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 Security in the Purchasing Function 16

3. © 2011 John Wiley and Sons, Inc. All Rights Reserved YOU SHOULD BE ABLE TO: Discuss current employee theft statistics. Describe the security problems associated with the purchasing function. Identify methods used to prevent security problems related to purchasing. Create a process to reduce theft and pilferage in a hospitality operation.

4. © 2011 John Wiley and Sons, Inc. All Rights Reserved SECURITY PROBLEMS Kickbacks Invoice scams Supplier and receiver error Inventory theft Inventory padding Inventory substitutions Telephone sales scams

5. © 2011 John Wiley and Sons, Inc. All Rights Reserved SECURITY PROBLEMS (CONT.) E-Mail sales scams Operating activities Suspicious behavior

6. © 2011 John Wiley and Sons, Inc. All Rights Reserved WATCH EMPLOYEES WHO: Seem unduly friendly with salespeople Hang around storage areas Needlessly handle keys or locks Make too many trips to garbage areas, bathrooms, locker room, or parking lot

7. © 2011 John Wiley and Sons, Inc. All Rights Reserved WATCH EMPLOYEES WHO (CONT.): Requisition abnormally large amounts of supplies Make frequent trips to the storage areas for no real reason Have relatives working for the suppliers Frequently stray from assigned workstations

8. © 2011 John Wiley and Sons, Inc. All Rights Reserved WATCH EMPLOYEES WHO (CONT.): Are seen stuffing boxes or packages under a couch Are seen passing packages to guests Permit drivers to loiter in unauthorized areas Have visitors on the work site

9. © 2011 John Wiley and Sons, Inc. All Rights Reserved PREVENTING SECURITY BREACHES Select honest suppliers Ask other operators about suppliers’ honesty Employee honest employees Prosecute dishonest employees Background/reference checks, integrity tests Design physical facilities to help ensure security

10. © 2011 John Wiley and Sons, Inc. All Rights Reserved PREVENTING SECURITY PROBLEMS Document cash paid-outs No post office box payments Those who buy should never pay bills Cancel paperwork on all completed transactions Independent audit

11. © 2011 John Wiley and Sons, Inc. All Rights Reserved PREVENTING SECURITY PROBLEMS (CONT.) Secret shoppers Integrity and drug tests Bonding company Trash compactor Enter/Leave through one door Parking Locker rooms Delivery agent concerns

12. © 2011 John Wiley and Sons, Inc. All Rights Reserved PREVENTING SECURITY PROBLEMS (CONT.) Do not rush receivers Physical barriers Time and heavy-duty locks Good lighting in storage areas Closed-circuit television or digital recorders Uniformed guards See-through screens on storage facilities Perimeter and interior alarm systems

13. © 2011 John Wiley and Sons, Inc. All Rights Reserved PREVENTING SECURITY PROBLEMS (CONT.) Separate purchasing activities Compare prices Approved supplier lists Small single-service packages Restrict access to certain items