Supply Chain Optimizationright place | right time | right quantity

Las Vegas | 3.8.2017

Welcome

a collaborative program that engages manufacturers, chain operators and distributors in the development of foodservice best practices that delivers a more efficient and effective supply chain.The output of the work will ensure product is in the right place, right time and right quantity and the consumer is 100% satisfied with their food experience.

SCO CHARTER

Recognitionwho’s involved

SCO SPONSORS | ASSOCIATIONS

SCO BOARD | OPERATORS

SCO BOARD | MANUFACTURERS

SCO BOARD | DISTRIBUTION

THE FULL SCO BOARD

orientationgrounding on current situation

discovery insightsdefine “SCO”

TODAY’S OBJECTIVES

The International Foodservice Manufacturers Association (IFMA) assigns the highest priority to full compliance with both the letter and the spirit of all applicable federal and state antitrust laws, and it is vital that this meeting be conducted in a manner consistent with that policy.

It is important to bear in mind that those participating in this meeting may work for your employer’s competitor. Accordingly, in order to ensure both strict compliance with the antitrust laws and the avoidance of any appearance of improper or anticompetitive conduct, all participants in this meeting are prohibited from discussing competitively sensitive information of competitor companies before, during and after this meeting. Competitively sensitive information generally includes non-public information about the setting of prices (including discounts, margins and sales and credit terms), profit margins or cost data, production restrictions, allocation of markets or customers, and your company’s future strategies and planning, as well as any other sensitive competitive information.

If, at any time during the course of the meeting, IFMA’s legal counsel believes that a sensitive topic under the antitrust laws is being discussed, or is about to be discussed, counsel will so advise the participants and halt further discussion of that topic. As participants in this meeting, you should likewise not hesitate to voice any concerns you may have in this regard. In addition, if your employer has an antitrust compliance policy, we encourage you to adhere to it as well. If you have any questions about appropriate topics for discussion, do not hesitate to consult with counsel.

Antitrust Reminder

What to Expect Ground Rules

o Challenge of the status quo o Ideaso Inspiration o New connectionso Some work and some fun o Raise the bar for the industry

o Participate

o Respect agenda / times

o No sacred cows

o There will be debate

o 80/20 alignment

o No sharing of proprietary information

o We will solve many issues and overcome many obstacles together

discovery

foundation & definition process tools

(data & comm.) activation training

pilot industry engagement

PROJECT FLOW

foundation & definition process tools

(data & comm.) activation training

MEETINGS

march 8 april 20 june 22 august 2 tbd

las vegas chicago chicago chicago chicago

TODAY

situation assessment

it all starts here

there is only one dollar

Retail: $671B (52%)

FS: $624B (48%)

$1.3 trilliontotal food spend

source: Datassential

there is only one dollar

Historic View

Food: $1.3T (100%)

Future View

the channels have blurred

FSR

LSR

Grocery

Club

C-Store

Drug

Just one-third of AFH is eaten at that venue

>50% of AFH food is eaten at home, work or school

74% of food is eaten at home

One in six AFH instances also includes food from home

competition has intensified

LTO ACTIVITY

13%

11%

15%

8% 9%

20%

15%

9%

0 to 3 4 to 5 6 to 10 11 to 15 16 to 20 21 to 30 31 to 50 Over 50

61%LTO ACTIVITY

14.0

14.8

18.619.2

20.820.3

21.7

24.6

22.5

24.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

LTO ACTIVITY

Starbucks 294Ram Restaurant & Brewery 230

Dunkin Donuts 208Au Bon Pain 204Bonefish Grill 192

Taco Bell 190Perkins Family Restaurant 183

Wawa Food Market 162Red Lobster 158

Maggiano's Little Italy 156Eat'n Park Restaurants 148

Sonic Drive-In 145Ninety Nine Restaurant And Pub 144

Coco's Bakery 138Mcdonald's 136

Granite City Food And Brewery 136Outback Steakhouse 135Carrabba's Italian Grill 132

Baskin-Robbins 131Bob Evans 126

total new items since june 2014

MOST PROLIFIC

suppliers want

operators want

consumers want

permanent menuproduct sales

product salesdifferentiation

differentiationreason for being

challenges across the supply chain

Increased Complexity and Volatility

Constantly modify supply chain to meet the ever-changing demands

Commodities ConsumersRestaurantsSuppliers Distribution Transportation

Challenges & Pressures• Ability to defend

food claims• Supply chain

readiness• Product

quality/recalls• Addressing

diversifying consumer preferences

• Sustainability

• Technology adoption

• Accurate demand/supply planning

• Improving inventory planning

• Improving flexibility and responsiveness

• Food safety & shelf life

• Dual sourcing & commodities management

• Improving visibility to supplier operations

• Optimizing network to reduce total landed cost and maintain quality / service

• Expanding distribution to support footprint growth

• Integration-enabling technologies

• Optimizing labor& equipment spend

• Minimizing waste / spoilage

• Omni-channel management

• Expanding choices -traditional & non-traditional

• Customer loyalty & relationship management

Rethinking the Supply Chain

Plan Design Source Distribution Restaurant Operations

• Demand Planning• Supply Planning• LTO / Promotions

Management• Integrated Business

Planning (Marketing, Menu, etc.)

• Network Asset Optimization

• Network Flow Optimization

• Risk / Contingency Management

• Category Management

• Supplier Management• Cost & Price

Management• Quality & Spec.

