NFSC 350 Purchasing

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NFSC 350Purchasing

• Nancy Brenowitz, MS, RD

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Purchasing

• The process of getting the right product into the
  facility at the right time, and in a form that
  meets pre-established standards for quantity,
  quality and price
• Must
• Know about the processing and serving of food
• Know about the intended use of various food items
• Follow market conditions
• Be alert to yields and labor requirements
• Be able to identify quality and value in buying

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Buying Procedures

• Should reflect
• Type of institution and/or service
• Sources of supply that are dependable and
  convenient
• Availability of selections, service, cooperation
  and sources of supply
• Inspection services required for certification of
  grade and wholesomeness
• Consistently uniform quality, grades, types,
  styles, counts, sizes
• Production needs

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Buying Procedures

• Costs incurred in inventory, warehousing, cold
  storage, handling costs
• Economic conditions reflecting availability,
  seasonality of foods, price trends
• Physical conditions of the system, including
  general layout, equipment, service
  accommodations, prep space, receiving,
  warehousing, cold storage facilities
• Financial structure and buying power of
  institution
• Various tax laws and insurance

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Overall Purchasing Plan

• Determine what items are needed
• Determine specifications
• Determine best way to purchase item and order
• Receive order, checking for quality and quantity
• Put items in appropriate storage areas and add to
  inventory
• Pay vendors invoice
• Food issues to kitchen, subtracted from inventory

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Factors in Purchasing Decisions

• Assembly time
• Processors
• Pricing
• Type of reconstitution
• Packaging
• Transportation
• Acceptability
• Nutritional content
• Sensory Factors

• Quantity
• Usage rate
• Quality
• Production control
• Variety of items
• Purchasing procedures
• Space
• Personnel
• Prep time

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Par Level vs. Order as Needed

• Par Level
• Minimum and maximum amount of an item kept on
  hand (FIFO)
• When reach minimum, automatically order more to
  reach maximum
• Too high means money tied up in inventory
• Too low means at risk of running out
• Easier for set menus, harder for selective menus
• Good for cycle menus
• May allow you to take advantage of quantity
  discounts, sales

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Selecting Purveyors

• Price
• Ability to meet price, quality and quantity needs
• Product quality
• Quality of services rendered
• Delivery needs
• Cleanliness and upkeep of plant

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Buying Procedures (Informal)

• Open Market
• Call a variety of vendors and ask for prices,
  then determine who to buy from
• Ordering food and supplies from a selected list
  of vendors based on daily, weekly, monthly price
  quotes
• Cherry picking system-dividing up total order
  between purveyors
• Bottom line buyingbuy all the food in that
  category from the purveyor with the lowest total
  price
• Must be familiar with purveyor
• Best for small operations, allows for frequent
  changes

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Buying Procedures (Informal)

• Cost Plus Buying (prime vendor)
• A buyer agrees with a purveyor to buy as much as
  75-85 of the buyers need for a particular class
  of food from the dealer for a period of time
• Vendor agrees that certain items will always be
  available, even if they must get from another
  source
• Works well when volume of business is large
• Vendors charge 15-25 markup

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Buying Procedures (Informal)

• On-site purchasing
• Small organizations
• Used for produce, some meat, fish, poultry eggs
• Eliminates middle man
• Auction
• A bidding system for produce
• Use by large quantity food buyers
• Must be a member in order to bid

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Buying Procedures (Informal)

• Standing Orders
• For items needed frequently
• Milk, bread, etc.
• May need to adapt on certain occasions such as
  holidays, special events
• Negotiated Buying
• Buyer and purveyor negotiate a price for a
  certain period of time

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Buying Procedures (Informal)

• Just-In-Time Purchasing
• Main point is to have items delivered as close to
  production time as possible
• Dont want a lot of money to be tied up in
  inventory or dont have large amounts of storage
  space
• Usually negotiate with one prime vendor
• Need computerized inventory and ordering
• Fewer staff needed

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Buying Procedures (Formal)

