Page 145 - Tom Finocchiaro - RPI Apple Onboarding

MESSAGE

MIKE LEIKAM

PRESIDENT & CEO APPLE SUPPLY CHAIN CO-OP

The theme of our fiscal year 2017 annual report, “Your Bottom Line is our Top
Focus” is really borne from our vision of Creating an Unmatched Competitive Advantage for EVERY Member EVERY
Day. Everything we do is focused on maximizing the value we deliver to you through the supply chain to improve your
bottom line.

One such step we undertook in 2017 together with Applebee’s was launching the Restaurant Profitability Improvement
project. Together we engaged a third-party consultant, PricewaterhouseCoopers, to help us identify additional
opportunities to improve margins while maintaining the customer and brand experience, optimize how we and the
Brand work together to maximize value, and to continue to enhance our and the Brand’s internal capabilities. This
effort will result in millions of dollars of additional value based on the results of similar engagements at other brands
and co-ops.

Softer commodity market trends and strategic sourcing strategies by Mark Smith and the Procurement team lowered
the Applebee’s market basket by 2.3% versus 2016 and significantly outperformed the corresponding Producers’
Price Index. This is the second year in a row of market basket deflation. Participation in our optional service
programs continued to grow as more Members realize their value. Paul Allegri’s logistics team delivered sustained
freight management results and focused on several key distributors whose service levels were not to acceptable
standards. Chris McNutt and the Brand Program Management team delivered strong results with effective campaign
management and improved collaboration with Applebee’s, and we continued to make progress against our technology
road map under the direction of Dustin Pittman, our Chief Financial Officer. In addition, under his direction, we
earned our ninth consecutive clean audit from our independent audit firm and operated the company within the Board
approved budget.

We manage CSCS guided by our core company values – Results Driven, Member Focused, Accountability,
Integrity, Continuous Improvement and Community. In September 2017, we again celebrated our
Member Focused value by conducting Member Maniac Week, a week where we attempt to contact
every Member of the Apple and Pancake Co-ops to find out how we can continue to improve and add Welcome
even greater value to your businesses. Our 2017 Member satisfaction scores improved to 4.77 out of Member!
5.0 versus our 2016 score of 4.63. We continue to receive a tremendous amount of feedback through
this process that will help us continue to improve.

We again would not have been able to achieve the results we did in 2017 without the support and
leadership of the CSCS and Apple Boards. It is an honor and a privilege to work with such a dedicated group
of people. I also want to thank the CSCS management team – Mark Smith, Dustin Pittman, Paul Allegri, Chris
McNutt, and Mary Hempfling. They are true professionals in every sense of the word. Finally, I want to thank every
CSCS team member. They are the true “Member Maniacs”, a tireless group of professionals dedicated to fulfilling our
vision of Creating an Unmatched Competitive Advantage for Every Member Every Day.
Thank you for your collaboration, feedback and support in 2017. I hope you find this annual report informative and
useful. We will continue to work hard to deliver against our commitments to you because this company exists for only
one reason – to serve you, our Member owners.

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