5306 Hollister Road
Houston, Texas 77040
Telephone: (713) 430-3000
Toll Free: (800) 468-7866
Fax: (713) 430-3099
Web site: http://www.smithweb.com
Sales: $500 million (2004 est.)
NAIC: 423430 Computer and Computer Peripheral Equipment and Software Merchant Wholesalers; 423690 Other Electronic Parts and Equipment Merchant Wholesalers
Based in Houston, N.F. Smith & Associates LP is a leading independent distributor of computer components and semiconductors. The company's offerings include everything from inductors, capacitors, resistors, and switches to memory chips, microprocessors, sound cards, monitors, CD-ROM drives, and motherboards. In addition to marketing components and products, Smith & Associates also provides an array of testing services specific to microprocessors, CPUs, memory, CD-ROM drives, floppy drives, and more. Other services include bar code labeling, dry packing and packaging, and component programming. Smith & Associates is a global enterprise, conducting business in more than 20 different languages from office locations throughout the world. In addition to its ISO 9001:2000 certified headquarters in the United States, the company has branches in Spain, South Korea, the Netherlands, Mexico, Hong Kong, and China. Though geographically dispersed, these sites are connected in real time to trading systems and international market information that enable Smith to quickly locate parts for its customer base, which includes both computer equipment resellers and leading manufacturers. One key focus for Smith & Associates has been to smooth out supply chain volatility for its customers. By analyzing and understanding the component market, Smith attempts to forecast upcoming part shortages and surpluses so that manufacturers can bolster or liquidate their inventories accordingly.
Smith & Associates got its start in 1984, the same year that Apple Computer unveiled its Macintosh and IBM introduced the PC. As the popularity of personal computing exploded, a component shortage soon followed. When manufacturers began searching high and low for parts, brothers Robert and Leland Ackerley were inspired to form their own distribution business. "We got our start helping companies get parts at a time when many parts were allocated," explained Robert Ackerley in the October 30, 2000, issue of Electronic Buyers' News (EBN) .
Armed with a $51,000 investment, which included contributions from friends and family, the Ackerley brothers teamed with their wives and established a fledgling home-based distribution enterprise. The new business immediately benefited from a strong market, and the Ackerleys closed their first deal before their start-up even had a name. In fact, they were forced to invoice the sale through a real estate company owned by Robert's wife, Nora Ackerley, called Smith & Associates. The name stuck, and by year's end Smith & Associates was operating from a leased office with a staff of ten employees.
Growth continued at a strong clip throughout the remainder of the 1980s. The company's small staff worked around the clock to serve international markets. "We were a fairly small company, with about 15 or 16 people, but we were working with some of the bigger manufacturers to try and augment their purchasing departments and help them locate product, specifically allocated semiconductors," Ackerley said in the same issue of EBN . "The first evolution of our business came in 1988 and 1989, [when] you had the new generation of 386 PCs. We got heavily into importing memory chips from the Far East to supply American manufacturers with DRAMs and augment their existing supply channels."
As the Ackerleys diligently reinvested their profits back into the business, Smith & Associates prospered. By 1991 the company's staff numbered 35 and it had moved to a 15,000-square-foot facility at 10440 Westoffice Drive in Houston. By this time Smith & Associates had developed a pioneer status among independent American distributors for its emphasis on buying and selling in the international market.
Smith & Associates' sales reached $30 million in 1992. Two years later sales reached $150 million and the company established its Express Components division to concentrate on broker and distributor sales. That same year Smith was recognized as one of 100 privately-owned companies making a significant impact on Houston, Texas, and was listed on the "Houston 100."
National and international recognition soon followed. In 1995 Smith & Associates was named to the "World Trade 100" and also ranked 219 on Inc. 's list of the 500 fastest growing companies. That year, the company established a contract manufacturing business called Assembletech. Sales skyrocketed to $367 million in 1995, and employees exceeded 100.
Heading into the mid-1990s, Smith & Associates had established a leadership position within the independent distribution market. Industry publications frequently listed the company on their lists of top distributors. In 1996 Smith again made Inc. 's list of the 500 fastest-growing companies. Fueled by a five-year growth rate of 3,109 percent, Smith rose in the publication's rankings from 219 to 49.
The independent distribution market struggled in 1996. As computer memory prices dropped significantly, a number of independent distributors either folded or downsized. Although its unit sales increased from 1995, Smith saw revenues drop from $376 million to $154.5 million. Even still, the company remained focused on future growth. It formed its ExStock division to buy and resell surplus products on behalf of its manufacturing customers and also created a value-added services division called Reel Technology.
By 1997 Smith & Associates obtained more than half of its revenues from the international market, up from 10 to 20 percent during the company's early years. By this time the company had established offices in Limerick, Ireland; Hong Kong; and Los Angeles.
