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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"The food business today is a bigger, faster, quicker business. Customers today are seeking suppliers that can rapidly respond to such things as menu cycle changes, changing consumer demands, and new product introductions."¹

- Keith Pittman, senior vice president of operations, Ben E. Keith Foods², in 2003.

"Our vision is to become the global leader of the efficient, multi-temperature food product supply chain. We will be able to move a case, or multiple cases, of food and related products from points anywhere in the world more effectively than any other company. By further developing our global supply chain, we intend to provide significant benefits and opportunities for our customers, suppliers, SYSCO associates, and ultimately our shareholders."³

- Richard J. Schnieders, Chairman, CEO and President, SYSCO Corporation, in 2005.

Introduction

On May 18, 2006, SYSCO Corporation (SYSCO), the largest foodservice distributor⁴ in North America (as of September 2006), announced that it had recorded revenues of US$ 695.9 million in the week ending May 13, 2006 leading up to Mother's Day.⁵ Announcement of revenues for the week leading up to Mother's Day was a tradition strictly followed at SYSCO since 1979. The revenues for this week in 2006 were up on the same week in 2005 by US$ 23.9 million - an increase of 7.6 percent.

Commenting on the company's record revenues, Richard J. Schnieders (Schnieders), Chairman, CEO and President, SYSCO, said,

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"This is the first time since fiscal 2003 that SYSCO has posted back-to-back record sales weeks and it is the first time since fiscal 2004 that we had three record weeks in the same quarter. This performance is a testament to the strength of our industry, the soundness of our business strategies and the skills of our valued associates who execute those strategies."⁶

The news was also a good break for SYSCO, from the 16 percent decline in profits during the third quarter that ended on April 01, 2006 - which had occurred largely due to the rise in oil prices.

SYSCO, an acronym for Systems and Services Company, distributes a variety of products including frozen foods, canned dry foods, fresh meats, imported specialty foods and fresh foods (Refer to Exhibit I for SYSCO's product mix).

It also provides non-food products such as disposable napkins, plates, cups, tableware, cookware, restaurant and kitchen equipment, etc.

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1] Leslie Hansen Harps, "Fast Food: SCM feeds the need," www.cardlog.com, August 2003.

2] Ben E. Keith Foods is part of the Ben E. Keith Company. It is a leading distributor of food service products in the US.

3] "SYSCO outlines global strategy," http://equa-net.com, November 22, 2005.

4] A foodservice distributor is a company that provides both food and non-food products to restaurants, cafeterias, industrial caterers, and hospitals and nursing homes.

5] Mother's Day is celebrated to thank mothers and celebrate motherhood. In the US, it is celebrated every year on the second Sunday of May. Mother's Day is the most popular day in the US to dine out in restaurants, the day on which maximum flowers are sold, and the day on which telephone exchanges are likely to be the busiest in the whole year.

6] "SYSCO reports third record sales week in fourth quarter," http://memphis.bizjournals.com, May 18, 2006.