Foodservice provider builds value into its supply chain

February 9, 2009

Sysco is the largest foodservice distributor in the United States with sales of $38 billion a year. The company employs more than 8,000 sales and has more than 400,000 customers worldwide.

The distributor has more than 2,000 suppliers, including 23 produce houses that are under the FreshPoint name. While the company distributes a full range of products and brands, about 50 percent of its sales are Sysco brands – Sysco Natural for whole produce, Sysco Reliance for economy-priced products, Sysco Classic for competitive “first” product quality levels, Sysco Imperial for top quality products and Sysco Supreme for rare and unique items. FreshPoint, Sysco’s produce distribution company, offers whole produce as well as fresh-cut fruits and vegetables on a made-to-order basis in a wide selection of cuts.

As with many companies, Sysco has been building sustainability into its supply chain – or value chain, as Shawn Sampels calls it. Sampels is the director of quality assurance for Sysco Corp. The company now looks at each step in its value chain to see the economic, social and environmental impacts. With sustainability there’s no concrete definition – it’s continuous improvement of a number of different processes.

“There really isn’t a goal in sustainability. We don’t know what it looks like,” Sampels said.

While the company has its own definition of sustainability, Sampels said putting it into practice is more difficult. The practices and improvements to sustainability anywhere in the value chain are continually changing – and in some cases are not even possible because what is sustainable conflicts with the food safety of a product.

“Not only is there not a target, but if there was a target it would be moving constantly,” Sampels said.

Sysco has implemented programs that increase the sustainable attributes of its products. Since 2000 the company has had an Integrated Pest Management (IPM) program, which was adapted from an HACCP program and applied to pesticide applications. The program doesn’t have rules and guidelines per se, but does have a documentation process. In 2005 there were 325,000 acres in the program and by 2007 it had grown to 624,000 acres and 4,200 growers. IPM audits were averaging around 75 percent when the program started, but they’re now averaging over 97 percent.

Suppliers started an environmental stewardship reporting program in 2006. The program was developed by suppliers of Sysco’s frozen products, and those companies implemented the program in 2004, followed by 160 suppliers of canned and frozen fruits and vegetables. Audits began in 2005 and 2006.

As part of the sustainability program, growers for Sysco agree to not use biosolids on crops, not use genetically modified organisms and agree to minimum recordkeeping requirements for nutrient and pesticide applications that are often more strict than state guidelines.
Since the start of the sustainability programs, Sampels said Sysco has eliminated the need for 370,000 pounds of pesticides and reused or recycled 155 million pounds of waste that would have gone to landfills.

Suppliers are required to abide by Sysco’s Supplier Code of Conduct, which includes ethical and social responsibilities. A social audit process was instituted in 2007 that covered wages and hours, discrimination, worker safety, living conditions and offenses like child or slave labor. The audit measures a supplier’s social impact against in-country standards and the United Nations standards. That program was rolled out in China, Thailand, Latin America and South America in 2008 and those regions will be participating in the audit process in 2009.

To reduce energy use in Sysco’s distribution facilities – 180 across the United States and Canada – lights were changed to fluorescent bulbs and the plants converted to new pallet jacks that move three pallets at a time instead of two, according to the Sysco Corp. 2008 Sustainability Report. The distribution centers also stopped using shrink wrap on pallets in favor of rubber pallet bands.

The foodservice distributor is looking at other ways to reduce energy use and improve sustainability in the supply chain. Biodiesel or natural gas could reduce greenhouse gases from Sysco’s fleet of trucks, one of the largest private fleets in the country at 9,000 trucks, but the new fuel systems are expensive, Sampels said. An easier way is to reduce the number of miles those 9,000 trucks drive, and in 2008 the company’s total mileage dropped 5 percent – 9.8 million miles. That was accomplished using computer software that maps out the most fuel-efficient route. Deliveries were also rescheduled for the hours of 7 p.m. to 5 a.m. to avoid traffic and the need to idle the engine.

For a company as large as Sysco, even small improvements can make a big difference. Sysco has made a commitment to its customers and its value chain to reduce waste and energy use. Sustainability at Sysco, although the end user at a restaurant may not see it, adds efficiencies to the value chain and can benefit suppliers, especially growers whose economic and social situations are considered by the distributor, Sampels said.