1. Food and Beverage Management
Ch 8 Preparing for Production

2. The Flow of Food Purchasing Receiving Storing Issuing
Tracking and Control

3. Purchasing Always purchase from a reputable Supplier
An Operation can save or lose money with a Purchasign System – Directly affects the bottom line
Purchase systems include
Requisitions
Purchase orders
Delivery Invoices

4. Purchasing Flow

5. Goals of a Purchasing System
Buy the right product
Buy the right amount
Pay the right price
Deal with the right supplier

6. Buying the Right Product
Develop Purchase specifications
Quality
Size
Weight
Ripeness
Needed for each important item (ex. Filet)
Ex. – 8 up PSMO Choice Filet
Clearly communicated to Suppliers & Receivers

7. Make or Buy Convenience Foods – Prepared off site
Some managers believe that quality is less than on site prep
Might be less costly
May be easier to purchase, receive, store and issue

8. Make or Buy Analysis Example Bloody Mary Mix Make on site –
Purchase in 5 case lots - $31 case for 12 quart bottles
Cost per bottle = $2.45 after 5% discount on bulk purchase
Make on site –
Ingredient cost use standard recipe = $1.81 per quart
Labor Cost = .31 per quart (15 minutes of labor)
Total = $2.12 per quart
On site cost is $.33 cheaper than purchasing ready made

9. Purchasing the Right Quantity
Cash Flow is adversely affected if inventory levels are too high
Too low – no product means lost sales and unhappy customers

10. Minimum Maximum Ordering
Uses par levels – the minimum level of stock acceptable
Par Levels are determined by
Lead time quantity – number of units that will be used between the time the replacement stock is ordered and delivered
Safety Stock Level – in case of shortages, spoilage, etc
Get Bids from Several Suppliers

11. Other Factors in Purchasing Levels
Changing Prices
Available Storage
Storage and handling costs
Waste and Spoilage
Theft
Market Conditions
Quantity discounts
Minimum Order requirements
Transportation and delivery
Order Costs
Freshness -

12. Paying the Right Price Get bids from Several Suppliers Negotiate
Consider lower quality products
Do you really have to buy it? Can it be made better or cheaper on site?
Combine Orders
Re evaluate high cost items, especially things such as garnishes

13. Paying the Right Price Pay Cash – use discounts for paying promptly
Speculate on price trends
Change purchase unit size
Be innovative
Use Promotional Discounts
Bypass the supplier

14. Suppliers Location Facility Financial Stability
Technical Knowledge of the staff
Honesty and fairness
Dependability
Facility Inspections (own and regulatory)
HACCP Programs

15. Other Concerns Theft Ethics Track Inventory Kickbacks
Fictitious Companies
Ethics
Develop standards and policies
Integrity

16. Receiving Inspect each delivery against PO
Compare delivered Product against specifications – weights, etc.
Inspect against Delivery invoice
Verify Price per unit (against PO)
Verify math!
If not delivered (or rejected) – get a credit memo (signed!)
Accept Product (or reject)
If needed check temperatures
Check for pests
Store – label and date (for FIFO)
Complete reports (some PO ‘s are also HACCP Records)

17. Storage Security includes: Lockable Storage areas Precious storage
Limited Access
Effective inventory control procedures
Perpetual inventory system
Central Inventory control
Secure Design
Lighting and monitoring

18. Quality Rotate Food Stocks (FIFO) Store foods at proper temperatures
Clean storage areas frequently
Ensure proper ventilation and air circulation

19. Recordkeeping Perpetual Inventory System Physical Inventory System
Similar to a checkbook
Confirm at regular intervals (use different people)
Physical Inventory System
Typically done once per month
Combination Systems

20. Reducing Inventory Costs
Carry a smaller amount of inventory
Be sure required levels are correct
Decrease the number of items carried
Refuse to accept early deliveries

21. Issuing Products Issue only on proper authority
Depends on system – Perpetual Inventory needs a requisition
Requisitions should be entered daily

22. Special Beverage Concerns
Typically buy by brand name
House or well brand
Call brand
Premium brands
Laws regarding suppliers vary by state
Laws regarding discounts vary by state
Inventory turnover rates are lower

23. Special Beverage Concerns
More prone to theft
After received – move immediately to storage
Always use secured storage
Purchasing and receiving tasks should be separated
Issue on a bottle for bottle basis
Mark bottles with dates and times.

24. Technology and Control
E Commerce – facilitates ordering with suppliers
JIT = Just in Time Inventory systems
Ordering Systems (FoodTrak) (
Customized software systems integrating recipe cards & purchasing
UPC codes