Page 281 - Onboarding May 2017

Message

Mike Leikam
president & ceo

centralized supply chain services

The theme of our 2015 CSCS and Apple Supply Chain Co-op annual report is “Creating a Competitive

Advantage in Everything We Do”. It builds on our new vision statement, “Creating an unmatched
competitive advantage for every Member every day”. We changed our vision statement because we

believe it more clearly defines what we aspire to do on your behalf.

The words are important.

“Unmatched competitive advantage”.... After all, it really is the basis for CSCS’s existence. The whole idea of
bringing these two systems together from a supply chain perspective was to bring purchasing leverage to the
market others simply could not. Not only should our Members be better off than before they joined CSCS, they
should be better off than their competitors from a supply chain perspective.

“Every Member”.... It doesn’t matter if you operate several Applebee’s or you own several hundred of them, our
maniacal focus on delivering against our commitments to you is the same.

“Every day”.... Not some days, but every day. We must be relentless in our pursuit of achieving results for you.
The unintended consequence sometimes of achieving success is complacency. We must never rest on our
laurels or we jeopardize our ability to create the unmatched competitive advantage we strive to deliver for you.

2015’s Avian Influenza crisis in the egg industry provides an excellent example of CSCS delivering against our
vision statement. During a six-week period this disease wiped out 11% of all laying hen production in the United
States, hitting the Midwest especially hard where the majority of liquid processed egg production resides.
40% of all laying hens were lost in Iowa. Liquid egg markets rose by over 200% at their peak, over 70% versus
2014, and supply was rationed. Through our strategic supplier relationships, Mark Smith and the Procurement
team mitigated the price increases to 32% and avoided the supply disruption that others in the industry faced.
While the direct impact of this example was on IHOP and the Pancake Co-op, CSCS delivered similar results for
Applebee’s and the Apple Co-op when facing extraordinary circumstances in 2014 with the Quantum Foods
bankruptcy and 2013’s world-wide shrimp supply disruption caused by Early Mortality Syndrome (EMS)
disease.

In addition, the team played a key role in supporting the Hand Cut Wood Fire test and developed the key supply
elements necessary to support the rollout of this unprecedented program for the future of the Applebee’s
brand. This included managing the system wide rollout of new grills, becoming immersed in wood procurement
for the first time, and developing new strategies to source top sirloin, which demands a much different

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