Photos by Joseph A. Garcia / Star staff Carlos Blas, a technician at Network Hardware Resale in Santa Barbara, tests a device used in routing of optical data networks. Network Hardware Resale is the largest provider of refurbished Cisco and other network routers, switches and accessories.

At Network Hardware Resale, much of the company's business relies on its reputation for speed and quality.

That's particularly important in the field in which the Santa Barbara business specializes — selling used and pre-owned computer network equipment such as routers and switches.

CEO Mike Sheldon said the company offers two services for customers: It buys what they don't want, whether it's extra routers or used equipment; and sells them what they need at a discount.

The company, which started out in a garage as a brokerage business in Santa Barbara, has grown into an international business with more than 10,000 customers. And it's on target to beat its revenue projection of $170 million this year. The company recently made Inc. magazine's list of fastest growing private companies, with sales increasing 163 percent over the past three years.

Network Hardware Resale has more than 200 employees worldwide, with about 140 in Santa Barbara. About 10 percent of the workers commute from Ventura County.

The Santa Barbara office added more than 30 employees this year and the operation already has filled the 75,000-square-foot building it moved into two years ago, Sheldon said.

In addition to the headquarters and warehouse in Santa Barbara, the company has an office and warehouse in Amsterdam and an office in New York. It added an office and warehouse in Singapore this year and is opening a London office next year.

The plan is to eventually have a 24/7 operation that follows the sun, so clients anywhere in the world can get help when they need it, said Rick Stevens, vice president of marketing.

All those offices and warehouses are the backbone of what makes Network Hardware Resale a successful business in a field where many small firms start and fail. The company relies on a large inventory and technical expertise to set it apart from the competition, Sheldon said.

Customers typically call as they plan an expansion to seek parts, but there also are crisis calls when some piece of equipment goes down.

Often, Network Hardware Resale can get the necessary part to the customer by the next day.

"Sometimes things happen that are unplanned, unforeseen," Stevens said. "We reduce their chaos and anxiety by offering a wide variety of solutions."

Items usually at hand

The company's quick response depends in part on the high volume of inventory it carries.

On a yearly basis, the company holds about $100 million in inventory worldwide. Any particular month, it has about $16 million to $18 million in inventory at its 25,000-square-foot Santa Barbara warehouse and from $6 million to $9 million of inventory in Amsterdam, said Bryan Siever, vice president of global warehouse operations.

Equipment moves methodically through the warehouses, but it also has to move quickly.

Of the 160 orders that on average ship out of the Santa Barbara warehouse each day, about half are filled with products that came into the warehouse the same morning, Siever said.

The moment a product is received, it is labeled and goes into the computer system so that salespeople can immediately add it to an order. Used equipment is tested and cosmetically refurbished to make sure it looks and works like new.

Once equipment becomes part of an order, it is sent to another part of the warehouse to be tested, configured and shipped.

This time of year is the busiest, mostly because customers are expanding networks or putting in data centers, Siever said.

Because the equipment isn't new, the warehouse employees can't take for granted that the product will work, or even that it's authentic. Just like a fake Gucci purse bought in an alley, there is fake name-brand networking equipment.

Counterfeits get scrapped

Employees at Network Hardware Resale are trained to spot a fake, and each warehouse has a team that reviews suspected fakes and returns or destroys those determined to be counterfeit. The source providing the equipment gets flagged as a precaution for future business dealings.

Network Hardware Resale carefully picks its vendors because the company bases its reputation on the equipment.

The company likes to promote from within and has a structure in place to build employees' skills on the job. It also encourages employee input on working faster and better. Siever said the shipping team recently finished brainstorming and rearranging the shipping area to get rid of bottlenecks.

Employee input also goes into the packaging used to ship equipment, such as a box custom made to fit a certain type of equipment with a plastic sleeve inside to hold the product in place. That eliminates the time and effort once used to wrap it in bubble wrap, tape it and box it, and creates a cleaner-looking product when it arrives on the customer's loading dock.

"Instead of an outside consultant, we rely on the team members for our process improvement needs," Siever said.

In the coming year, Network Hardware Resale plans to continue its global expansion and increase its product offerings and services.

Extending the service

Sheldon said the company, which provides a one-year warranty on the equipment it sells, now plans to provide an extended warranty to customers no matter where they buy the equipment. The company also is considering technical support, refurbishment and installation services.

"Everyone who buys our equipment installs and configures it using someone. We figure, why not us?" Sheldon said.

Beyond the expansion in Singapore and London, Sheldon said the company is looking at potential in the Middle East, Northern Asia and perhaps India and China.

Sheldon said there's plenty of room to grow. He would guess that the used networking business is now about 1 percent of the new networking business. There's no reason it shouldn't be 5 or 10 percent, he said.

"If the U.S. can keep growing by 20 percent or more, we're looking at very fast growth in these new territories," Sheldon said. "I don't see any reason why the company couldn't double again."

On the Net:

networkhardware.com