Page 4 - 2019 Pancake Supply Chain Co-op, Inc. Annual Report

Peter DeGast

Board Chairman, Pancake Supply Chain Co-op

Within the walls of Centralized Supply Chain Services, or CSCS, a sign hangs in the entryway that reads “The Supply
Chain Starts Here.” The concept of accountability or ownership resonates through those words and is a significant
factor in the results achieved year after year on behalf of all our Members. But the full value of what CSCS provides
goes well beyond the activities conducted within the four walls of the office. The Supply Chain may start here, but it’s
certainly not where it ends.

The full value of what CSCS provides its Member franchisees resides in the relationships that have been cultivated
over the years up and down the supply chain. The reality is that everything that happens to manage our supply chain
daily is a complex coordination of tasks across many different parties. When things are going well and according to
plan, everyone is happy to play their part. When something happens to disrupt that flow and cause a breakdown, and
it frequently does, oftentimes it is only through relationships that order is restored. For example, when the Avian Flu
outbreak of 2015 decimated layer hen populations and threatened U.S. egg supply, CSCS’ strong relationships with
our suppliers assured our supply with relatively minimal impact to price.

Relationships are also needed when strategic, long-term threats to the business emerge. You have heard a lot about
the tightening distribution landscape over the last two years and everything CSCS is doing to make IHOP a Customer of
Choice. Your CSCS management team, led by Mike Leikam, has conducted top-to-top meetings with every distribution
partner as one way to re-assess those relationships and cultivate the ones that will matter to us in the future. A new
five-year strategy will align us with distribution partners that will deliver results, not because they are bound by a
contract, but because they want to do a good job for us.

The Restaurant Profitability Initiative has delivered strong results since 2017. The nearly $16.0MM in value delivered
in 2019 required an incredible amount of cross-functional work, much of it underpinned by individual relationships and
trust among IHOP, CSCS, the franchisee-led Steering Committee, the supplier community, and our distributors. The
cost-savings projects identified are part of a “category strategy” process that exemplifies the power of relationships
at work. Individuals from all these different stakeholder groups convene in one location to work together, contributing
what they know, to collectively get us to a better answer and a lower total cost in use.

While the supply chain starts at CSCS, it doesn’t end there. CSCS’ ability to ensure continuity of supply at the lowest
sustainable prices is only as strong as the relationships in place. Fortunately for us, we have a team at CSCS that is
highly accountable, executes to high standards, and understands nothing of lasting value can be accomplished alone.
And thank you to the Pancake Co-op Board and all Members for engaging in system excellence through your trust and
partnership. •

The nearly $16MM in value delivered Results through
in 2019 required an incredible amount of cross-funtional work, Relationships
much ofit underpnned by individual realtionships and trust.
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