Dive Brief:
- High supply chain costs, driven by increases related to warehousing and transportation, led to a 4.7% year-over-year increase in Sysco's adjusted operating expenses for its U.S. Foodservice Operations division.
- "While we have seen increased cost in these areas in recent quarters, we continue to remain focused on better managing and mitigating these costs," Sysco CEO Tom Bené said on the company's most recent earning's call.
- One solution the company is considering to lower this cost is smaller delivery vehicles. These could be driven by employees without a commercial driver's license and help to lower the delivery cost, Bené suggested.
Dive Insight:
The increase in supply chain costs is not a sign of a looming spike in operating expenses, Bené said. "We've now kind of hit that number and we are now just trying to manage the overall utilization of our headcount and our resources."
The company is struggling to retain truck drivers and warehouse employees. To help, it is planning to focus on hiring, training and onboarding in both driver and warehouse positions, explained Joel Grade, the company's chief financial officer.
"I think it's leveled out somewhat, but certainly not in a position to really say we're past the issue," Grade said.
When it comes to truck driver cost, it's an issue that's not unique to Sysco. A shortage of drivers around the country has driven up wages with the average salary growing to $53,000 in 2017, a $7,000 increase from 2013.
The shortage of warehouse workers is similarly widespread with e-commerce creating a high demand for these positions, but pay often isn't competitive enough to encourage employees to stick around.
