Dive Brief:
- Sysco aims to generate $500 million in cost savings over the next three fiscal years by deploying an AI-powered efficiency improvement program. The food distributor projects $100 million of net cost savings for its 2027 fiscal year, the company said in a Wednesday report.
- The program will trim structural costs from the business and will be anchored in supply chain productivity, back-office simplification and customer experience, indirect spend management and automation in merchandising and procurement, according to the report.
- Sysco CEO Kevin Hourican touted efficiency improvement efforts powered by AI as drivers of company growth during an earnings call for Q4 2026 earlier this month. “We believe we can improve service to our customers, do our work more efficiently and reduce our structural operating expenses by leveraging best-in-class technology,” Hourican said.
Dive Insight:
Sysco’s AI business transformation is focused on reducing costs across business operations amid rising enterprise concerns over the economics of the technology itself.
AI is set to boost annual IT costs as the technology becomes embedded across workflows, according to a Bain & Co. report published earlier this month. An average $10-billion consumer packaged goods company could see IT costs increase 75% by 2035, the report said.
While enterprises are identifying returns from their AI investments in the form of better business insights and customer interactions, the technology isn’t always saving companies additional time or money, according to an SAP study. As a result, CIOs are beginning to take a more pragmatic approach to the technology as token costs, lack of ROI, skills gaps and policy concerns mount.
Still, enterprises are starting to see targeted benefits from the technology’s adoption.
Sysco last year launched its AI360 CRM tool to improve selling productivity, which continues to provide conversion opportunities to its sales employees, Hourican said during the earnings call. Sysco sales increased 3.9% to $84.6 billion during its 2026 fiscal year, which closed June 27.
Modernizing technology to improve fill rates and inventory forecasting accuracy, using AI to write better contracts and adding coding improvement technology to complete work more efficiently are contributing to Sysco’s projected savings during the 2027 fiscal year, executives said during the earnings call. The food distributor is also heavily focused on modernizing its routing software to help realize savings.
“It’s about customer-centric routing capabilities, doing that work in a more agile manner, decreasing miles driven while simultaneously increasing our [on time delivery] promise to the customer,” Hourican said.
