Sysco's Supply Chain Management Practices

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Case Details:

Case Code : OPER060
Case Length : 19 Pages
Period : 2001-2006
Organization : SYSCO Corporation
Pub Date : 2006
Teaching Note : Available
Countries : North America
Industry : Foodservice Distribution

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

SYSCO operated in the foodservice distribution market⁷ through a number of operating companies (OC)⁸. The OCs distributed different lines of food products and a variety of non-food products to both traditional and chain restaurants and other customer locations. The company distributed over 300,000 products comprised of both nationally branded merchandise and products sold under SYSCO's private brands.⁹ Other business segments included SYSCO's specialty produce, custom-cut meat, Asian cuisine foodservice, and lodging industry products. SYSCO's success in distribution was primarily attributed to the adoption of innovative supply chain practices and implementation of the latest Information Technology (IT) tools.

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Among the other factors that made SYSCO the undisputed leader in the US foodservice distribution industry were the company's autonomous decision making management structure, the high number of marketing associates, its innovative high-quality products, and its commitment to employees, customers, suppliers and shareholders. The company also had a comprehensive quality assurance policy that guaranteed and enabled availability of high quality products to customers. In short, a well-coordinated supply chain apparatus coupled with an organized management structure contributed to SYSCO's success.

Background Note

SYSCO was founded by John Baugh (Baugh) in 1969 at Houston, Texas, USA, by merging various small food distribution companies in different parts of the US (Refer to Exhibit II for company logo). These companies included Louisville Grocery Company of Louisville, Kentucky; Plantation Foods of Miami, Florida; Texas Wholesale Grocery Corporation and Wicker Inc. of Dallas, Texas; Frost-Pack Distributing Company of Grand Rapids, Michigan; Global Frozen Foods and Albany Frosted Foods of New York; Food Service Company of Houston, Texas; and Thomas Foods of Cincinnati, Ohio...

Excerpts>>

7] The North American foodservice market had three types of distributors - Broadline Distributors, Customized or Systems Distributors, and Specialty or Niche Distributors. Broadline Distributors, like SYSCO's traditional OCs, supplied a wide range of food brands and related items to all types of foodservice operators. Systems Distributors served a relatively fixed menu and had a more limited product line. The SYGMA Network, Inc. (SYGMA), a subsidiary of SYSCO, is an example of a systems distributor. Specialty Distributors specialized in supplying a specific product category or a specific customer segment like ethnic foodservice restaurants. FreshPoint, Inc, a subsidiary of SYSCO, is a specialty distributor. (Source: 'Glossary,' http://media.corporate-ir.net).

8] As of January 2006, SYSCO had 100 operating companies. (Source: Emily Lambert, "Sysco," www.forbes.com, January 09, 2006.)

9] As of March 2006, the company had around 36,000 SYSCO branded products, which accounted for around 43 percent of the company's revenues. (Source: http://library.corporate-ir.net).