Senior Writer

Sysco’s recipe for growth centers on IT

Case Study
Jun 21, 20237 mins
CIO 100Digital TransformationIT Leadership

The multinational food distribution company transformed its pandemic pivot into an aggressive hypergrowth strategy based on a homegrown tech stack, analytics, and, increasingly, AI.

Tom Peck
Credit: Sysco

When Tom Peck joined Sysco during the peak of the COVID-19 pandemic, his major goal was ensuring the survival of the world’s largest food service delivery company and helping its thousands of customers stay afloat.

The Houston-based multinational was still delivering food supplies to sparsely populated buildings, cafeterias, airports, and nursing homes across the US—and helping its customers “reinvent” their businesses with curbside check-in, touchless menus, and QR codes for menus.

“We were one of the most impacted industries in the pandemic economy,” says Peck, who joined Sysco as EVP and chief information and digital officer in December 2020. “The pandemic forced us to review our company and the entire industry.”

While the company was well into its cloud journey when the pandemic hit, such a seismic event for a food distributor called for a major overhaul of its strategic vision, R&D plans, and digital transformation, Peck says.

The blueprint, called ‘Recipe for Growth,’ was announced in May 2021, roughly a year after Sysco appointed to its CEO position Kevin Hourican, a former top exec at CVS Health and CVS Pharmacy.

Recipe for Growth, for which Sysco has earned a 2023 CIO 100 Award for innovation and IT leadership, is based on applying B2C principles to Sysco’s B2B business, and calls for the company to grow 1.5 times the size of the entire industry—estimated to be valued at $330 billion in the US alone, Peck says.

“Surviving the pandemic wasn’t enough,” Peck adds. “We needed to transform ourselves … and grow faster than our competitors and faster than our markets required. The Recipe for Growth has everything to do with how we run the business—the cloud and the underlying technology, how we deliver software and all the fundamental foundational capabilities that underpinned our strategy.”

Sysco’s key ingredient: IT

At its core, Recipe for Growth “relies heavily on Sysco being a great technology shop, getting rid of technical debt, migration to the cloud, delivering microservices and using artificial intelligence,” Peck says.

Having been very acquisitive over the years, Sysco found itself burdened with a lot of on-premise data centers and legacy applications. To modernize, it had to migrate and rewrite many applications for the cloud to gain efficiencies, speed production, and reduce tech debt, says Peck, insisting that Sysco uses and will continue to use all three major public cloud providers to support the scope of its business and the diversity of its expansive customer needs.

Aside from the cloud, the recipe has as its main ingredient a complex, homegrown e-commerce system called Sysco Shop that enables the application of B2C principles to a global B2B business—in particular, personalization and customization, which Peck says is delivered via an analytics strategy that centers around the company’s homegrown data warehouse, its Amperity customer data platform and Salesforce CRM, as well as Tableau for sales analytics and Tealium, which generates user clickstream analytics.

Like most companies, Sysco traditionally ran its B2B e-commerce business in a bulk reordering fashion.  But the ability to employ the agility and flexibility of the cloud, combined with personalization microservices for each customer, has been very good for business.

“We’ve been able to deliver in a more agile way, and every two weeks [roll out] new capabilities that are much more consumer-like; you don’t just transact, like reordering,” the CIDO says, adding the combination of analytics and e-commerce personalization tools, such as product recommendations, tools to manage inventory, curated menus, and loyalty programs, is expanding its value to enterprise customers. “We’re seeing bigger carts because we’re upselling and cross-selling products and making recommendations. It’s that combined with our investments and sales tools that are driving a lot of growth.”

Adding AI to the IT mix

Sysco’s programmers and data scientists used a range of tools, including JavaScript, Kafka, and Python, to build the company’s homegrown e-commerce and data warehousing platforms, and the company has deployed Blue Prism robotic process automation at its many distribution centers.

Sysco, which sits between the food suppliers and large customers, uses SaaS platforms when possible but its core technology stack is homegrown—and the IT team will build on that with emerging tools such as AI. “The base engine for the e-commerce and data warehouse is all custom code. but we use best-of-breed boutique solutions surrounding the core for everything else,” Peck says.

Using analytics from Salesforce and Tealium, as well as historical ordering data from each customer, Sysco’s goal is to continue making custom recommendations, offer more self-service tools and, with AI, a more refined product mix recommendation. Sysco currently uses AI to detect anomalies in purchasing habits and to determine its customers’ propensity to buy new products.

Sysco has also been implementing machine learning to help “smooth inventory forecasts by predicting customer behavior, inventory levels, and pricing,” Peck says.

Integrating advanced AI into its heavily robotic process automation shop, as well as edge computing, Peck says, are huge opportunities the company is now exploring. Deploying large language models (LLMs) will also allow Sysco to use a much greater abundance of data in the cloud to curate menus based on trends and to detect evolving purchasing behaviors.

“The next logical step is AI,” Peck says. “Machine learning was about comparing a lot of inputs. Large language models allow you to gobble up more data and scan through much more information, whether it’s in another cloud or on premise. We would be able to search and get feedback on restaurant or social trends about recipes and food and surf that back to us or to our customers.”

Catalyzing change

As complex as it is to write AI algorithms, technology is the easy part of Sysco’s next-generation Recipe for Growth, the CIDO says.

There are several challenges to implementing such advanced technology, namely, how to handle change management and how fast to scale, but the benefits far outweigh the challenges, Peck adds.

To that end, Sysco is teaching its sales teams about the benefits and time savings in eliminating mundane paperwork and tasks, and allowing them to pursue new leads and grow their business.

Peck says moves such as these are all about winning the hearts and minds of employees and getting them to embrace AI’s ability to suggest more predictive types of sales calls and order suggestions.

“Your sales teams may view it as a threat, but in reality, it’s not a threat,” he says. “It’s enabling them to spend more time on the customer relationship and nurture new business when they’re spending less time doing research and looking at pricing.” 

If implemented correctly, AI’s benefits are numerous for all employees and the company overall, he maintains.

“It helps us to service our customers better, having exact fill rates, so our trucks show up on time and it helps our company to focus,” he says. “Sometimes companies that want to digitally transform tend to be too broad and want to do everything. We’re very laser focused about key things we’re trying to do and it’s a rallying cry for the company—a morale booster. It helps us feel like we’re part of something special.” 

The breadth and depth of Sysco’s CIDO is well known in industry circles. Last month Peck received the annual MIT Leadership Award at the MIT CIO Symposium in Cambridge, Mass.

“While all of our finalists were doing exceptional work, Tom stood out for his deep knowledge of, and connection with, the needs of the business,” says George Westerman, a senior lecturer at MIT Sloan School of Management, who sits on the awards committee. “It showed in the way he talked, the topics he found important, and the results he and his team helped to drive.”