© 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

© 2011 John Wiley and Sons, Inc. All Rights Reserved CHAPTER The Organization and Administration of Purchasing 6

© 2011 John Wiley and Sons, Inc. All Rights Reserved YOU SHOULD BE ABLE TO: Describe the methods used to plan and organize the purchasing activities of a hospitality operator. Recognize the issues involved in administering purchasing activities.

© 2011 John Wiley and Sons, Inc. All Rights Reserved YOU SHOULD BE ABLE TO (CONT.): Differentiate the purchasing organizational pattern between small independent, medium independent, and multiunit hospitality operations. Explain the advantages and disadvantages of centralized purchasing

© 2011 John Wiley and Sons, Inc. All Rights Reserved THE ADMINISTRATIVE STAGES OF PURCHASING Planning Organizing Staffing Training Budgeting Directing Controlling – direct vs. indirect

© 2011 John Wiley and Sons, Inc. All Rights Reserved PLANNING Objectives of purchasing Maintain adequate supply Minimize investment Maintain quality Obtain lowest possible edible-portion (EP) cost Maintain competitive advantage

© 2011 John Wiley and Sons, Inc. All Rights Reserved ORGANIZING Independent Organizations Chain Operations

© 2011 John Wiley and Sons, Inc. All Rights Reserved INDEPENDENT OPERATIONS Independent operations Small Medium-sized Large Co-op

© 2011 John Wiley and Sons, Inc. All Rights Reserved CHAIN OPERATIONS Local unit level Company-owned stores Centralized purchasing

© 2011 John Wiley and Sons, Inc. All Rights Reserved STAFFING Process of recruiting, hiring, and training personnel to perform specific tasks in an organization.

© 2011 John Wiley and Sons, Inc. All Rights Reserved TRAINING Entry level Job and company orientation Formal instruction On-the-job training

© 2011 John Wiley and Sons, Inc. All Rights Reserved TRAINING (CONT.) Professional Training Options National Restaurant Association National Restaurant Association Educational Foundation (NRAEF) Institute of Supply Management (ISM) North American Association of Food equipment Manufacturers (NAFEM)

© 2011 John Wiley and Sons, Inc. All Rights Reserved BUDGETING Budgeting – a realistic statement of management’s goals and objectives, expressed in financial terms.

© 2011 John Wiley and Sons, Inc. All Rights Reserved CONTROLLING Controlling – systems and procedures used by managers to ensure that the actual costs of doing business are consistent with the expected (or budgeted or theoretical) costs.