the top of the food chain: interview with William B. Day
It's already North America's largest foodservice distributor. Now Sysco wants to make its supply chain the best food chain on the planet. And it's William B. Day's job to see that it happens.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
The usual complaint among supply chain executives is that the supply chain is all but invisible to the CEO. But you won't hear that from William B. Day. Day is a senior supply chain executive at food-distributor Sysco, which supplies fresh and frozen food, china and silverware, and kitchen equipment to nearly 400,000 restaurant and institutional food-service customers. Sysco's CEO, Richard J. Schnieders, has made it clear that he sees the supply chain as the industry's new competitive battleground. In a November 2005 address to shareholders, Schnieders announced his intent to make Sysco the global leader in "multi-temperature food product supply chains." And he left no doubt as to his expectations: "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."
It's now up to Day to deliver on that very public promise. But at least the groundwork is in place. Since 2001, he has been immersed in a wide-ranging supply chain overhaul that will leave virtually no aspect of the operation untouched. Among other goals, the project seeks to improve the company's forecasting, use technology to cut operating and delivery costs, and open as many as nine new distribution centers (or as Sysco calls them, "redistribution" centers) throughout the United States. And according to Day, it's beginning to see results.
A 24-year Sysco veteran, Day began his career as a staff accountant at the company's Memphis, Tenn., office. Since that time, he has transferred to corporate headquarters in Houston, where he progressed through a variety of technology and finance positions, becoming vice president of supply chain management in 2003. In February, the company announced his promotion to senior vice president, supply chain, effective next month.
Day met recently with DC VELOCITY Group Editorial Director Mitch Mac Donald to discuss how he moved from staff accountant to senior vice president, the study that prompted Sysco's supply chain overhaul, and what he sees lacking in supply chain management in most industries in the United States.
Q: Would you tell us a little about Sysco?
A: We are the nation's largest foodservice distributor. For fiscal 2007, sales are projected to be around $34 billion. We have about 53,000 employees nationwide, supplying our customers with 300,000 different products.We have somewhere around 10,000 salespeople out on the street calling on restaurants, hospitals, schools, nursing homes, and so forth. Our customers are any institutional user of food products.
We also have the largest private truck fleet in the United States, with over 9,000 delivery vehicles on the road.
Q: Do you strictly serve the U.S. market or does your scope extend beyond that?
A: We are primarily North American, but we do have a division called International Food Group that exports food to about 70 different countries. It doesn't account for a large percentage of our sales right now, but we are certainly planning to grow that part of our business.
Q: As Sysco's senior vice president of supply chain, what are your responsibilities?
A: I'm responsible for what we call supply chain management and redistribution. That encompasses a network of redistribution centers that we're building across the country that makes our supply chain a lot more efficient and cost-effective than our previous system. I am also responsible for the national inbound transportation of all the products flowing into the redistribution centers and into our operating companies. I am responsible for demand planning and inventory management, which is primarily management of the redistribution centers. I also have responsibility for the inventory systems that are used by our other business divisions. I have a very substantial analysis team that is responsible for supply chain planning and optimization as well as supplier compliance and a few other little things. The big pieces are the redistribution centers, inbound transportation management, demand planning and inventory management, and planning and optimization.
Q: What are "redistribution centers"? I've never heard that term before.
A: A redistribution center is basically an aggregation point for product that doesn't go directly from the manufacturer to our operating companies. Our analysis and supply chain planning team spends a great deal of time looking at the transportation costs, inventory costs, handling costs, transaction costs—essentially all supply chain costs—for our various products. If they determine it would be less expensive to move a product through the redistribution center than to go directly to our operating company, that's how we flow the product.
We're in the process of building several redistribution centers across the country. Our first is in Front Royal, Va. It services our 14 operating companies in the Northeast.
Q: How long have you been with Sysco?
A: I've been with Sysco for 24 years, though not always in a supply chain capacity. I started out in the financial area and came up through the ranks. I was a financial officer with the company at one time, but I also have a strong systems background here. I was the director of applications development for the company and actually led the development of the systems that the company runs on today.
