Purchasing Chapter 6

What is Purchasing? Purchasing is the process of getting the right product into a facility at the right time and in a form that meets pre- established standards for quantity, quality, and price. Procurement

The Market Market Channel Primary Market Secondary Market Local Market Brokers

Market Regulations USDA –Food Safety and Inspection Service Meat, Poultry, Eggs

Market Regulations FDA –Pure Food and Drug Act, 1906 –Food and Drug Cosmetic Act, 1938 –Fair Packaging and Labeling Act, 1966 –Nutrition Labeling Regulations, 1973 –Nutritional Labeling and Education Act, 1990

Market Regulations Enforced by FDA –Misbranded food –Standards of identity –Standards of quality –Standards of fill

Market Regulations National Marine and Fisheries Service U.S. Public Health Service Environmental Protection Agency Department of the Treasury

Flow of Purchasing Activities Identify needs

Flow of Purchasing Activities Identify needs Determine standards of quality and write specifications

Product Selection Market forms of food Value Analysis –Determining the best value in services and features for the price obtained. –Standards of quality vary from operation to operation Considerations: –Cost –Facility –Employee skills –Menu –Equipment use –Storage –Customers

Standards of Quality Quality standards Grades –Grading and Acceptance Services –Pg. 212 Brands

Specifications Includes: –Name of the product – Federal grade or brand – Unit on which price was quoted – Name and size of container – Count per container or approximate number per pound Example: –Yellow Cling Peaches, Choice, 6-No. 10 cans/case

Specifications Additional information: –Count and size of items in the container –Weight ranges –Type of processing or packaging –Degree of ripeness –Additional information for different food categories – pg. 219 Example: Yellow Cling Peach Halves, Choice, size in No. 10 can, packed in light syrup, 6-No. 10 can/case.

Specifications Chicken Breast Fillets: Form: boneless, skinless, Cajun marinated breast halves with no rib meat Use: grilled Cajun flavored chicken breast Class: broiler/fryer Preservation form: frozen, 0° F inside case on delivery in refrigerated truck Quality: U.S. Grade A Weight: 3 ½ to 4 ½ ounces Pack: 10-pound carton Price: by the carton

Flow of Purchasing Activities Identify needs Determine standards of quality and write specifications Estimate quantities needed

Quantities Needed Frequency of deliveries Storage space Amount of money Method of buying Type of food

Flow of Purchasing Activities Identify needs Determine standards of quality and write specifications Estimate quantities needed Calculate desired inventory or stock levels

Inventory Stock Level Par Stock Mini-max

Flow of Purchasing Activities Identify needs Determine standards of quality and write specifications Estimate quantities needed Calculate desired inventory or stock levels Identify amounts to purchase Develop purchase orders

Purchase Orders P.O. Written requests to vendor to sell goods or services to a facility Requisitions Authorization

Flow of Purchasing Activities Identify needs Determine standards of quality and write specifications Estimate quantities needed Calculate desired inventory or stock levels Identify amounts to purchase Develop purchase orders Conduct market research

The Vendor Careful evaluation –Facilities –Policies Value added services Ethics in purchasing –Collusion

Flow of Purchasing Activities Identify needs Determine standards of quality and write specifications Estimate quantities needed Calculate desired inventory or stock levels Identify amounts to purchase Develop purchase orders Conduct market research Select and negotiate with vendors

Methods of Purchasing Formal –Issuing bid requests –Tabulating and evaluating bids –Awarding bids Informal –Price quotations –Select vendor and place order

Variations Cost-plus purchasing Prime vending Blanket purchase agreement Just-in-time purchasing

Types of Purchasing Centralized purchasing Group or cooperative purchasing Group purchasing organization (GPO)