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 The Purchase Specification: An Overall View 8

3. © 2011 John Wiley and Sons, Inc. All Rights Reserved YOU SHOULD BE ABLE TO: Give examples of information that should be included on purchase specifications. Create a purchase specification. Identify factors that influence the information included on purchase specifications.

4. © 2011 John Wiley and Sons, Inc. All Rights Reserved YOU SHOULD BE ABLE TO (CONT.): Explain the potential problems related to purchase specifications. Describe how quality is measured, including the use of government grades and packers’ brands.

5. © 2011 John Wiley and Sons, Inc. All Rights Reserved SPECIFICATIONS Product specification -- description of characteristics in a product to fill needs. Includes only information of product. Purchase specification – includes product spec information and also includes services required from suppliers.

6. © 2011 John Wiley and Sons, Inc. All Rights Reserved WHY HAVE SPECS? Create quality and cost control standards Help avoid misunderstandings Can be used as a training device Assist in the bid process

7. © 2011 John Wiley and Sons, Inc. All Rights Reserved WHO DECIDES WHAT TO INCLUDE ON A SPEC? Owner or manager Buyer User Some combination of the three

8. © 2011 John Wiley and Sons, Inc. All Rights Reserved What May be Included on a Spec? Performance requirement Exact name Packer’s name Grade Size Trim Package size Type of package Preservation or processing Point of origin Packaging procedure Ripeness Form Color

9. © 2011 John Wiley and Sons, Inc. All Rights Reserved What May be Included on a Spec? (cont.) Trade association standards Approved substitutes Expiration date Chemical standards Inspection procedure Cost and quantity limitations General instructions Specific instructions to bidders

10. © 2011 John Wiley and Sons, Inc. All Rights Reserved WHAT INFLUENCES THE SPEC? Goals and policies Time and money available Production systems Storage facilities Skill levels of employees Menu and prices Service style

11. © 2011 John Wiley and Sons, Inc. All Rights Reserved WHO WRITES THE SPEC? Company personnel Industry publications Hire an expert Buyer and supplier can work together

12. © 2011 John Wiley and Sons, Inc. All Rights Reserved POTENTIAL PROBLEMS WITH SPECS Unreasonable requirements Inadvertent discrimination Too high of quality standards Broad grades Not flexible Employees expertise in understanding information

13. © 2011 John Wiley and Sons, Inc. All Rights Reserved PROBLEMS ASSOCIATED WITH BID BUYING Lowball bids Inequality among bidders Restrictive specifications Redundant favoritism Delivery schedules

14. © 2011 John Wiley and Sons, Inc. All Rights Reserved QUALITY Must determine optimal quality to include on speck Who makes quality decision? Ultimately the customer Owner/managers have more leeway with supplies not encountered by customers

15. © 2011 John Wiley and Sons, Inc. All Rights Reserved MEASURES OF QUALITY Federal government grades AP prices Packers’ brands Samples Endorsements Trade associations Company’s specifications

16. © 2011 John Wiley and Sons, Inc. All Rights Reserved IS THE QUALITY AVAILABLE? Sometimes the desired quality is not available, e.g., low-quality apples for applesauce Desired quality may only be available from one supplier

17. © 2011 John Wiley and Sons, Inc. All Rights Reserved THE BUYER’S MAJOR ROLE Maintain quality standards often set by others