SYSCO Corporation 2005 Analyst Field Trip

Transcription

1 SYSCO Corporation 2005 Analyst Field Trip Leveraging Human Capital Ken Carrig Executive Vice President & Chief Administrative Officer

2 Topics Overview Work Climate Employee Relations/Productivity Health Costs Knowledge Solutions Safety Enhancements

3 Leveraging Human Capital Approximately 72% ($3.2 billion) of operating expenses are people related % Operating Expenses 28% Other 72% Human Capital Expenses

4 Sysco s 7 C Human Capital Model based upon our Business Strategy CUSTOMER-CENTRIC: Help Our Customers Succeed COST-EFFECTIVE: Productivity & Quality CAPABILITY: Individual & Organizational Learning Knowledge Management COMMITMENT: Engaged, Productive Associates COMPLIANCE: Operating within the law CLEAR EXPECTATIONS: Individual & Group Contributions - What is expected of me COMMON UNDERSTANDING: Organization Goals & Priorities - Vision/Mission -Metrics - What is organization trying to do Business Strategy Provide breadth & depth on critical areas of leverage

5 Treat your Associates right They will treat your Customers right Sustained profitable growth follows

6 Value Profit Chain Correlations OPCOs scoring among the top 25% in Work Climate Survey significantly outperform those in the bottom 25%. MA Retention Driver Retention Operating Pretax % Op. Exp. % to Sales Workers Comp % to Sales Employees per 100K Cases 17% better 13% better 33% better 9% lower 65% better 5% lower

7 Work Climate Survey Worker Satisfaction: Overall, I am satisfied working at SYSCO % 90.0% 80.0% 90.1% SYSCO 79.7% 79.0% General Industry 70.0% 68.0% 69.3% Percent Agree 60.0% 50.0% 40.0% 40.0% 30.0% 20.0% 10.0% 0.0% Corporate Broadline Meat FreshPoint Guest Supply National Data We have done well in engaging our associates and improving work climate scores. Continued focus (via CMP) is critical to improving long-term performance and keeping third parties irrelevant.

8 Key Leadership Practices Best Practices Leadership Support Execute CMP process State of Company address Monthly Senior Management Meetings Front Line Supervisor Strengthen FLS Program Corrective Action Program Monthly supervisory meetings FLS e-learning for all new supervisors Rewards Execute ABC (Delivery/Warehouse) Competitive pay to market Career opportunities MAC Roll-out Quality of life Clean warehouse/trucks Open door policy Flexible schedule Family gatherings/ events Engagement / Diversity Comprehensive orientation process SYSCO Partnership Targeted selection Leadership roundtable meetings w/associates 14 most impactful questions identified

9 Rewards: Use of ABC with Drivers Higher Gross Earnings Improved Quality of Life Self Directed Drivers Improved Responsiveness Lower Total Costs for SYSCO

10 Improved operating performance through ABC: OpCo Example Year # of Drivers Driver Retention Delivery Expense % % 20% lower % 28% lower Net Gain: 28 less drivers 26 pts. 28% lower higher

11 Use of ABC for Drivers: More productive and satisfied workforce Fewer trucks due to more cases on each truck. SYSCO is an employer of choice- - Companies now have a waiting list for driver positions. - Companies now have a major recruiting point due to benefits and earnings incentives offered. Rolling out ABC to Warehouse & other functions

12 Employee Relations/Productivity Employees per 100K Cases Operations Expense % to Sales % % % Focus Areas: Greater leverage on employees per 100,000 cases Implement Best Practices Operations / Sales Supply Chain Impact: Continued positive trend Implement Delivery & Warehouse ABC Regional Field Operations Directors Automation

13 SYSCO s PEPY Medical Cost % Increase vs. National Average Healthcare Costs Nat l SYY 16% 15% 14% 12% 10% 8% 6% 4% 2% 8% 11.0% 6% 10% 6% 0% 2003 Natl./SYY 2004 Natl./SYY 2005 Nat'l/SYY SYSCO s costs are $1,300 PEPY less than overall industry SYSCO 3-Pronged Approach: Health, Financials, Suppliers

14 SYSCO s Annual Medical % Cost of Sales % % % 0.68 % Goal General Industry % Cost of Sales significantly below McKinsey s 2005 Benefits Study 85% of associates are satisfied or very satisfied with their benefits

15 Shared Services - Payroll Continued progress made. Roll-out completed in FY07 $2mm to $3 mm annual savings Payroll Headcount Comparison CY Headcount Savings Cumulative PY Savings Headcount Savings FY04: (5) FY05: (11) FY06: (22) FY07: (7) Total: (45-50) April 04 April 05 April 06 April 07

