USDA Foods Single Bank

1. Regional Meetings Winter 2014 USDA Foods Single Bank USDA Foods

2. HPS as your Commodity Administrator • The HPS Commodity Portal • HPS staff • Fee structure and Billing • Volume Discounts • HPS experience

3. HPS Commodity Portal • http://epcmec.hpsusdafoods.org • Browsers that work the best • Mozilla Firefox • Google Chrome

4. HPS Staff President & CEOTom LaPres • Senior Director of Finance & Administration Rick Jones • VP of Member Development and Customer Relations Michelle Pleiness • VP of Contracting and New Business Development Kevin Crampton Contracting National Contracts MedAssets-Healthcare Furniture, Finishes, & Equipment Member Relations Healthcare Members Administration Member Relations Associate Members Interior Design Support Services Contracting Regional Contracts All Segments Member Relations Education Members Technology Business Development USDA Foods Administration Corporate Communications Member Development All Segments

5. HPS Staff • Dedicated Point Person • Tami Kruger • epcmec@hpsnet.com • 800-632-4572 • Customer Service hours 8a.m.-5p.m. (est) • Established Vendor/Broker relationships • Backup staff at office

6. Fee Structure • Transparent • One bill a year, billed by Awarded Distributor • In Conjunction with Volume Discount

7. Volume Discounts • All discounts given will be passed on to districts • The awarded distributor (GFS) will distribute the Volume Discounts in Conjunction with the EPC/MEC Commodity Administration Bill • Report available on Portal • **May be in year two**

8. Volume Discounts

9. How will that work? (Example) You will be receiving the Volume Discount for School Year (SY) 2013-2014.  Disbursement of these rebates is in conjunction with your one-time annual fee for your Commodity Administration Service (CAS) for SY 2014-15.  The Volume Discount for SY 2013-2014 will be in one of two forms: GFS Credit Memo: • The amount shown on the credit memo is the net effect of the credit less the annual fee for Commodity Administration Services due to EPC/MEC. • This rebate has covered your fee to EPC/MEC and your district is paid in full for CAS for SY 2012-13. • Please process as a typical credit memo with GFS. GFS Invoice:   • The amount shown on the invoice means either: • The credit earned covered a portion of the CAS fee OR • Your district did not accrue any Volume Discounts in SY 2011-12 (there were no purchases from the manufacturers offering Volume Discounts). • Please submit payment to GFS, which in turn will remit payment for your EPC/MEC CAS fee. This process eliminates the need for you to cut an additional check for your CAS fee. • If your district does not receive either form of this communication from GFS, your district will receive a CAS fee bill directly from HPS.

10. HPS Experience • Transparency • Expertise (USDA Relationships) • A presence at ACDA • Branded Portal website • Excellent Customer Service for your members • Same Time Zone • Dedicated point person • Back-up personnel

11. USDA Foods Basics • What do commodities mean to customers • Importance of customers staying on track • Concept of Single Bank

12. What commodities mean to Customers • Schools earn @$0.27 per meal served • Do not lose track of this Fact: Your schools earned this amount by serving meals • This is not “Free Money” • It is not just given to the school • Schools can make a difference based on performance • Schools need to earn and utilize these funds to have a successful program.

13. The Value of USDA Foods • Average commercial cost of a meal: $1.50 • Average price of a meal: $2.25 • Food cost with no commodity: ($1.50/$2.25)66% • Food cost with commodity: ($1.50-$0.27)/$2.25)54% • Customers must effectively utilize their USDA Foods to realize this 12% in lower food costs. • Job one is to Spend Your Money

14. District Level Diversion Method • District decides how many pounds to go to the processors of their choice. • This decision is made in January/February timeframe of the prior school year • Cannot spend any more or less than pounds allocated

15. Inefficiencies of District Diversion • Lower flexibility in the menu offering • Allocating dollars to product and unable to utilize in the current school year • Low commodity utilization • High carryover balances • High level of frustration

16. Single Bank • What will it mean for me?????

17. Single Bank Process • Michigan piloted SY 2011-2012 • HPS and GLC implemented SY 2013-2014 • Ohio and California will start SY 2014-2015 • HPS has been successfully managing this system in the 2013-2014 school year • Great results • High member satisfaction • State Dept. pleased with results

18. Why make this change? • The system is becoming inefficient • Members do not have sufficient data to make the decisions they need to make • Converting Commercial Sales to Commodity Sales • USDA Utilization Directives • Use it or Lose it. • What does that mean?

19. HPS Advantages • Membership dues are paid once per year • Volume Rebate • (Members receive 100% of rebates earned) • Emphasis on Customer Service • Customer Service hours 8am-5pm EST.

20. Single Bank System • What does that mean? • Timeline • Processed Items • Volume Discounts • Brown Box • DoD Produce

21. What Does it Mean for your District? • Time saved on Survey Process • No need to calculate pounds • Ability to change processors when menu dictates • Allows members to focus on what they do best: • Feed Kids

22. What Does it Mean for your District? • Do I need to do a survey for Brown Box and DoD if my district does not want those items? • No. If you feel it is best for your district to use all of your entitlement on Processed, do not complete the survey and all of your entitlement will go into the Single Bank System • What if I forget to order Brown Box and DoD during the survey period?