• Formal Written Bid
• Common with government and state facilities
• Buyer submits written specs and quantity needed
  to interested vendors with an invitation for bids
• Request for bid includes
• Method of delivery
• Term of payment
• Willingness to accept all or part of a bid
• Discounts and other terms of negotiation
• Date of closing for bids

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Buying Procedures (Formal)

• Formal Written Bid
• For government, bids remain sealed until a
  specified time at which they are all opened
• Order placed with vendor submitting lowest bids
  that meets all of organizations needs

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Buying Procedures (Formal)

• Formal Written Bid
• Advantages
• Easy to control
• Solves problem of questionable ethics
• Allows steady flow of merchandise at
  non-fluctuating price
• Disadvantages
• Cumbersome
• Purchasing planned FAR in advance
• Not practical for perishable items, items where
  price change frequently

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Specifications

• Types of specifications
• Internal define items used within the facility,
  recipes, requisitions
• External product needs required for vendors to
  be able to quote price, deliver right product
• General Specifications apply to overall
  purchasing program covers factors and
  arrangements that apply to all deliveries such as
  delivery time

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External Specifications

• Name of item
• Legal definition/standard of identity
• Very specific
• Tomatoes, chopped, canned
• Quantity
• Minimum amount

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External Specifications

• Quality needed
• Brand names may be prohibited in open bidding
  but can describe to specifically that no other
  product can match it
• Grading government and vendor
• Packaging, size, Containers, Count
• Size can
• Number per case
• Number and/or weight of item in bag, crate,
  carton

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External Specifications

• Unit Price
• Price per ________ (can, pound, individual items
  and price for total order)
• Miscellaneous
• Geographical area of production
• Variety (Bosc, DAnjou, Jonah Gold)
• Type (cut, skinned/unskinned, chilled
• Style (sticks, fingers, tidbits)
• Count and portion size
• Yield grade
• Syrup density, packing medium, percent mixtures
• Aging/Ripeness
• Delivery time

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Sample Specification

• Name of Item
• Broccoliflower, fresh
• Quantity
• 25 cases/month
• Quality, brand or other details
• Grade US Number 1
• Brand California Fresh

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Sample Specification

• Delivery/Packaging, etc.
• 12 heads per case (crate)
• 1 head weights 1-1.5 pounds
• Case weight 12-18 pounds
• Unit on which price is based
• 1.99/head or 23.88 for 12 pound case

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Sample Specification

• Miscellaneous factors
• Color Light green with fresh green jacket
• Freshness NO riciness, fuzziness, no wilting of
  leaves, bruises or brown spots, no yellow leaves
  or open buds
• Geographical area N/A
• Styles Base trim even within 1-2 inches from
  curd clean, heavy, compact curd
• Condition upon receipt maximum 10-14 days from
  harvest to delivery, transportation at lt40F, free
  of insects, style and freshness as described
  above

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Buying Procedures (Other)

• Cooperative or Group Buying
• Several facilities agree to buy as a group
• Can drive prices down due to increased volume
• Supplier Development
• Special agreement between buyer and seller
• One-stop Buying
• Getting all food needs from one location
• Prices can be lower

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Food Evaluation

• Manager needs to evaluate foods for appearance
  and sensory quality, as well as quantity
• Value Quality/Price
• To Increase Value
• Decrease pricebuy in bulk
• Increase quality, keeping price the same
• Decrease quality if you decrease price more
• Increase quality if you increase price less

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Ethics in Purchasing

• Purchasing person should not be receiving person
  or storeroom clerk
• Vendor may try to
• Upgrade quality and charge for it
• Short weight and/or count
• Price changing
• Brand and label substitution
• Upgrading sizes and charging for it
• Give inappropriate prizes or gifts

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Ethics in Purchasing

• Buyer should
• Be courteous
• Establish regular hours for vendors to call, and
  adhere to schedule
• Be fair
• Dont disclose one vendors price to another
• Never accept special gifts