Editor's note: This is a two-part series exploring the industrial distribution market, which is rapidly growing and utilizes some of the same technology as self-serve kiosks. The market offers a potential growth opportunity for kiosk suppliers.
Product-dispensing machines equipped with computerized inventory control devices have existed for decades to help industries manage inventory and control product loss.
Workers typically scan an ID card or fingerprint to return items through kiosks. The machine manages the record keeping automatically and can even reorder products. Industries that have deployed such systems have included automotive, heavy equipment, aviation, utilities, food processing, medical/pharmaceuticals and government.
As technology has evolved, it has brought growth to industrial supply vending, and in different ways.
Internet technology has created options to oversee machine activity remotely, for example.
The massive adoption of technology among businesses, however, has also expanded the need for managing computer peripherals. Hence, the supply vending market is no longer limited to tools, safety equipment and medical equipment.
But according to industrial supply vending observers, all customer segments are expanding due to demand.
The market expands
Technavio, a research firm, recently reported that the global maintenance repair order and personal protective equipment market is expected to grow at a combined annual growth rate of 6.1 percent over the next five years due to increased manufacturing and infrastructure activities across the world.
"During the forecast period, the expansion and penetration of the global PPE market are increasing through the integration of technological innovations and low-cost, sustainable products," said Angad Singh, lead Technavio procurement specialist for category spend intelligence. "In addition, growing demand from the increasing infrastructure activities in growing economies, will drive the market."
Three companies that are driving the market are Fastenal, Autocrib, Inc. and International Vending Management.
Fastenal is largely credited with driving much of the growth in industrial supply distribution since its founding in 1967, with a machine that dispensed nuts and bolts.
This year, the publicly traded company launched FAST P.O.D. (Products-on-Demand), essentially as an unmanned hardware store, filled with the company's FAST Solution vending machines that dispense a range of industrial products from hand and power tools, safety gloves and batteries to cutting tools.
Fastenal had nearly 30,000 vending machines installed as of the end of the second quarter 2013, according to Modern Distribution Management. And while the company recently backed off on its goal of adding 30,000 vending machines this year, it continues to expand its FAST Solutions deployments.
Autocrib Inc., a 20-year player in the space, serves more than 20,000 deployments and continues to expand worldwide.
Lockheed Martin steps forward
One Autocrib customer, Lockheed Martin, an aerospace, defense, security and technologies manufacturer, recently won a 5-year, $750 million contract to manage spare parts for the U.S. Air Force, according to washingtontechnology.com. Lockheed Martin will use Autocrib systems to manage spare parts at Air Force Air Logistics Complexes at Hill, Tinker and Robbins Air Force bases. Depending on the model of the machine, it can hold 500 to 2,000 parts.
"Our ability to integrate technology seamlessly helped us achieve a 99.78 percent bin fill rate with virtually zero quality issues," said Scott Martin, senior program manager of Lockheed Martin’s U.S. Air Force IPV. The bins Martin refers to hold the parts maintenance workers need, such as nuts, bolts, washers, etc.
Computer peripherals emerge
The need to manage dispensing computer peripherals has delivered a much faster growth than the more traditional industrial supplies, said Mike Pitts, president of International Vending Management.
IVM, with roots in full line (snack and beverage) vending, expanded beyond full line vending several years ago to assume a major role in the industrial supply business. In addition to managing the machines on behalf of customers, the company has developed its own electronic components and management software, and assembles its own machines.
IVM purchases the cabinet, trays and motors from a vending machine manufacturer.
"We do custom build every single machine that leaves here," Pitts said. "The custom build depends on the products that they want to vend. Larger clients all have very unique needs.There’s going to be customization that’s required, for their reporting, for the restrictions that they want, or their ability to change planograms, or their ability to automatically download (to) tens of thousands of employees that now have access to the machines."
IVM is unique among major players in the industrial supply space in that it largely relies on its relationships with vending operators to deliver supplies to factories, stores and other locations.
"We have a relationship with thousands of vending operators," said Pitts. IVM was founded by a full line vending operation in 1991, Calderon Brothers Vending (which was sold in 2009 to a competitor.)
One such vending operator partner is BREC Vending Inc., in San Diego, California. The company delivers safety equipment and other industrial supplies to companies along with snacks and soda. IVM drop ships the industrial products to BREC so that BREC does not have to warehouse them.
Part 2 in this series will explore the rapid growth of technology companies as customers of industrial dispensing systems.
Elliot Maras / Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.