Food Purchasing Control

1
Food Purchasing Control

• HRT 276 Chapter 4
• Part II Food Control

2
Thanks to

• The information in this presentation comes from
  Chapter 4
• Principles of Food, Beverage, and Labor Cost
  Controls
• By Paul R. Dittmer
• 7th Edition. 2003. New York John Wiley Sons

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Introduction to Part II

• Purchase
• Receive
• Store
• Issue
• Produce
• Sell Serve

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Introduction

• Purchasing decisions are driven by these key
  components
• Menu
• Product specifications
• Purchase method
• Product forecasting
• Other factors
• Budgeted food cost goal
• Labor and type of service
• Equipment, storage space, and layout of facilities

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Purchasing The key factors

• Menudetermines needs
• Product specificationsdetermines quality
• Purchase methoddetermines price and supplier
• Product forecastingdetermines quantity

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Responsibility for Purchasing

• Manager, Chef, Steward
• The book uses the steward
• The primary issue in this step is to limit
  purchasing to one person if possible

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The Control Process (from Ch. 2)

• Establish standards and procedures
• Train
• Monitor performance
• Take appropriate action
• With people
• With products

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Definitions

• Perishables
• Comparatively short shelf life or useful life
• Think fresh purchased for immediate use
• Its a quality thing in most cases
• Can be more costly and more wasteful
• Non-perishables
• Comparatively longer shelf life
• Do no deteriorate as rapidly if stored closed and
  at proper temperatures

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Standards Developing Standards

• The primary purpose of establishing control over
  purchasing is to ensure a continuing supply of
  products
• In sufficient quantities
• At the appropriate quality for its intended use
• Purchased at the most favorable price
• Standards dictate
• Quality
• Quantity
• Price

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Standards Establishing Quality

• Before the first purchase, one must determine
• Type of food (menu-based decision)
• Quality of food (market-based decision)
• Brand
• Size
• Packaging
• Grade
• Degree of freshness
• Other

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Standards Establishing Quality

• To produce meals of desired and consistent
  quality, then the raw products must be of desired
  and consistent quality
• STANDARD PURCHASING SPECIFICATION
• Commonly abbreviated SPS
• These specifications dictate quality

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Standards Establishing Quality

• SPS
• Establishes exact requirements in advance
• Useful in menu preparation and development
• Help eliminate misunderstandings between steward
  and purveyors (vendors)
• When distributed to more than one purveyor,
  competitive bidding is possible
• Limit or eliminate verbal descriptions each order
• Aid in proper receiving

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Standards Establishing Quantity

• Principles are based primarily on useful life of
  the product
• Perishable
• Non-perishable
• Other considerations
• Projected business volume
• Storage
• Financial desires (cash-on-hand vs. on-shelf)
• Purveyor minimums (quantity or value)

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Standards Terms and considerations

• Storage locations
• Permanent locations / Limited Locations
• Shelf tags and labels
• FIFO
• Bin Cards
• Computerized assistance

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Standards Establishing Quantity

• Perishables
• Par or Par Stock
• Minimum vs. maximum vs. always on-hand
• Defined for our use as the quantity of any
  item required to meet anticipated demand in some
  specific upcoming period of time
• The par level is established using historical
  information (remember the assumptions!)
• Volume projections may dictate that more than
  normal is needed.

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Standards Establishing Quantity

• Ordering Perishables
• The par (standard for quantity) is established
  and used in calculating the needed purchase
  amount
• Steward conducts a daily physical inventory (or
  at least a physical observation)
• Par is sometimes called a build-to value
• So, par is what we need
• Inventory is what we actually have
• Order is the difference between par and actual
• More may be ordered as par can be considered a
  minimum

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Standards Establishing Quantity

• Ordering Perishables (continued)
• Stewards Market Quotation List (figure 4.2)
• For all purveyors holding the SPS for
  perishables, daily quoting is possible (price
  issue)

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Standards Establishing Quantity