An exciting development occurred when Smith moved from a two-building, 40,000-square-foot facility to new, 60,000-square-foot headquarters in Houston. In addition to a new purchasing and sales floor and additional space for offices and meeting rooms, the new structure included a state-of-the-art shipping and receiving area, and allowed the company to expand its warehouse and reel and tape operations.
In the January 6, 1997, issue of EBN , President Robert Ackerley commented on the move, stating: "The opening of our new headquarters marks a milestone in the history of our company. It serves as a focal point for our commitment to the international market and our ability to meet the challenges of a global industry."
It also was in 1997 that Smith & Associates forged an agreement with Houston-based EnterpriseWorks to handle its IT functions on an outsourced basis. According to a November 18, 1997, PR Newswire release, the multi-million dollar deal included help desk setup and support, Web site development, network integration and planning, and software development.
Another development in 1997 was the launch of Smith & Associates' Web site, which included Smith Market Watch, a free service that provided daily prices for microprocessors and computer memory, as well as a channel to request online price quotes. On the heels of these developments, sales improved to $343 million.
In 1998 Smith & Associates created an in-house training program called Smith University. Established with an investment of approximately $1 million, the month-long program sought to reduce learning time for component traders. According to the July 20, 1998, issue of EBN , the program involved the construction of a classroom at Smith headquarters, with dedicated training center staff and 26 workstations.
Industry recognition continued in 1998. That year, Smith was named as the leading independent distributor by Electronic Business , and as the top non-franchised distributor by EBN . Regionally, the company was included in Current Technology 's Texas Top 100, along with the likes of computer industry heavyweights Dell and Compaq. Revenues grew significantly over 1997 levels, reaching a record $470 million.
Smith & Associates ended the 1990s by celebrating 15 years of successful operations. In 1999 the company continued to expand internationally with a new office in Amsterdam, the Netherlands. Purchasing magazine ranked Smith as the industry's leading independent distributor, and EBN once again named the company as the top non-franchised distributor. It also was in 1999 that Smith's Reel Technology division was assimilated into the company's renovated operations facility, and warehouse facilities were expanded. Smith ended the decade with a staff of approximately 137 employees and annual revenue of $282 million.
Several developments took place at Smith & Associates in 2000. That year the company established a new domestic office in Silicon Valley, as well as international locations in Barcelona, Spain; Guadalajara, Mexico; and Seoul, South Korea. Smith also dedicated a 15,000-square-foot warehouse to handle excess inventory and consignment items for its customers.
Founded in 1984, Smith & Associates pioneered the Independent Distribution business with a focused, 'can-do' approach. This customer-oriented approach requires a certain passion for getting the job done and it's what has earned us the reputation with our customers as the one to turn to in time of need.
In addition, Smith combined its ExStock and Express Components divisions under the name SmithMart. A related move was the formation of a new business-to-business Web site called Smithmart.com that enabled real-time component trading, instantaneous communications with Smith & Associates representatives, and hundreds of simultaneous real-time excess/surplus auctions. The auction tools, which included short "ultra" auctions and reverse auctions, were mainly intended for other brokers and distributors.
By late 2000 Smith & Associates continued to improve its understanding of component market trends. In addition to insight from years of experience, the company's analyses also involved the use of special tools. In the October 30, 2000, issue of EBN , Robert Ackerley explained: "Over the years, we've developed proprietary software that gives us a view of what's happening at the component level in the semiconductor market, so we see trends, what people are buying, what they're looking for. It helps us see a part, something that no one has been asking for, coming from southern Europe or the Far East. It can also tell us that suddenly certain parts are becoming more available, which alerts us that there'll be issues with pricing on those parts."
In 2001 Smith & Associates continued to garner third-party recognition. In addition being named a Top Global Importer by the U.S. Government, EBN once again placed the company at the top of its list of leading non-franchised distributors.
In the wake of an economic slowdown and the aftermath of the September 11 terrorist attacks, the tech industry faced tough times in 2001. In addition to massive layoffs, the industry was marked by oversupply and slack demand. In the May 13, 2002, issue of EBN , Smith & Associates Executive Vice-President Lee Ackerley indicated that 2001 had been the most difficult year in the company's history.
On the heels of rapid growth and expansion during the latter half of the 1990s, Smith saw its sales drop from $464 million in 2000 to $324.4 million in 2001. Nevertheless, the company did better than the industry as a whole and managed to emerge on solid footing. In the same EBN article, Lee Ackerley said: "The downturn in 2001 allowed us to fine-tune the advancements made in the proceeding years, and in spite of the market slump, there were no layoffs or offices closed."
