Control the process

Control the process

companies by Mark Gordon | Managing Editor

Perks and employee giveaways can be costly. But it's paid off in big ways for the Gulf Coast Sysco operation, which has seen six-fold growth in the past decade.

Executives for the enormous Gulf Coast operation of Sysco, an entity of the international food and beverage service giant, like to think they succeed by doing the little things right. Every box of lettuce has a specific label, every forklift ride has a purpose, every truck is repaired in-house.

But it's the big numbers that tell this Sysco unit's story.

In just more than 10 years since it opened as a cast-off of the Houston-based mother ship's Miami and Orlando units, the Palmetto-based Gulf Coast Sysco has become one of the company's top performers. It's gone from 46th out of 47th in annual revenues when it opened in 1996 to third last year, behind only the Boston and Los Angeles divisions. Specific sales volume, while not released for individual branches, has grown more than six times during the past 10 years.

The number of employees has grown from 300 when it opened to 750 in 2007, and what's more, the branch has expanded its facility three times, at a cost of almost $30 million. The entire complex, including a 100,000-square-foot warehouse for dry foods, now totals 350,000 square feet.

The true Sysco story, though, lies neither in big nor small, but in how the company got there by steadfastly sticking to its core mission statement.

Indeed, the branch is a proving ground for startups, entrepreneurs and even fellow large company executives to see that you don't have to sacrifice customer service principles in order to grow in size, stature and sales.

"Our mission is to help our customers succeed [and] our customer is everything to us," says Carl Cannova, the president and CEO of the Sysco Food Services-West Coast Florida. "We try to take care of them so they don't have to go somewhere else."

'Happy employees'

The company starts taking care of its customers, Cannova says, by first taking care of its employees, an important, albeit sometimes costly and time-consuming process.

Perks and benefits range from token appreciations, such as Valentine Day's gifts and Christmas hams, to financial programs, which include allowing employees to become fully vested in the company's pension plan after five years and full health care coverage after two months of employment.

The benefits package actually starts soon after a new hire begins working, during a family night celebration where a new employee's spouse and children can get tours of the facility. The employee "is going to be dedicating eight to 10 hours a day at this place," says Cannova, "and we want the other people in their lives to see where they work."

And the top benefit of all - salary - sticks with the company's employee-first philosophy: In 2006, the average annual salary of a Sysco-West Coast Florida employee was about $57,500, about $15,000 above the county's median household income. Positions range from truck drivers to sales to accounting.

The efforts to treat employees well culminates with a company-wide year-end holiday party, a tradition Cannova brought with him from Kansas City in 1996, when he left an executive position at a Sysco facility there to run the Gulf Coast operation. The 2006 party was held at the Florida Aquarium in Tampa; past parties have been held at the St. Pete Times Forum, the Circus and the Ellenton Ice & Sports Complex.

Giveaways at the party include gifts in the $20 range for every employee's child under 15, as well as the hams, which are even given to temporary employees. The price tag for the event is big, Cannova says, costing as much as $30,000 just for the gifts.

The pay-off comes, Cannova says, when he walks around the building and sees employees smile as they work. The Manatee County Economic Development Council has recognized Sysco-West Florida, too, presenting it with its Workforce Initiative Award for 2006. "We want employees to be happy," Cannova says. "We want them to like working here."

Military precision

It's a good thing employees have high job satisfaction, because the refined, scientific system the company uses to ship products in and out would likely show some kinks if grumpy employees began gumming things up.

Every row and column in the warehouse is assigned to a supervisor, who makes sure the temperature of the room is correct, the products are fresh and the area is clean. Employees moving products to and from the rows to the docking stations are armed with devices to zap the bar code on each product, so the department heads know where all the products are.

It's all carried out with military precision, only there is very little hurry up and waiting going on. Instead, on a recent weekday afternoon, it was mostly hurry up and hurry up some more, as employees were scurrying around the warehouse, moving boxes of tomatoes and other fresh produce.

The process starts early each morning, Cannova says, with the first delivery - anything from sea scallops to spoons. Dairy, meat, seafood, canned goods and paper products continue coming into the company until about 3 p.m. every day. At any given time, there could be as much as 13,000 products sitting in the various warehouses and cold-storage facilities, with a total value of $27 million.

It only gets busier after the receiving process is completed, though, as the next three hours are spent shipping products out to the company's hundreds of customers, a list that includes hotels, hospitals, colleges and restaurants. Cannova says getting the products out of the warehouse and on the road is Sysco-West Florida's biggest challenge. "Time is our biggest constraint," he says.

The company has 170 trucks that take the products as far north as Plant City and Brooksville and as far south as Naples. The delivery routes are just as fine-tuned as the warehouse system, and the trips are monitored by a few supervisors in a Mission Control-like room, where managers can check where drivers are at all times.

Sysco-West Florida mirrors the communities it serves in terms of sales volume, Cannova says, as the four months of season, January to April, nearly double the output of the summer months. Still, the company has never had to lay off any regular full-time employees, Cannova adds, instead adding some temporary employees during peak times.

REVIEW SUMMARY

Business. Sysco Food Services-West Coast Florida, Inc., Palmetto

Industry. Food and beverage distributor

Key. Company's intense focus on the customer begins with giving employees top-notch perks and benefits.

Company CARES

The Palmetto-based Sysco operation, which thrives on the theory that small executions lead to big successes, is really just a well-disciplined, 11-year-old child when it comes to the entire Sysco family.

That's because the Gulf Coast operation, officially called Sysco-West Coast Florida Inc., utilizes the same customer-first theories that have propelled Houston-based Sysco Corp. to become the largest food and beverage marketing and distribution company in North America.

The parent company, a combination of nine distributors that merged as one public company in 1970, had $32.6 billion in sales in 2006, giving it about a 15% share of the fragmented market.

And its long-term growth results are even more impressive, leading business professor and author Edward Hess to include it as one of 22 public companies that excel at non-acquisition growth in his book, The Road to Organic Growth (See 3/2/07 Review). For example, Hess writes, the company's 20-year compounded growth rate through 2004 was 14.6%.

The company, traded on the NYSE under the symbol SYY, has also served its shareholders well: It's increased its quarterly cash dividend 36 times since its 1970 IPO and it's returned about $3.6 billion in dividends and share repurchases over the last six years.

Hess calls Sysco an execution champion, adding that "What makes the company different is that its leaders have figured out, on a daily basis, how to get and keep everyone - from the CEO to the truck driver - focused on doing the little things..."

Those little things include Sysco's CARES program, which is acronym for Customers Are Really Everything to Sysco.

It's a checks and balances system used to make sure customers are getting the best service, from on-time deliveries to accurate invoices. The company recently launched an advanced version of the program, called iCARES, which is designed to have the sales force learn the details of their customer's business models, so they can improve the product offerings and service.

-Mark Gordon