About six years ago, we initiated a study to weigh the merits of shifting from a system in which each individual location managed its own supply chain (we have 172 locations around the country) to a model in which we would centralize certain aspects of the operation where it made sense to do so.What we've done as a result of that analysis is to centralize execution of carrier management functions, especially as it relates to the flow of inbound inventory. We've also implemented a new demand planning and inventory management system that will help with the transition to our new processes using the redistribution centers. The new system is allowing us to dramatically reduce our safety stock and cycle times at our operating companies.
Q: The holy grail of inventory management, right?
A: Yes, that's right.We have had really fantastic results in that regard.
Q: I would guess that your IT background made your shift to this side of the business a fairly natural transition?
A: Yes, it actually was a pretty easy transition for me. Of course, there were a lot of nuances about the logistics field, especially as it relates to managing relationships with the railroads and motor carriers.
Q: What are some of the biggest challenges you face when it comes to optimizing Sysco's logistics operations?
A: The biggest challenge for me is continuing to lead the transformation that we're going through right now. It's a big cultural change for the company. So far it has required the integration of five new best-of-breed supply chain systems into our existing ERP [enterprise resource planning] system.
Q: What prompted Sysco to overhaul its supply chain?
A: Sometimes a company looks at its position in the market and realizes that it needs to transform its business processes if it wants to stay competitive in the long run. That's what we saw when we did our analysis. It is a big adjustment for the company, but it is needed. Changes like these affect almost every area of a company—no one goes untouched.
Q: When did Sysco begin the transformation process?
A: We began in 2001.We've now got our first redistribution center up and running in Virginia. A second redistribution center is under construction in Alachua, Fla., and will begin shipping in April 2008. The site for a third redistribution center has been secured; we plan to begin construction next month. It should be operational by October 2008. Then we have three or four other sites that we are working on.
Q: It's not uncommon for corporations to encounter some pretty serious resistance when they ask employees to change the way they do their jobs. Are you taking any steps to help them understand why it's so important to embrace these changes?
A: That is a very big and very important part of the transformation. Certainly, education must be a big part of the process when you're asking people to begin looking at costs differently than they've looked at them in the past. You're asking them to make decisions differently. You're changing the standards against which success is measured. All of that change is always difficult to introduce and manage in a company.
Q: You mentioned earlier that Sysco has the largest private truck fleet in the United States.What do you use the fleet for?
A: We use dedicated private carriage for outbound deliveries of goods from the redistribution centers to the operating companies. Those operating companies then distribute the supplies directly to customers in their regions.
Q: What will be the next big breakthrough in supply chain management?
A: Full integration of the entire business process.We talk about it all the time, but when I look at supply chain management across most industries in the United States, I see a lot of room for improvement. One of the biggest problems I see is the disconnect that exists between sales and supply chain planning, and then even among various supply chain activities.
We have to get to the point where we have full integration across all those business processes and where we have an optimized planning layer that really enables us to understand our capacity needs, our constraints, and what we need to do to optimize the supply chain.
Q: What will it take to get there?
A: I think a big part of the answer will be technology that helps with demand planning and inventory management and sharing of information with your suppliers so that production can be planned and shipments can be predicted. The effort to integrate business processes will always be ongoing, but I do think there are tools that can move things forward quickly. There are enough people in the software development world who understand the need, that I think the tools are going to get even better over time.
Q: Speaking of tools, if you had to identify the one tool in your personal skill set that's most useful in the dayto-day management of your company's supply chain, what would it be?
A: In the context of this large-scale transformation we've been working on, I would say strategic thinking and decision-making ability. I've been out there on the front lines throughout the process, presenting the business case, organizing the projects, and making really most of the decisions. I think my leadership skills are good, and I have the ability to really help people bridge the gap between strategy and execution—that is, taking the strategy and then figuring out what steps are required in order to realize it.
Q: It brings to mind the old adage that a really good idea is a job half done.
A: Exactly.
Q: A few years down the road when your supply chain overhaul is complete, what do you hope to point to as testimony to the project's success?
A: Well, actually it already exists. In the Northeast, with our first redistribution center online, our inventory levels are lower than they were in 2004. The operating benefits that we expected to achieve and that we built into the business case are being realized. I think that we have our proof of concept. In the end, what we will have will be a network that will be able to significantly increase our capacity to grow because our supply chain is going to be lower cost and more efficient. We are going to have a capacity to move more product at a lower cost than anybody else can.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.