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Food and Beverage Management

Ch 8 Preparing for Production

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The Flow of FoodPurchasingReceivingStoring IssuingTracking and Control

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PurchasingAlways purchase from a reputable SupplierAn Operation can save or lose money with a

Purchasign System – Directly affects the bottom line

Purchase systems includeRequisitionsPurchase ordersDelivery Invoices

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Purchasing Flow

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Goals of a Purchasing SystemBuy the right productBuy the right amountPay the right priceDeal with the right supplier

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Buying the Right ProductDevelop Purchase specifications

QualitySizeWeightRipeness

Needed for each important item (ex. Filet)Ex. – 8 up PSMO Choice Filet

Clearly communicated to Suppliers & Receivers

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Make or BuyConvenience Foods –Prepared off siteSome managers believe that quality is less than

on site prepMight be less costlyMay be easier to purchase, receive, store and

issue

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Make or Buy AnalysisExampleBloody Mary Mix

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

quartLabor Cost = .31 per quart (15 minutes of labor)Total = $2.12 per quart

On site cost is $.33 cheaper than purchasing ready made

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Purchasing the Right QuantityCash Flow is adversely affected if inventory levels

are too highToo low – no product means lost sales and

unhappy customers

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Minimum Maximum OrderingUses par levels – the minimum level of stock

acceptablePar Levels are determined byLead 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

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Other Factors in Purchasing LevelsChanging PricesAvailable StorageStorage and handling costsWaste and SpoilageTheftMarket ConditionsQuantity discountsMinimum Order requirementsTransportation and deliveryOrder CostsFreshness -

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Paying the Right PriceGet bids from Several SuppliersNegotiateConsider lower quality productsDo you really have to buy it? Can it be made

better or cheaper on site?Combine OrdersRe evaluate high cost items, especially things

such as garnishes

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Paying the Right PricePay Cash – use discounts for paying promptlySpeculate on price trendsChange purchase unit sizeBe innovativeUse Promotional DiscountsBypass the supplier

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SuppliersLocationFacilityFinancial StabilityTechnical Knowledge of the staffHonesty and fairnessDependabilityFacility Inspections (own and regulatory)HACCP Programs

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Other ConcernsTheft

Track InventoryKickbacksFictitious Companies

EthicsDevelop standards and policies Integrity

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Receiving Inspect each delivery against POCompare 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)

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StorageSecurity includes:Lockable Storage areasPrecious storage Limited AccessEffective inventory control procedures

Perpetual inventory system

Central Inventory controlSecure DesignLighting and monitoring

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QualityRotate Food Stocks (FIFO)Store foods at proper temperaturesClean storage areas frequentlyEnsure proper ventilation and air circulation

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RecordkeepingPerpetual Inventory System

Similar to a checkbookConfirm at regular intervals (use different people)

Physical Inventory SystemTypically done once per month

Combination Systems

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Reducing Inventory CostsCarry a smaller amount of inventoryBe sure required levels are correctDecrease the number of items carriedRefuse to accept early deliveries

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Issuing ProductsIssue only on proper authorityDepends on system – Perpetual Inventory needs a

requisitionRequisitions should be entered daily

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Special Beverage ConcernsTypically buy by brand name

House or well brandCall brand Premium brands

Laws regarding suppliers vary by stateLaws regarding discounts vary by state Inventory turnover rates are lower

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Special Beverage ConcernsMore prone to theftAfter received – move immediately to storageAlways use secured storagePurchasing and receiving tasks should be

separatedIssue on a bottle for bottle basisMark bottles with dates and times.

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Technology and ControlE Commerce – facilitates ordering with suppliersJIT = Just in Time Inventory systemsOrdering Systems (FoodTrak) (www.foodtrak.com)Customized software systems integrating recipe

cards & purchasingUPC codes