Viva vending: Turning Performance

Vending machines can help manage tool and supply usage and keep costs in check.

Walk into any parts manufacturing facility, big or small, and you are likely to find a toolcrib that helps keep all the tools organized in one place—most of the time. Many cribs have a manager or a staff that manually dispense tools and supplies.

That approach is changing, however, with the growth of automated inventory control management systems, including industrial tool and supply vending machines. While point-of-use vending machines are not new to the metalworking industry—they’ve been around about 20 years—their manufacturers as well as toolmakers and distributors have noticed a surge in their popularity. But will vending machines someday be more common than toolcribs? One company seems to think so.

Courtesy of Fastenal

A shop employee retrieves an item from one of Fastenal’s vending machines.

A few years ago, Fastenal Co., an industrial products distributor, didn’t even have a vending machine program. Fast-forward to April 2012, when the Winona, Minn.-based company announced more than 10,000 of its FAST Solutions vending machines had been installed globally.

“To put our vending growth into perspective, by March 2010 we had installed a total of 892 machines and just 2 years later that number was 9,798,” said Russ Rubie, vice president of Fastenal’s FAST Solutions division, which was created in 2008. He anticipates the company will have installed a total of about 29,000 machines by the end of 2013.

Fastenal has installed its machines—which are manufactured by a partner—in almost every U.S. state, as well as in Canada, Mexico, Europe and Asia.

Pam Ray, supply programs manager for Iscar Metals Inc., Arlington, Texas, said the toolmaker also casts a big spotlight on vending. The company began to notice growth in 2007, so it started making a vending system called Matrix4, which comes with proprietary management software.

Courtesy of Sandvik Coromant

Sandvik Coromant’s AutoTAS software’s logistical functionality includes item catalogs, stock control, purchasing and statistics. The software interfaces with Sandvik Coromant enterprise resource planning software, tool catalogs, log-in systems, vending equipment and vertical storage systems.

Seco Tools Inc., Troy Mich., is another toolmaker bullish on vending. “This is growing crazy fast; we’re having a hard time keeping up with the demand,” said Magnus Tillman, business solutions program manager at Seco. “Vending machines are used to control inventory on the shop floor, which leads to cost savings and those savings help attract customers.” Seco offers SecoPoint machines with configurable Smart Drawer technology, which dispense and accept returns of items, according to Tillman.

Karl Almquist, business services manager at toolmaker Sandvik Coromant Co., Fair Lawn, N.J., said it’s hard to tell how much of the increased interest in vending solutions stems from an internal need by end users and how much is from promotion of vending systems and their capabilities by integrators (companies that purchase day-to-day items on behalf of a manufacturer), distributors, tool manufacturers and vending machine companies. “A lot of integrators, distributors and tooling companies have set goals for installation of vending equipment to increase sales of the products they sell,” he said. In any case, Sandvik Coromant offers AutoTAS software, which interfaces with many vending systems, to manage tool inventory.

Whatever the reasons, there’s growing demand. What it comes down to, according to Fastenal’s Rubie, is part manufacturers want more accountability as well as a way to eliminate excess tooling and MRO inventory.

Saving Time and Money

Managing a manual toolcrib can be time-consuming and unrestricted access sometimes leads to theft and hoarding. With vending machines, workers access items via codes or electronic cards. Software records usage by operator, and data on tool usage is displayed and stored for analysis.

“Something magical happens when you have to identify yourself and enter how many items you are taking out of the system—you become more accountable and more responsible for the items you take,” Seco’s Tillman said.

Sandvik Coromant’s Almquist estimates 20 to 40 percent of tool inventory is out of control at any shop, based on information from Sandvik.

Almquist also said, on average, 15 percent of scheduled jobs are stopped because of lack of tooling, 20 percent of an operator’s time is spent looking for tools and up to 40 percent of a supervisor’s time is spent dealing with tooling issues, such as ordering tools. “Taking control of your inventory will save time and money,” he said.

Based on experience with its own customers, Latrobe, Pa.-based toolmaker Kennametal Inc. estimates a vending unit can:

• reduce tool consumption 10 to 30 percent,
• cut inventory 30 to 75 percent,
• slash administrative costs 50 to 90 percent,
• shrink machine downtime 10 to 60 percent, and
• trim tool transaction costs 30 to 60 percent.

Kennametal offers its ToolBOSS inventory management solution.

One of the key benefits of point-of-use systems is reduction of inventory and associated carrying costs. “It’s not unheard of for a parts manufacturer to keep 2 to 3 months of inventory for certain items, and maybe even keep items in inventory that don’t move at all,” said Seco’s Tillman. “Our goal is to control inventory levels so only 2 to 3 weeks of inventory is in the vending machines. This means the inventory is turning faster and less money is tied up in inventory.”

Power of Software

Vending machines do more than just control inventory—equally as important is the data their software generates.

Controls and reporting are a major part of the value proposition, according to Fastenal’s Rubie. “Depending on the sophistication of the system, you can do more than just track what employee took out what tools for a certain job,” he said. “With Fastenal’s software, for example, you can set controls so that employees only have access to specific products and amounts needed for the job.” He added that Fastenal’s system can also track usage by individual employees as well as by department, job number, cost center, location and other user-defined criteria.

Also, users can program vending machine software to trigger a reorder notification when the inventory on items falls below a certain level, allowing more product to be automatically ordered when a certain level is reached, before the supply runs out.

“So now when the employee goes to get a tool, it’s there—it’s not out of stock, and you don’t have to place a rush order if you’re on deadline and facing a fine for missing it,” said Eric Mason, sales and service manager for Automated Inventory Solutions, which manufactures data-based, inventory-management vending machines in its Kearneysville, W.Va. plant.

Courtesy of Kennametal

Kennametal’s ToolBOSS has 19 drawer sizes to accommodate a variety of tools.

Vending machine software generates multiple reports. Canned reports include usage by operator and cost center. Reports also analyze the frequency of tool purchases and the costs of those tools. Custom reports can track virtually any other parameter.

“Software-generated reports are really the key to tool management,” said Larry Harper, president of CribMaster, Marietta, Ga., which manufactures and sells a suite of vending machines and offers leasing through third-party leasing companies.

Paying the Price

The convenience of vending machines comes at a price, but that price varies for each shop based on the machine selected and the deal made with the supplier or distributor.

The machine itself can cost from $5,000 for a basic coil machine to $25,000 to $35,000 for basic drawer machines to hundreds of thousands of dollars for more sophisticated systems, depending on size and level of customization.

Courtesy of Seco Tools