Posting beefy results for its fourth quarter and full-year fiscal 2021, Tyson Foods (TSN 1.07%) continued a positive trend that has seen its stock gain about 30% over the past 12 months. Both revenue and earnings per share (EPS) rose year over year to outperform consensus analyst expectations. The real story, though, is the details Tyson shared about its "productivity plan" and the growth investors can likely expect if this scheme develops as intended.

Tyson's Q4 and full-year background

Tyson's results beat Wall Street average forecasts at both the top and bottom lines, with revenue rising solidly and EPS soaring. Adjusted EPS surged 35% year over year, while full-year adjusted EPS climbed 53%. For both periods, the bottom-line gains outpaced revenue growth as the company is turning revenue into profits more efficiently.

Automated sausage production conveyer in a meatpacking plant.

Image source: Getty Images.

Tyson saw volumes decline across all of its major categories, including beef, pork, chicken, and prepared foods, with the sole exception of its small international segment. However, prices rose sharply across all categories, more than offsetting the volume slump and resulting in positive revenue growth overall. The strongest category was beef where prices rose 32.7% versus a 15.4% volume drop.

Tyson is planning for a profitable future

While results were good overall, the most important part of the report may have been the announcement of a new productivity plan. CEO Donnie King noted, "[W]e're launching a new productivity program designed to deliver more than $1 billion in annual savings by the end of 2024." King and other executives then provided more detail on the plan during the earnings call.

The anticipated billion dollars in savings uses 2021 as a baseline. While the full results won't be apparent until the target year of 2024, the success of the program will be visible in the coming months, since it is expected to cut expenses by $300 million to $400 million in fiscal 2022, which started on Oct. 3. This will help investors judge whether Tyson's plans are actually working, and whether they have the potential to arrive ahead of schedule.

The productivity plan has three components as outlined during the conference call. First, management wants to reduce costs by cutting out bureaucracy and improving internal efficiency. This effort is expected to save $300 million annually once fully rolled out.

Second, Tyson will streamline supply and warehousing by way of digital initiatives, such as using artificial intelligence to gather and process data to find the cheapest, most efficient shipping for products as they come out of the company's processing plants. Predictive analytics like the type Tyson is planning to use can help improve efficiency by turning data into accurate predictions of future business conditions, according to research by Advanced Market Analytics.

In practical terms, this can mean everything from supply chain savings, fast and low-cost transport, reduced production line downtime, more accurate demand forecasts, and substantial inventory reductions thanks to those new demand forecasts. Tyson expects $250 million in cost savings from the digital part of its plan.

And third, Tyson is planning to greatly increase its use of automation to bring about $450 million of additional annual savings. The CEO said it will use "robotics technologies to automate difficult and higher turnover positions," citing a "substantial opportunity to automate the debone process within our poultry harvest facilities" as one example of planned automation.

Tyson's plan in the 2021 economy

Given current economic conditions, Tyson's plans appear very timely. Two of its three areas of focus address problems confronting the U.S. and worldwide economies after the impact of COVID-19 lockdowns. The supply chain is still backed up with truck drivers in particularly short supply. The American Trucking Associations (ATA) said in October that the U.S. currently has a shortage of 80,000 drivers according to its research, expected to worsen to a 160,000 shortfall over the next decade. With a high number of retirements and many truckers dissatisfied with both pay and the lifestyle demanded of drivers, closing the gap would require a million new truckers to be trained and licensed annually.

The Biden administration vaccine mandate or "Emergency Temporary Standard" (ETS) has only added to the logjam with independent-minded truckers frequently viewing the mandate as an unnecessary violation of personal freedom. The ATA has launched a legal challenge which has stayed the mandate and could potentially overturn it for the trucking industry. The ATA blasts "the enormous disruptions this unlawful ETS will cause the trucking industry." While its legal challenge may ultimately be successful, disputes between truckers and companies over the vaccine are currently adding to supply chain problems with truckers potentially quitting over the mandate according to the Truckload Carriers Association.

In this environment, Tyson's predictive analytics and AI could be of immense help in routing meat shipments around bottlenecks and finding the lowest-cost options available in a difficult shipping situation. Furthermore, its automation will not only help lessen the impact of the current labor shortage, but it also could ease disruptions caused by sick leave and social-distancing requirements if there's another COVID-19 flare-up. If at least part of the production line is automated, workers will likely be in less crowded contact with one another, possibly helping avoid the plant outbreaks and shutdowns that nearly broke the American meat supply chain in 2020.

Even once the current supply and labor difficulties ease, the improved efficiency and lowered labor costs gained through AI analysis and production line robotics will help Tyson stay streamlined and profitable. Its plans look smart and well timed, making this food stock a potential buy for both its short-term success and long-term flexibility in adapting to evolving market conditions.