SYSCO

SYSCO how has it achieved thirty-four years of continued growths... 

Sysco, based in Houston, Texas, is the largest food marketing and distribution company in North America. SYSCO sells annually over 30 billion of food, related products, and services to over 400,000 customers through 157 separate profit centers which employ in total 46,000 employees. The magnitude of SYSCO s operations is mind-boggling. It sells over 300,000 products to over 400,000 customers and on a daily basis delivers almost 4 million cases of food and related foodservice products to 360,000 customers, 99% on-time and defect-free. Over one-half of SYSCO s 46,000 employees are hourly warehouse and delivery people, and it employs 12,000 sales and business development employees. 

From fiscal 1984 through 2002, SYSCO s compound annual sales growth rate was over 9% as compared to an industry average of 2.6%. SYSCO s historical sales and earnings increases through fiscal year 2004 are shown in Table 5.1. SYSCO s available market space is approximately 207 billion. With sales of almost 30 billion, it has approximately a 14% market share. 

Table 5.1. SYSCO compound annual growth rates of sales and net earnings (%)...

SYSCO initially expanded its footprint geographically throughout the USA ... 

SYSCO, now, is redesigning its supply and distribution chain for additional cost efficiencies. 

SYSCO is the major player in a 200 billion dollar market - even though it only has a 14% market share. Not only is it big but it outperforms its industry competition year in and year out. How does it do this In trying to crack SYSCO s DNA, my research and site interviews attempted to understand what made the company different. 

First, what was interesting was what I did not find. SYSCO s uniqueness does not appear to be either its strategy, its products, its financial expertise, or its employees. Nor did I did find a rah-rah culture or a visible culture. What is unique about SYSCO is that it has figured out how, on a daily basis, to get and keep everyone - from the CEO to the truck driver - focused with the right attitude on doing the little things that count very very much to their customers. 

Simply put, SYSCO is an execution champion. They have figured out how to balance and manage the tensions between decentralized... 

SYSCO is a quiet company without a lot of cheerleading at the corporate level and without a lot of corporate frills. They are more like farmers, and I am being complimentary, than Wall Street corporate types - they get up every day, go to the fields, till the soil, water, fertilize, pull the weeds, harvest some crops, and get up tomorrow and do the job again and again very well. They go about the business of doing business in a determined, engaged, methodical way. 

The CARES program has evolved into its second phase, /CARE. Through this initiative, marketing associates are trained to be more effective business consultants for their customers by understanding a foodservice operation s profitability model, thus enabling them to analyze and develop menus, control inventories, and provide food safety training. Through SYSCO s website, customers are able to access a variety of third-party services that can help them drive and... 

The service profit chain rings true at SYSCO. The companies with highly satisfied associates deliver better results. 

SYSCO s employees, from the CEO to the warehouse worker, understand the mission Helping Our Customers Succeed. Nearly 50% of its employees are customer-facing. 

So SYSCO is the industry leader. It is big, national, and an outstanding performer. As expected, it is customer-centric. But why is the company so much more profitable than its competitors Is it just efficiencies of scale Or, is it something else The SYSCO story is more sophisticated and complex than just efficiencies of scale. SYSCO s competitive advantage is the seamless integration of two interrelated systems ... 

What makes SYSCO interesting is how they have aligned and seamlessly integrated these two systems so they make sense to the line employees. Its employees not only know that their job is to Help Our Customers Succeed but they also know what that means performance-wise. The employees know that SYSCO measures what is important and that they will be financially rewarded for doing those things. 

SYSCO, through years of iteration and just plain hard work, has implemented the principles people will do what you measure and they will do it even better if rewarded. 

SYSCO s entrepreneurial culture is historically based. The company was created by John F. Baugh, an entrepreneur, who convinced eight other foodservice entrepreneurs to merge all their companies on a partial earn-out basis to create the beginnings of his novel idea - a national foodservice distribution company created to meet the future needs of the projected high-growth out-of-the-home cooked meal business. 

SYSCO s entrepreneurial culture is emphasized on a daily basis in the following ways. 

Ownership 65% of SYSCO s employees own stock (a share of the results of their hard work) in the company. 

Its 157 operating units have day-to-day autonomy to operate in their market, subject to strict central financial controls and measurement. As SYSCO s president, Tom Lankford, stated, Our units have complete autonomy relating to the front-of-the house, customer-facing actions, and very little autonomy on the back of the house - financial controls, accounting, supply chain, ordering, and supplier relationships. ... 

Not only does entrepreneurship mean financial ownership but SYSCO employees are responsible for servicing their customers -they have ownership of and autonomy with respect to the customer. 

In addition, SYSCO is a promote-from-within company - filling over 95% of its promotions from within the company. And... 

SYSCO s entrepreneurial culture is further evidenced by the fact that six of its top seven executives are former line operators of its business units. They know the intimate details of the business operations. These executives are 90% internally and operationally focused on a daily basis. 

Rick Schnieders, the chairman and CEO of SYSCO, stated that... 

SYSCO s focus on its operations - the blocking and tackling of its business - is evidenced also in looking at how its CEO spends his time. Mr. Schnieders spends his time on the following company areas ... 

In summary, SYSCO was founded upon values that include integrity, reliability, autonomy, quality, and entrepreneurship, which have been the essence of its culture through the company s history. The autonomous, entrepreneurial, decentralized culture with performance-based reward systems has been one of the keys that has made the company successful and was an integral part of the founding fathers vision. 

While SYSCO allows its 157 business units to operate the front of the house autonomously, the back of the house is centralized and controlled, with a sophisticated measurement system. 

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