Management

• Logistics - Supplier to Restaurant

• DC / Warehouse Management

• Inventory Management

• Traceability

• Inventory Management

• Replenishment• Operations and Labor• Customer Experience

Collaboration

Technology / Platform / Analytics

Best Practices / Standards

Supply Chain as a Growth Enabler

Foodservice Supply Chain Capability Framework

board survey

53 survey responses10 operator interviews

your current approachchallenges & opportunitiesyour areas of investmentdesired outputs/outcomes for this workbarriers to implementationfunctions involved

TOPICS

SUPPLY CHAIN OPTIMIZATION

current approach

“Our marketing and LTO calendar is built around

not having waste”

“We don’t do a very good job of talking about the issues that really

need solving”

How would you characterize the effectiveness and efficiency of your current interaction and collaboration between you and your key channel partners around supply chain management?

Highly effective/efficient 10%

Somewhat effective/efficient 75%

neither 2%

Somewhat inefficient/ineffective 13%

Highly ineffective/inefficient 0%

“I don’t know what I don’t know”

State of Current Supply Chain Interaction & Collaboration

Identify your greatest areas of challenge or frustration when it comes to Supply Chain Optimization interaction with suppliers, chain operators and/or distributors?

Collaborative communication

Accurate & timely forecasting

Transparency / information sharing

Inventory management

Top 4 Areas of Challenge or Frustration

“We do not have a published

process for this”

Our greatest inefficiency is...

“the amount of time spent in back and forth communication as a result of not having a

clean process that outlines how stakeholders work together.”

“the lack of true sharing of information between all

trading partners.”

Great results

Predictability

Systems

Time management

Innovation

Forecasting

Sharing

Collaboration

TransparencyData driven

Visibility

Alignment

Communication

Opportunities for Optimization

Process

What is your organization’s single biggest Supply Chain opportunity area relative to interactions with external partners?

Better Communication

Lowering/controlling costs

LTO Management

Demand Predictability

Collaboration

“Accurate forecasts provided by the partner… with the appropriate lead time to execute cost efficient supply.”

“Lowering our total costs”

“Communication and execution. It seems we always have a breakdown in one area with external partners.”

“Testing, forecasting and execution on LTO items.”

“Collaborative communication among cross functional teams.”

your areas of investment

“I haven’t seen a platform worth investing in”

“We have a lot of gaps in information”

What areas have been the focus of your organization’s investment/efforts in improving Supply Chain Optimization

Process improvements 63%

Communication, connecting to the right people 63%

Information accuracy 51%

Execution 32%

Skills & capabilities development 22%

Information accuracy 22%

Investment Areas

“We need ideas on how to take waste

out of the system”

desired outputs / outcomes for this work

“A collaborative process among stakeholders to mitigate issues and help lower costs within

the supply chain”

“A best-practice approach across the three parties that can be leveraged as the basis of

dialogue, planning and execution.”

What is the most important thing you would like this Best Practice to address that would impact your businesses?

Improvement, internally and externally with partners

Collaborative executional processes

Standards in reporting

Metrics for project needs

Win-win efficiency solutions

Effective communication, partnership and relationship building

LTO execution

Creating improved transparency

Minimizing write-offs and excess inventory

A Best Practice for/in…

What do you see as the most valuable OUTPUTS of this IFMA-sponsored best practice model around Supply Chain Optimization?

A collaborative process for gaining better transparency and better communication between channel partners 73%

A best practice that defines an approach/process for managing core products and LTOs 53%

Project Outputs Needed

What do you see as the most valuable OUTCOMES of this IMFA-sponsored best practice model around Supply Chain Optimization?

Improved visibility and communication across the supply chain 82%

Ideas for supply chain flexibility and agility 50%

Ideas that will lead to cost savings 50%

Validation or improvement ideas to your current approach 42%

Project Outcomes Desired

“Our distribution model is the same as it was 20 years ago”

functions involved

What functions ARE CURRENTLY involved? What functions SHOULD be involved?

Functional Involvement

From To

procurementsupply chain

sales

procurementsupply chainsalesoperationsmarketingsr. managementculinary

barriers to implementation“Old school thinking…

lack of desire to learn new things or change behaviors… secrecy vs transparency between trading partners…

not creating win-win outcomes… a lack of willingness to work toward the common goal”

What are the greatest barriers to implementing a new best practice around supply chain optimization?

Paradigm shift in thinkingResistance to changeBreaking old habitsEstablished behaviorsOld school thinkingSecrecy

SkillsEffective models/processData accuracySystemsPoor forecastsAbility to execute

Having the right partners

CommunicationTrustWillingness to share informationFlexibilityCommitmentAccountability

Budget

Barriers to Implementation

Openness Attitude Enablers

Team $

Workshop

workshop #1barriers & challenges

discuss at your tablelist 5 to 7 key challenges

identify top 2 and whyreport out to full board

purpose: synthesize the current challenges in Supply Chaintiming: 30 minute discussion

workshop #2solutions that overcome

discuss at your tableidentify potential solutions for top 2 challenges

report out to full board

purpose: brainstorm solutions to address current challenges timing: 30 minute discussion

workshop #3define SCO best practice

review your card deck of DEFINITION WORDSuse blank cards to add more wordspick favorite words for desired state

write a 1-2 sentence definition using favorite wordsreport out to full board

purpose: create future state definition for supply chain optimizationtiming: 30 minute discussion

ForecastingCollaborativeInsight-drivenDataFoodservice industryTransparencySharingValue-addedCross-functionalEfficiencyEffectivenessCost savingsVisibilityCommunicationInventoryValue Chain

card deck starters

UP NEXT

Embassy SuitesRosemont O’hare

8:30am – 4pm

foundation & definition process tools

(data & comm.) activation training

march 8 april 20 june 22 august 2 tbd

las vegas chicago chicago chicago chicago

MEETING #2

April 20|Chicago SCO definition finalizationprocess identification & development

workstream prioritizationinputs, outputs & timing creation