1. © 2011 John Wiley and Sons, Inc. All Rights Reserved Selection and Procurement for the Hospitality Industry Purchasing ANDREW HALE FEINSTEIN AND JOHN M. STEFANELLI E i g h t h E d i t i o n

2. © 2011 John Wiley and Sons, Inc. All Rights Reserved CHAPTER The Optimal Supplier 12

3. © 2011 John Wiley and Sons, Inc. All Rights Reserved THE INITIAL SUPPLIER SURVEY List all possible suppliers Trim list by establishing a set of criteria Product Lists AP prices Supplier services Location Lead times Purchasing policies

4. © 2011 John Wiley and Sons, Inc. All Rights Reserved BUYING PLANS Working with one supplier Bid Buying

5. © 2011 John Wiley and Sons, Inc. All Rights Reserved THE FIXED BID VS. THE DAILY BID Fixed bid Used for large quantities of products purchased over a long period of time Typically a formal procedure Request for bid includes specs for bidding process Daily bid Used for fresh items Called “daily quote buying”

6. © 2011 John Wiley and Sons, Inc. All Rights Reserved SELECTING A SUPPLIER WHEN USING BID-BUYING Fixed Bid Distribute bid requests to potential suppliers Determine what supplier provides you with the optimal value for a product or a set of products Daily bid Review bid sheets Determine what supplier provides you with the optimal value

7. © 2011 John Wiley and Sons, Inc. All Rights Reserved OTHER SUPPLIER SELECTION CRITERIA Cost-plus purchasing One-stop shopping Stockless purchasing Cash-and-carry Standing orders Use of technology Co-op purchasing Local or national source

8. © 2011 John Wiley and Sons, Inc. All Rights Reserved OTHER SUPPLIER SELECTION CRITERIA (CONT.) Delivery schedule Ordering procedures Credit terms Minimum order requirements Variety of merchandise

9. © 2011 John Wiley and Sons, Inc. All Rights Reserved OTHER SUPPLIER SELECTION CRITERIA (CONT.) Lead time Free samples Returns policy Reciprocal buying Willingness to barter

10. © 2011 John Wiley and Sons, Inc. All Rights Reserved OTHER SUPPLIER SELECTION CRITERIA (CONT.) Cooperation in bid procedures Size of firm Number of back orders Substitution capability Buyout policy

11. © 2011 John Wiley and Sons, Inc. All Rights Reserved OTHER SUPPLIER SELECTION CRITERIA (CONT.) Suppliers facilities Long-term contracts Case price Bonded suppliers Consulting services Deposits required

12. © 2011 John Wiley and Sons, Inc. All Rights Reserved OTHER SUPPLIER SELECTION CRITERIA (CONT.) Willingness to sell storage Suppliers who own hospitality operations Socially responsible suppliers references

13. © 2011 John Wiley and Sons, Inc. All Rights Reserved MOST IMPORTANT SELECTION CRITERIA Individual buyer preference Product quality usually number one Supplier service is a close second AP price is usually third

14. © 2011 John Wiley and Sons, Inc. All Rights Reserved SUPPLIER-BUYER RELATIONS Supply house officers set the tone of their business They set the overall sales strategies They sponsor product and market research Suppliers train their sales staffs Suppliers keep their salespersons’ promises

15. © 2011 John Wiley and Sons, Inc. All Rights Reserved SUPPLIERS’ MAJOR ACTIVITIES Set tone of business Determine sales strategies Push Pull Product and market research Sales training

16. © 2011 John Wiley and Sons, Inc. All Rights Reserved ADDITIONAL CONSIDERATIONS Determine how you will work with salespersons or distributor sales representatives (DSRs) Evaluate suppliers and salespersons Get comfortable in the relationship