Food and Beverage Management Ch 8 Preparing for Production

The Flow of Food Purchasing Receiving Storing Issuing Tracking and Control

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

Purchasing Flow

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

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

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

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

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

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

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 -

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

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

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

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

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)

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

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

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

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

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

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

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.

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