Fastenal Company (NASDAQ:FAST) Q2 2023 Earnings Call Transcript

Where we typically see a supply chain impact the most is when we take on a new customer relationship. It’s not uncommon for us stepping into the new customer relationship will though have elements of inventory that we’re going to be managing now for them where they have a 6-month, 12-month, 15-month supply, 4-month supply. The extreme examples are usually niche [ph]. But they — as we illuminate what they have in their inventory and/or how their predecessor supply chain partner was supplying and I’m not throwing in a predecessor under the bus because it could have been there’s a bunch of different suppliers supplying this in and there’s not a coordinated effort. And so you have months of inventory on something that is ridiculous to have months of a customer a few years ago.

First off, it was a part that I thought was fairly unique. I discovered that we had a regular supplier for it. But it was an item where the customer discovered, they had 14 months of inventory and they had no idea. They were appreciative of it and we worked out an arrangement with them to manage it down and they paid us something for helping manage it down but we didn’t have product sales for a period of time but we had a lot of other sales. It was an Onsite doing 130,000 a month, it just wasn’t doing 160. But then when we burn through it. And that’s what a supply chain partner does. But that’s not about supply chain time. That’s about just an inefficient supply chain. I apologize to whoever was in queue. Holden be available for calls, you want to give him a direct call.

I’m going to run to a meeting in a few minutes but we hold these calls to 1 hour and we are at 10:00 central time. Once again, thank you, everybody, for attending our earnings call today. And best of luck in July and the balance of the year. Have a good day, everybody.

Operator: Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.