In particular, during 2001 Smith & Associates was able to expand warehouse space at its Houston headquarters, relocate its Amsterdam office to a larger and more technologically advanced site, and also move its Spain office to larger quarters. In addition, the company formed its Corporate Security division and made $100,000 in enhancements to the Smithweb.com site, including a new design; increased browser/platform compatibility; and translations into Chinese, Dutch, German, Japanese, Korean, and Spanish.
In 2002 Smith & Associates was once again recognized by a number of trade publications, including EBN and Purchasing magazine, for its industry leadership position. Another major accomplishment came when the company was awarded ISO 9001:2000 Certification, after an extensive assessment of its procedures and processes.
In a February 18, 2002, news release, Smith's Vice President of Operations Gary Morrissey said: "Quality is such a fundamental process for Smith & Associates—it's not a standard, it's an obligation. This certification is not about 'bragging rights,' it's a reflection of a company-wide commitment and an essential part of our continual pursuit for a quality operation. All of our offices worldwide are fully dedicated to surpassing customer expectations, increasing management involvement, and continual quality improvements."
In 2002 Smith also completed a $300,000 expansion of its Amsterdam consignment warehouse, which was used to house its customers' excess inventory. The project, which involved the addition of 100,000 square feet in security and racking systems, resulted in overall consignment inventory capacity of 150,000 square feet. Other noteworthy developments in 2002 included business expansion efforts in both Asia and Europe. These initiatives included the appointment of new business operations directors for both regions.
In 2003 Smith & Associates' sales reached $319.2 million, up from $295 million in 2002. That year, the company was one of only 16 U.S. firms to qualify for the U.S. Custom Service's elite Importer Self Assessment (ISA) program. The opening of a New York sales and purchasing office in April completed Smith's North American expansion efforts. From its new Park Avenue location, the company was able to better serve customers on the East Coast. Customers in the central states were served by Smith's Houston headquarters, while its Silicon Valley site—which relocated in 2003 as part of an expansion effort—provided support for clients on the West Coast.
A special accomplishment was realized in 2004 when Smith & Associates was named as North America's leading independent electronic component distributor, as well as one of the top ten distributors in all of North America, by Electronic Business .
That year, the company positioned itself to capitalize on the burgeoning Asian market with the formation of a Chinese office in Shanghai. In a March 22, 2004, news release, Leland Ackerley explained: "Shanghai is the epicenter of the expanding electronics manufacturing industry in the People's Republic of China. By opening an office here, we are acknowledging the importance of China in our global sourcing network, and we are giving the many OEM and EMS providers in China greater access to our unique suite of technological, financial and logistical resources."
In June 2004 the Ackerleys appointed Senior Vice-President of Corporate Development Doug Kelly as CEO. Kelly, who assumed responsibility for day-to-day operations, had joined the company in 1995 as chief financial officer. According to the founding brothers, this move was necessary so that they could focus solely on growing the business. As Smith celebrated its 20th year of successful operations, the Ackerleys were halfway to a goal of $1 billion in annual sales. In 2004 revenues reached $500 million and the company's workforce reached 300 employees.
TTI Inc.; Richardson Electronics Ltd.; MA Laboratories Inc.; Bell Microproducts Inc.; Avnet Inc.; Arrow Electronics Inc.; America II Inc.; All American Semiconductor Inc.; Advanced MP Technology Inc.
"Co. Moves into New Facility," Electronic Buyers' News , January 6, 1997.
Cohodas, Marilyn, "Smith Sinks $1M into Training," Electronic Buyers' News , July 20, 1998.
Darwin, Jennifer, "When the Chips Are Down," Houston Business Journal , August 8, 1997.
"EnterpriseWorks Garners Multi-Million Dollar Contract with Leading High-Tech Company," PR Newswire , November 18, 1997.
"Graceland Receives $2 Million Gift from the Ackerley Families," Graceland Horizons , Spring 2003.
"Optimism Reigns at Smith & Associates," Electronic Buyers' News , October 30, 2000.
Sheerin, Matthew, "Smith & Associates Upgrades Site," Electronic Buyers' News , March 20, 2000.
"Smith & Associates Celebrates 20th Anniversary," Houston, Texas: N.F. Smith & Associates LP, June 15, 2004.
"Smith & Associates Expands Asian Presence with New Sales and Purchasing Office in Shanghai," Houston, Texas: N.F. Smith & Associates LP, March 22, 2004.
"Smith & Associates Expands Warehouse in Amsterdam," Houston Business Journal, June 3, 2002.
"Smith & Associates Launches Business-to-Business E-Commerce Website," Canada NewsWire Ltd. , April 11, 2000.
"The 2002 Top 10 Nonfranchised Distributors," Electronic Buyers' News, May 13, 2002.
—Paul R. Greenland