Birmingham, Ala.-based Perry Supply Co. has taken the phrase “going global” to a new level. Faced with serving mature markets in an increasingly competitive business climate, the regional distributor of tools and mill supplies embarked on an international business plan eight years ago that has quadrupled sales and changed the company’s business philosophy, say company leaders John Coffey and Bill Currie. No longer a traditional regional distributor, Perry Supply has transformed itself into a global company, buying products from all over the world and shipping them to customers throughout North and South America.

“We were a traditional regional supplier and then we put together a new business plan to go global and take it to an international scale,” says Coffey, who joined the company as president in 2000. “Basically, the business was in 'status quo.’ The markets we serve were very mature. We saw an opportunity to expand our business and take it to an international level.”

It’s a trend playing out across the industry, as more distributors seek to build business by serving customers around the world. According to Industrial Distribution’s 62nd Annual Survey of Distributor Operations (to be published this fall), 63 percent of distributors say they are buying from, selling to or setting up branches in other parts of the world. They say they’re buying products from China (63 percent), selling to customers throughout Latin America and South America (60 percent) and establishing branches in Canada (58 percent), Mexico (54 percent) and elsewhere. Our yearly survey queries hundreds of distributor owners and managers on trends affecting the industrial distribution industry.

Perry Supply has reinvented itself by using a combination of these tactics, building a business model that stands in stark contrast to its 1913 origins as a mill supply company serving foundries and mining customers throughout the South. Selling industrial supplies to mining and other customers remains the focus of its business, but Perry Supply has become adept at global sourcing and logistics in an effort to differentiate itself on a world-wide scale. The result is a complete change in the make-up of the business: Just 25 percent of sales come from U.S.-based accounts today, compared to 100 percent in 2000. And the company has more than tripled its number of employees in that time.

“Our business has changed quite a lot,” says Coffey. “Product sales is still our main line of business, but we do some things here that are probably a little unique.

“The challenge for the corporation that owned Perry was, 'What do we do with the company?’ So we put together a business plan that would take the company to a new level.”

Exporters use freight forwarders, which are licensed by the International Air Transport Assn. and the Federal Maritime Commission, to move cargo overseas. Freight forwarders are familiar with the import rules and regulations of foreign countries, the export regulations of the U.S. government, various methods of shipping and the documents related to foreign trade. In essence, Perry Supply has brought these capabilities in house.

The company developed this capacity eight years ago, hiring some experienced freight forwarders and augmenting its IT systems with freight forwarding capabilities. The end result is that Perry Supply has become a one-stop shop for many mining and industrial customers in South America.

“It’s really an A-to-Z supply chain,” Coffey explains. “We can source, purchase and deliver on a global scale, using virtually no other parties.”

Adds Bill Currie, Perry Supply’s director of sales, “We’re really a one-stop shop. We can not only sell you the goods, but we can arrange the transfer of the goods, handle the paperwork. … Customers have one source to contact, because we can supply all of the information regarding when the order was shipped and what the status of the order is.”

The company’s mining business is growing, both in the United States and abroad, but Coffey says he expects the international side of the business to drive the company’s overall growth. As for expansion, he says Perry Supply will continue to source products from all over the world, but will concentrate its selling opportunities in South America, where sales reps have spent eight years building customer relationships.

“We will look for opportunities that may develop from our current [operations] but, honestly, it’s very difficult to expand into new markets [abroad],” Coffey says, pointing to the need to develop contacts, customers and new relationships, in particular. “You’ve got to have a reason for being there.

“We’re realistic about what those opportunities are—but if they develop, we certainly have the capability to expand.”

Baton Rouge, La.-based Edgen Murray has undergone a similar transformation. The distributor of specialty steel pipe, valves, fittings and related products did the majority of its business in North America as recently as three years ago, but has been developing a global business structure since 2003. A key part of the company’s philosophy is refusing to segment its business into “U.S.” and “international” buckets.

“Global companies look at global markets,” explains Edgen Murray CEO Dan O’Leary. “The real difference here is … we’re a global company that happens to be headquartered in the U.S.”

Edgen Murray, which serves energy infrastructure markets, was predominantly a U.S. company in 2003 when company leaders decided to expand the firm’s focus. In a nutshell, they believed there was more opportunity outside the United States for the products Edgen Murray sells and the markets it serves. The theory has borne fruit: Today, 40 percent of Edgen Murray’s business comes from overseas markets and 60 percent is done in North America.

The company took its first step toward global expansion in 2005 with an acquisition in western Canada. From there, Edgen Murray moved into the United Kingdom, the Middle East and elsewhere through a combination of acquisitions and organic growth, the plan being to acquire strong local companies and develop them into larger entities.

“For example, we acquired an operation in Singapore and used that to open a [facility] in Perth, Australia, and in Jakarta,” says David Laxton III, Edgen Murray’s CFO. “This is not a company that tries to get an order and then ship it half way across the world.”

To the contrary, Edgen Murray embeds itself in the local markets it serves, leaving the talent it acquires in place and hiring more people from those local markets in order to expand.

“We knew [our strategy] couldn’t be a salesperson who grew up in Cincinnati, Ohio, running a location in Dubai,” O’Leary explains. “Our model is truly a global one.”

As a result of their commitment to local market development, both O’Leary and Laxton spend well over 50 percent of their time on the road, meeting with customers, suppliers and employees from Northern Europe to the Middle East to Southeast Asia. They adhere to a long-held philosophy that the best way to manage an organization is to be out there among the people who do the work day in and day out.

“We travel extensively and we don’t look at it as drudgery—or as something special,” O’Leary explains. “It’s what we do. It’s the strategy that we’re executing. … And if we get good at it, we’ll create barriers to entry [for other companies].”

Building a global business isn’t easy. Having spent five years at it so far, O’Leary says he’s still faced with daily challenges—primarily in keeping up with economic, financial and political news on a global and regional basis. There’s also the 24/7 nature of the business: When an office closes for the day in Dubai, another is just opening in Baton Rouge.

“That’s been the real challenge. We never close,” O’Leary says. “Also, we spend an inordinate amount of time learning about other cultures, other ways of doing business, politics … every day your desk is piled with things to keep up on.”

Perry Supply’s Coffey advises patience when undertaking a global strategy, pointing to government regulations and logistics difficulties when dealing in foreign markets.

“One of the things you have to have is a lot of patience—and when you get through that you have to have a little more patience,” he says. “The big thing is all the complexities [involved in doing business globally].

“The other important thing is that you have to be able to build trusting relationships with customers. To do that, you have to have a core of employees that can help you make those contacts and you’ve got to have good supply chain partners out there. … It’s all about relationships, really.”

Those challenges aren’t deterring distributors from developing global business. Like Edgen Murray and Perry Supply, 62 percent of distributors say conducting business overseas is an important part of their growth strategy for 2008 and 2009, according to our 62nd Annual Survey of Distributor Operations.

“Obviously, we’re watching where our customers are, where they’re going to be and how we can assist them,” explains Laxton.

Adds Coffey, “The U.S. side of our business has been steady over the past few years. Our growth really has come from the international side. And we expect that to continue.”