16 Knowledge Management/Solutions Knowledge has replaced capital as greatest factor for production Peter Drucker Practices Downloads 1,200 1, ,100 4,000 3,000 2,000 1,000 1,050 3, Fully integrated into daily activity; FEC in place Power Packs developed: Shrink, Bus. Rev., Mkt Analysis, ABC Vehicle for expecting roll-outs (projects/systems) Approximately $5 million in operating pre-tax generated

17 What BBP Means for an OpCo Step 1 Search for: delivery expense metric Step 2 System churns through database Step 3 Resul ts: 3 practices Cases per truck proven practice Driver retention powerpack Truck damage proven practice 0.1% pts improvement in del expense Pretax savings of $0.3 million/year Step 4 Applicability check, get expert help Step 5 Implementation

18 BBP Website Productivity + warehouse Word search like yahoo/google Option to search by metrics Reducing pre-post shift times 6/5/03 Silvers, J OpcoA Proven Practice Reviewed **** $100,000 Forklift incentive plan 6/3/03 Williams, E Opco B Pending Review Staggering shifts for efficiency 6/1/03 Smith, A Opco C Good idea/unclear impact Reviewed *** $20,000

19 Knowledge Management/Solutions OpCos that are taking an initiative are seeing results EXAMPLE Shrink decline for companies using the BBP Website for shrink 0. 70% Shrink took a dive after utilizing the BBP Website 0. 60% shrink % to sales 0. 50% 0. 40% 0. 30% 0. 20% 0. 10% C Company A Company B Company C Company D Company E Company F Company G 0. 00% Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Companies that reported and confirmed using the site for reducing shrink

20 Retention Target = 85% MA & Driver Retention by Driver Retention 80% 82% 85% % MA Retention 81% 81.5 % 85% % Goal Goal

21 SYSCOSAFE Execute the Basics with Excellence

22 Key Objective Build world class safety culture and programs in each company Worker s Comp. to Sales <.10% 57 <.10%

23 30 Historical Accident Frequency Trends Accidents per 100 Employees

24 Historical WC % Sales Trends Fiscal Years

25 Significant Reductions In Serious Back Injuries To Associates 2,500 2,384 2,000 1,500 1,000 1, FY98 FY00 FY05

26 SYSCOSafe Improvements: YTD Progress made at each OPCO Top 25% Bottom 25% FY98.08%.52% FY05.03%.19% % OpCo s with > $1 Million W.C. Costs to Sales 17% 3% % OpCo s <.10% W.C. Costs to Sales 20% 70% % OpCo s < 7 Accidents per % 80%

27 SYSCOSafe Vision Achieve Corporate-wide by FY09 FY98 FY05 W.C. Losses % to Sales Accident Frequency (per 100 associates) Open Claims (per 100 claims) Auto Liability % to Sales.22% %.135% %

28 Significant Positive Financial Results $66MM $32 mm Annual Savings 30 $34MM $32MM % W.C. Costs FY98.13% W.C. Costs FY05 Annual Savings 0 FY05 Revenues: $30 Billion

29 Supervisory Coach Cards to Keep the Focus EXAMPLE: FORK LIFT OPERATIONS REVIEW KEY AREAS: BACKS, FORKLIFTS, ELEVATED PLATFORMS PREFERRED WORK METHOD BOTTOM 25% TOP 25% LOOKING IN DIRECTION OF TRAVEL WHEN MOVING EQUIP. 1ST INCH 3 out of 10 9 out of 10 STOP EQUIPMENT PRIOR TO DISMOUNT 3 out of 10 8 out of 10 PROPERLY HONK AT ENTRY AND EXIT FREEZER DOORS 3 out of 10 9 out of 10

30 Most heroes are not those engaged in events that make the headlines... the true heroes of business are the people who do their best work everyday... and succeed more often than not!

31 All Pro Team

32 Significant Positive People Results 9,000 8,000 7,000 6,000 5,000 9,000 6,250 Potential Fewer People Hurt per Year 6,250 4,000 3,000 2,000 1, Acc. Freq. 18 FY98 Acc. Freq. FY98 2, Acc. Freq. FY05 FY05 Employees: 50,000 Fewer People Fewer People Hurt Hurt

33 Conclusion: Leveraging Human Capital provides competitive advantage Leading edge practices result in rare combination of highly satisfied and highly productive associates that provide foundation for sustained profitable growth Questions

34 Thank You!