Daniel Parent, to assist with sourcing, and two Taiwanese locals, Sherry Yang and Iva Lee, to handle logistics. In 2002, Daniel relocated to Shanghai to start purchasing direct from several factories in mainland China.

FASTCO Rises in the East

Direct purchasing volume was ticking upwards, but the progression was painfully slow. “It really hit home during a flight back from Taiwan in 2002,” said Will, who by that time had become Fastenal’s president and CEO. “We’d finally resolved four or five decisions that had originally

come up nine months earlier, and I thought to myself, these should be three-week decisions, not nine-month decisions. By the time I landed, I’d made up my mind to close that gap by convincing [head of purchasing] Scott Camp to move his family to China.”

After getting held up for six months due to an Asian flu outbreak, Scott made the move, and according to Will, “That’s when our importing went through the roof. Our savings, our quality – everything about the business just became far, far better. It was all because we streamlined the speed to decisions.”

Those improvements didn’t necessarily include pricing – at least not initially. They knew they weren’t getting the best prices from the factories, and in some cases, they were actually paying as much to buy direct as it would have cost to use a broker.

According to Will, “It was tough, but Bob would always say, ‘You have to earn that price point – with volume, with respect, and with commitment.’ It really came back to Nick’s philosophy. It wasn’t about finding better deals today – it was about learning to become much more efficient tomorrow.”

Twenty years represent a significant milestone for FASTCO. With two decades of experience in Asia, a skilled team has been nurtured, sourcing processes have been refined, and an extensive supplier database has been built. In an ever-evolving global landscape, the realm of supply chain management is undergoing unprecedented transformation. FASTCO will continue to cultivate this invaluable resource across the Asia-Pacific region.

In 2003, the operation was registered as a subsidiary of Fastenal operating under Chinese law. The official name on the paperwork was “The Fastenal Asia Sourcing and Trading Company,” but everyone would come to know it as FASTCO.

The company started out with a few employees working upstairs in a house. By the next year, there were more than a dozen individuals working in a small office in the back of a hotel complex. And within five years, it had grown to more than 200 people stationed throughout the Pacific Rim.

Today, FASTCO’s handles sourcing, quality, IT, engineering, auditing, logistics, and finance. They are a several hundred-million-dollar company with an absolutely central role in Fastenal’s mission.

“We had Nick pounding on price and delivery, Bob was obsessed with quality, and Scott really did the heavy lifting,” said Will. “That got it off the ground, but the real credit goes to our teams in Asia. We have 200-plus fantastic people working hard in those offices every day to build a truly great company.”

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Quality. Always.

Although he had already handed the reins over to Will Oberton, Bob Kierlin had a keen interest in the establishment of FASTCO. According to Will, “He was always asking about quality – ‘Have you looked into their quality systems?’ From the very beginning that was one of the main functions of FASTCO, giving us the ability to monitor and drive quality ourselves rather than trusting that to outside importers.”

To support FASTCO’s quality operations, the company opened two A2LA-accredited product testing laboratories in 2007 (one in Gangshan District, Taiwan, the other in Shanghai), and a third A2LA lab was opened in Johor, Malaysia, in 2009.

The motto of FASTCO is “quality is everything.” To that point, Fastenal relies on FASTCO to provide quality fasteners to world.

If you want to reduce costs, minimize risk, and achieve your strategic goals, we can help. How? Just reach out to your local Fastenal. They will be your point of contact to start working with FASTCO.

"Twenty years represent a significant milestone for FASTCO. With two decades of experience in Asia, a skilled team has been nurtured, sourcing processes have been refined, and an extensive supplier database has been built. In an ever-evolving global landscape, the realm of supply chain management is undergoing unprecedented transformation. FASTCO will continue to cultivate this invaluable resource across the Asia-Pacific region."

-- Glenn Huang | President of FASTCO