23. What about my Carryover? • Processed • Will be included in the Single Bank • The Councils will have access to those pounds • They do not go back to Processor, get donated, or vanish • Non Processed • Will Carryover and you will see value of that carryover because you have already landed it

24. How does it all work? • How much Entitlement can I spend in the Single Bank System? • What Processors will be available to order from? • Can I spend too much at a Processor? • What about “Fair Share”?

25. How much can I spend in the Single Bank? • Depends on how much you divert to Non-Processed and DoD Produce. • All remaining entitlement will be available in the Single Bank System. • As an example if your district has $50,000 in entitlement and you • divert $5,000 to Non-Processed and an additional $5,000 to DoD • your district would be able to spend $40,000 on in the Single Bank System on Processed vendors. • Example Total Entitlement – Non-Processed Allocated – DoD Allocated = Single Bank Entitlement ($50,000) ($5,000) ($5,000) ($40,000)

26. What Processors will I be available to order from? • You can order from ANY approved EPC/MEC Processor. • How will I know what items to order? • GFS Experience and the Green Shield Icon. • Approved Product List on the Portal C C

27. What about Fair Share? • HPS has a system in place because per USDA a Fair Share must be ensured • Each member has a target of pounds at each Processor • We will determine targets from purchasing history • Once the target is reached, you will not be able to order from that Processor • If that happens you will call HPS to see if the overall Councils balance at that Processor would allow you to be loaded with additional pounds

28. How do these Targets work? • HPS will review your purchasing history and then: • Determine a minimum # of pounds that all members will have • Establish a buffer • This establishes your target • Place order with USDA • This will ensure Fair Share for all Members

29. What if I do not use a Processor? • Every member will start with a “Minimum Target” from every processor • HPS will reduce the balances by 10% of pounds from those members that had zero usage in any given month • Then HPS will re-distribute those pounds to members who are utilizing that processor

30. What Happens if I surpass my Target? • A notification will be sent to GFS and you. You will no longer get the Commodity discount for those vendor’s products. • At this point you can email HPS to determine if there are enough pounds available to be loaded with some more target pounds. • If that is not available you can continue to purchase NOI items from GFS at the Commercial price.

31. Are Brown Box and DoD part of Single Bank? • No. These products are ordered exactly as they are today • Complete the Survey • Products are assigned to your district • Place order through GFS • Storage Fees for Brown Box still apply • Survey dates for Brown Box Feb. 1st thru 21st

32. How can I manage this program? • You can monitor progress on your Home Page of http://epcmec.hpsusdafoods.org • You will be sent a notification from HPS when your Single Bank is 95% depleted • PAL Report

33. Will I still utilize Commodity Data Companies? • Yes, these companies are still very important in your managing of the USDA Foods program. • They are still your primary source for sales verification and have many resources that can help you utilize the program better.

34. K12 & Processor Link Usage Reports • You Will Always be at 100% - Don’t Worry!

35. What can HPS bring to EPC/MEC? • Email Notifications • Brown Box Delivery • EPC Specific Messages • Thresholds Notifications/Entitlement Notifications • Reports • Product List by DC • Broker Contact Information • Multiple thermometers for easy monitoring of progress • Detailed Brown Box order- With estimated delivery dates • Pie Chart of Manufacturers

36. Need assistance? • Please do not hesitate to call or email us!! • By Phone 1-800-632-4572 • By Email epcmec@hpsnet.com

37. Regional Meetings Winter 2014 Questions? Kevin Crampton | HPS, LLC Vice President of Contracting and Business Development kcrampton@hpsnet.com|269-795-3308

38. USDA Foods

39. USDA Foods • Monitoring Dollars – districts will no longer monitor pounds. Instead, they will monitor their dollars, much like a checkbook, on the hpsusdafoods.org website. • Spending - a district can make commodity purchases until 100% of their Total Entitlement is spend. This data is updated daily on the hpsusdafoods.org site.

40. USDA Foods Diverted to Processors Actual Spend Tyson $20,000 $18,000 JTM $20,000 $17,500 Schwan's $20,000 $19,500 Jennie O $20,000 $17,000 Pilgrims Pride $20,000$16,000 $100,000 $88,000 Carry Over = $12,000 (under spent)

41. USDA Foods Diverted to ProcessorsActual Spend Tyson $20,000 $18,000 JTM $20,000 $17,500 Schwan's $20,000 $19,500 Jennie O $20,000 $17,000 Pilgrims Pride $20,000$16,000 $100,000 $88,000 Single Bank Allowance $ 20,000 McCain $10,000 Gold Kist $ 5,000 Land O Lakes $ 7,000 $22,000 Additional $22,000 of commodity items to bring down the overall balance.

42. USDA Foods • Per USDA directive the commodity fair market value will not come off of your PAL report until it is delivered to your facility. Thus a district will no longer have a balance at the processor or processor.

43. Member Order Summary Report USDA Foods

44. Member Diversion USDA Foods

45. Truck Assignment – Brown Box USDA Foods

46. Product List USDA Foods