Page 4 - 2018 Apple Annual Report

MESSAGES

DAVID PARADISE

Board Chairman, Apple Supply Chain Co-op

" maintaining a healthy distribution network

is just as important to our bottom lines as

negotiating competitive prices "

There are many examples of companies falling into the trap of feeling secure only when things around them are

stable. In reality, and especially in our industry, security needs to be derived from our ability to change and adapt.
And as change accelerates, our capabilities need to as well. When we are aligned as a system, we can move

fast and win. With these things in mind, I invite you to read this report and learn about all the ways CSCS drove
positive changes for your business in 2018.

Centralized Supply Chain Services, or CSCS, is your company and exists to negotiate the lowest sustainable

prices, ensure continuity of supply, and support Applebee’s in product development. The CSCS team of supply
chain professionals is led by Mike Leikam who works tirelessly to identify new and creative ways to drive change

while making sure our interests are aligned. The end result is a “competitive advantage for every Member every
day” – a vision statement that is prominently displayed throughout the CSCS offices. There were two specific

developments in 2018 that exemplify the team’s work to drive change in a way that creates a competitive
advantage - the industry challenges around food distribution and the promising work resulting from the Restaurant

Profitability Management project or RPM.

Changes from the RPM project set the stage for how work gets done in the future, and the benefits derived in
2018 were significant. The $30 million in annualized savings last year is just the start of a long journey that will

be guided by new processes to drive cross-functional alignment on cost savings priorities, including a governance
structure that creates visibility to everyone involved. In last year’s letter, I promised significant savings without

impacting the guest experience, and the institutionalization of new methods of collaboration. I’m proud to report
both, and we should all look forward to what’s to come.

Maintaining a healthy distribution network is just as important to our bottom lines as negotiating competitive

prices. The transportation industry challenges have been well publicized, and the CSCS team is being proactive
in its use of both tactical and strategic measures to find opportunities within the macro trends. Strengthening our

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