The system includes a ram assembly with fingers for grasping a fastener. An actuator moves the ram assembly toward the workpiece, under machine control. A housing member which is movable by the actuator includes a holding member for an anvil portion of the ram assembly, the holding member being movable within the housing member. The holding member and the housing member are arranged so there is a selected air gap between the movable member and the top of the housing at the start of the fastener cycle. An insertion sensor assembly changes signal state when the air gap begins to close. When the air gap begins to close either too early or too late relative to a properly positioned fastener, the actuator is stopped by the cycle motion controller.