Cutting Tool Engineering
August 2012 / Volume 64 / Issue 8

Viva vending

By Yesenia Salcedo, Senior Editor

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.

FAST%204000CT.tif
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.

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Sandvik%20AutoTAS%20EasyPick%20Screen.tif
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.

Kennametal%20ToolBOSS.tif
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.

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Courtesy of Seco Tools

Seco Tool’s SecoPoint vending machines with Smart Drawer technology in use at Avon Gear and Engineering Co., Shelby Township, Mich.

Two basic cost structures are available. One is to purchase the machine outright from the manufacturer or distributor. In addition to the up-front cost, this approach generally comes with limited service, but it also gives shops more freedom to use whatever brands of tools and distributors they want. If a shop buys a vending machine outright, it pays the up-front cost, but is more likely to strike a consignment deal with the distributor, where shops don’t pay for tools until they use them, further reducing inventory costs for the shop.

Another option is to have a vending machine installed as part of a service agreement with an industrial distributor, whereby the distributor provides the machine at little or no cost in exchange for the shop meeting a specific spending requirement or as long as the shop already consumes a qualifying amount of products. The most obvious benefit is that there’s no capital expense for the machine.

Certain distributors, like Fastenal, provide tool and supply replenishment services as well as consignment plans. Iscar offers a plan for shops to own the machines when they purchase more of its tools.

If a shop selects a “no-machine-cost” deal, it doesn’t need to shell out an initial investment. Although whatever company supplies the machine chosen isn’t likely to limit the shop’s purchases from other distributors outright, if the shop agrees to give that company a certain part of its business, it may be limiting itself because it will be less able to purchase tools and supplies from other distributors.

“Any type of arrangement optimally has to be a good business decision for all parties,” said Sandvik Coromant’s Almquist. “But you need to do your homework. You have to look at your long-term goals, the flexibility in your shop’s purchasing department and consider ongoing costs, such as yearly maintenance on vending machine hardware and software updates, IT work, if required, and data-entry costs.”

For many shops, the best solution is to work with the toolmaker or distributor that supplies the biggest portion of the shop’s tools and supplies, according to Iscar’s Ray. “The best scenario is where a distributor supplies the vending machine as an enhancement service,” she said. “You want the vending solution to come from the company you are buying your products from instead of getting it from a vending system manufacturer or through third-party vendors. You want that local support there. Your distributor knows the products and knows your business.”

Part manufacturers of all sizes can benefit from some type of vending system.

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iscar%20drawer.tif
Courtesy of Iscar Metals

Iscar’s Matrix4 drawer vending machine.

Typically, a small shop, one with three to five CNC machines, does not have the volume to justify a full cabinet-sized vending machine, but they could definitely use a smaller pod-sized one like Seco’s SupplyPod, according to Tillman.

Medium-sized manufacturers might require two or three point-of-use vending areas, with vending machines for different tools for different jobs at each location. A larger manufacturer might have four or more point-of-use areas with a group of large vending machines at each location. Large machines can dispense from 250 to 400 items. The typical cabinet is 140 "×35 "×35 ".

As for that old shop staple, the toolcrib, it isn’t going away anytime soon. “Vending machines are definitely not a complete replacement for toolcribs,” Ray said.

Automated Inventory Solutions’ Mason agreed. “Vending machines aren’t going to be able to handle everything,” he said. “Some items are always going to be controlled in a toolcrib, such as very large drills or cutting tools that cannot be vended.”

Still, vending machines will continue to make their way into job shops of all sizes. “Vending is getting bigger and bigger in the market,” Ray said. “Part manufacturers are just looking for a solution—a way to take that uncertainty of inventory out of their process. Vending machines allow manufacturers to focus all of their time making products for their customers instead of spending time on inventory management.” CTE

About the Author: Yesenia Salcedo is senior editor of CTE. Contact her at (847) 714-0177 or ysalcedo@jwr.com.


Sandvik%20P1010136.tif
Courtesy of Sandvik Coromant

Green lights on drawers in vending cabinets help the user first identify the drawer and then the compartment of the item being vended.

Vending machines not a plug-and-play solution

Vending machine types include coil (candy-style) machines, drawer systems and locker systems, which all come in various sizes and configurations. All require a power source and most require an Internet or network connection for the management software. Typically, vending machines can be configured based on the number of items a customer needs to have dispensed.

Getting an item from a point-of-use vending machine is easy. Typically, machines have a touch screen or keyboard for user identification. Some require entering a user name and password, swiping a card or badge reader or a combination of these options to log in.

Sounds simple enough, but it’s not as easy as just dropping a machine on the floor, according to Karl Almquist of Sandvik Coromant. “It’s a project. Even if you want a simple system, you will need to consider the fair amount of data loading and training required, whether you do it yourself or pay whoever you got the machine from to provide those services. Sandvik Coromant provides its AutoTAS software for free to users, but there are fees for installation and report writing and annual service charges for technical support and upgrades.

“It’s not unusual for a shop to have thousands of SKUs. Each SKU needs to be entered into the system,” Almquist said. “If you have 100 employees using the system, they all have to be set up. All of the locations for all the tools have to be defined. That can be time-consuming.”

There’s no right or wrong way when it comes to stocking these machines. Ultimately, you can put whatever you want in there—as long as the customer wants to control the supply of that item, according to Larry Harper of CribMaster.

However, the must-stock inventory, according to Magnus Tillman of Seco Tools, are expensive, high-usage and mission-critical items. “It could be a 10-cent screw, but if it’s critical for running that half-million dollar machine, then it’s important for the customer to control that item,” he said.

Items typically kept in vending machines include spare parts, lubricants, abrasives, gages, carbide inserts and other cutting tools, grinding wheels, hand tools—and anything for MRO. Also, safety equipment like glasses, aprons and gloves are commonly vended.

According to Iscar’s Pam Ray, one of its customers began controlling the number of work gloves each employee could take out during a certain period. The shop paid for a vending machine in 6 months with the savings from purchasing fewer gloves.

Y. Salcedo


Contributors

Automated Inventory Solutions
(304) 725-4801
www.aisvendors.com

CribMaster
(888) 419-1399
www.cribmaster.com

Fastenal Co.
(507) 454-5374
www.fastenal.com

Iscar Metals Inc.
(888) ISCAR88
www.iscarmetals.com

Kennametal Inc.
(800) 446-7738
www.kennametal.com

Sandvik Coromant Co.
(800) SANDVIK
www.sandvik.coromant.com/us

Seco Tools Inc.
(800) 832-8326
www.secotools.com


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