Sysco Sales
Drop Sites Exposed

Last Friday night you chowed down on the chicken and steak tips at the corner bar at happy hour. Late that night, you found yourself hugging the porcelain throne asking Ralph where your Buick was. As you vomited your dinner, you wondered, "Was it what I drank, or what I ate?" The fever and body chills proved that whatever it was, it was attempting to kill you. As you caught your breath again, you swore off ever going to that restaurant again.

What if it was not the restaurant’s fault? What if the problem was upstream? Like the food wholesaler?

The food supply chain is a complex network of entities. Food distribution presents a number of challenges, like temperature control, sanitation, and lot tracking. Food recalls get huge notice — the media is all over food processor recalls for ground meats, eggs, peanut butter, and cheese. When it comes to food safety, public health department officials are challenged to root out the source of the problem. Most investigations examine policy and procedure to find where the execution failed to meet expectations.

More troubling is when an undocumented practice develops that violates all regulations governing food handling safety — and common sense. Sysco San Francisco is now facing serious fines for violating common sense.

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Tipped off that Sysco sales employees were using public storage lockers for drop-off storage, San Francisco’s local NBC television station launched an investigative report, following trucks and setting up hidden cameras to capture evidence that Sysco trucks delivered perishable food to the lockers for later pickup by field sales personnel. As the station reported in July 11, 2013, Sysco is now facing fines for storing perishable food in retail public storage lockers.

It wasn’t just one storage shed. Sysco’s sales team used 14 different locations.

The company faces misdemeanor criminal charges and a $1,000 fine for each violation. Unknown if each shed is a violation, or if each case of food is a violation, or if the health department plans to compound cases, calculating the fine by admitted days of operation. Inspectors found rat droppings, insects, and other unsanitary conditions inside the sheds, according to NBC.

Misguided Customer Service

Why would Sysco, the biggest name in wholesale food service at $39 BILLION in revenue, risk its reputation with an obvious violation of good practice?

It is not that the company doesn’t know any better. Charley Wilson, vice president of corporate communications at Sysco, said, “Sysco San Francisco’s drop-site practices in the Bay Area were not compliant with company policy. “We reviewed our policy with Sysco San Francisco, and they have taken immediate corrective action.”

Sysco went out of its way to let affected customers know that the local Bay Area operation had not followed protocol. “We are taking the precautionary measure with those affected customers to withdraw all products from the supply chain that had moved through the non-compliant Bay Area drop-sites,” Wilson said. “These customers are being asked to examine their inventory and dispose of the identified products; in these instances, their accounts will be credited accordingly. Sysco’s first priority is our commitment to provide safe, quality-assured products to our customers.”

While it’s nice that Sysco contacted the affected customers, how does Sysco know which customers were affected, and when?

For the television station to have gotten hidden cameras in place at the sites to capture the delivery and pick-up action, somebody who worked inside Sysco had to have been involved. Either a current or former employee contacted the television station. For both the station and health officials to locate, identify, and inspect 14 locations, the source had to be someone with knowledge of all of the sites, perhaps a delivery driver or a manager.

Still, why would a company with this level of control and stature flagrantly violate regulations and common sense? I think it was a combination of cost control and misguided customer service. Yes, in an effort to do a better job serving the customer, the local operations cut cost corners.

Late orders create a number of service problems for most food service distributors. The customer calls the order in after the warehouse has picked and loaded their route. Sometimes customers order food delivery for days on which deliveries are not scheduled. Things like this happen all the time in the restaurant industry because restaurants try to hold as little inventory as possible, as demand is often unpredictable. Moreover, most street account restaurants do not use sophisticated inventory management or sales projection systems; the system is a pad of paper and a pen.

Distributors, in an effort to provide better service to their customers, use their sales teams to deliver these special orders. If the Field Direct Salesperson (FDS) can pick up at the warehouse and deliver to the customer; that is what they do. That is how many smaller distributors handle special orders.

Sysco is very different. Because of its size, it builds massive distribution centers in low-cost central locations and deploys a fleet of hundreds of trucks to make deliveries. In many cases, the FDS never goes to the warehouse.

Sysco’s challenge:  how do we get the special-order product to the sales people so they can make the final delivery to the customer? That is where the public storage lockers come in. The route driver drops off the product in the public warehouse shed in the very early hours of the morning, and the FDS picks the product up later in the morning. How long could the food sit in such a situation? Hours.

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How common is this practice? That is a good question to ask. Despite Sysco’s corporate policy forbidding this practice, the local operations do not run exactly as prescribed by corporate in Houston. Moreover, I don’t think this is limited to just Sysco. Every major wholesale food distribution company faces this challenge. The larger the company, the longer the distance between the salesperson and the warehouse. Even medium size companies deliver to sales territories that are hundreds of miles from the warehouse.

If the biggest in the industry can get caught with its pants around its ankles like this, I am sure the same thing happens somewhere else every day.

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