• Non-Perishables
• Par methods can be used
• The par level is established using historical
  information
• Storage is a greater issue as the time period
  between orders may be longer
• Issues
• Storage / Permanent Location
• Theft
• Waste FIFO
• Labor for maintenance

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Standards Establishing Quantity

• Ordering Non-Perishables
• Periodic Order Method
• Amount required for upcoming period 40
• - Amount presently on hand - 12
• Amount wanted on hand at the end of the 15
• period to cover needs until the next delivery
• Amount to order 43
• Ideally, physical inventory is used to determine
  on-hand amounts

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Standards Establishing Quantity

• Ordering Non-Perishables
• Perpetual Order Method
• It is like a check book (In, Out, Balance)
• Requires some type of tracking
• Perpetual Inventory Cards (not bin cards)
• Paper or Computer
• Reorder Point - the amount at which a new order
  is placed
• Reorder Quantity the amount ordered regularly
  once stock reaches the reorder point

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Standards Establishing Quantity

• Ordering Non-Perishables (continued)
• Perpetual Order Method
• Par stock 32
• - Reorder Point - 15
• Subtotal 17
• Normal usage until delivery 10
• Reorder quantity (minimum needed) 27
• Note that the standardized Reorder Quantity is
  24, so a determination of number of cases is
  needed (case may be 6, 12, 24 of each item)

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Standards Establishing Price

• Quality what to buy
• Quantity how much to buy
• Price how much to spend
• Factors
• Quality / Market segment
• Quantity / Economies of Scale
• Seasonality of product
• Location
• Availability of more than one purveyor

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Standards Establishing Price

• Price Quote
• Daily
• Longer (bulk buying, commitments, etc.)
• Methods
• Phone
• Fax
• Email / Web / Direct On-line Links with Purveyor
• Salesperson
• Mail

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Standards Establishing Price

• Perishable
• Daily
• Weekly
• More than one purveyor is likely
• Non-Perishable
• More likely one primary purveyor and one back-up
• Individual items may vary between purveyors, but
  keep the big picture in mind

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Training for Purchasing

• Training of the Purchaser
• Formal education
• On-the-job training
• Owner / Manager
• Purveyors / Food Shows / Specialized training
• Use of SPS and other Standards
• Use of general policies and procedures regarding
  the operation that relate to purchasing
• Knowing the other steps in the flow of food

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Monitoring Purchasing

• Purchasing
• Standard Purchase Specifications (SPS)
• Monitor purveyor performance
• Monitor purchaser performance
• Who does what?
• Owner / Manager works with purchaser (steward)
• Both Owner or Manager and Steward monitor SPS and
  purveyors
• Steward must have two-way communication with the
  receiver

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Taking Corrective Action

• With Purchaser
• Further training and development
• Re-training
• Discipline
• By Purchaser
• Contact with salesperson
• Contact with purveyor directly
• Any variation from standards must be
  investigated people or product

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Purchasing Centralized Purchasing

• Needs of individual operations (units) are
  consolidated to a central location
• Total needs are purchased
• Purchased items be distributed to individual
  operations by the purveyor or by the company
  (central location)

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Purchasing Centralized Purchasing

• Advantages
• Volume pricing
• More choice of purveyors may lead to better
  quality
• SPS more likely to be met
• Larger inventories can lead to more reliable
  supply
• The possibilities for dishonest purchasing in
  individual units are reduced

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Purchasing Centralized Purchasing

• Disadvantages
• Restricts individual unit operators freedom
• Selection (variety)
• Needs (timing)
• Individual unit operators can not take advantage
  of local specials
• Limits individual menu variations

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Purchasing Standing Orders

• Delivery without order
• Specific quantity on a set day
• Building an item up to a specified level
• Convenient
• Possible waste or excessive cost

32
Purchasing Computer Applications

• Simple
• Excel
• Database
• HOH only
• More complex
• HOH and FOH communication
• May include
• Recipes
• Labor