CONTROL & ORDER STOCK

CONTROL & ORDER STOCK sriram.ramanathan@tafensw.edu.au

By the end of this task you should be able to:1. monitor stock performance and identify fast and slow-selling items 2. understand centralised purchasing 3. obtain competitive prices from suppliers 4. maintain the quality of the supplies order stock for a variety of departments

Chef: Hi, I need a bottle of Orange Liqueur immediately.Purchasing officer: OK, but you haven't sent me any paperwork. What's happening?Chef: I don't have time for the paperwork, I've got a special on Crepe Suzettes this week and I've got a rush on.Purchasing officer: I need to know why you didn't order it with the stock yesterday.Chef: I didn't know I'd need it then. But last night the crepes were very popular and I used all my stock. I need another bottle now before these customers start going elsewhere.Purchasing officer: Is this special going to be a regular item on the menu? Do we need to adjust the stock order in future to take account of it?Chef: Yes, it's been so popular, I'll probably run it on the menu regularly. Can we meet and discuss this later?

Sources of supplyThe availability of sources of supply will vary considerable from place to place.Major cities, for example, usually have a large number of suppliers offering a wide range of goods. Isolated areas, on the other hand, would not have such a variety of suppliers to choose from and might be restricted to what is available.Food service operators look to suppliers in the following general categories:wholesalers - someone who buys large quantities of goods and resells to merchants/retailers rather than to the ultimate customers local producers manufacturers egKellogspackers – egVizyPackaging, local farmers retailers – Woolworths, Coles etcco-operative associations. Eg IGA, Dairy Farmers etc

Sources of supplyIn most cases a restaurant operator will deal with several of these suppliers to obtain the food necessary at the appropriate quality and the lowest price. For example, the restaurant might buy dairy and bakery products from local producers, canned meats from a packer, fresh meats from a wholesaler, canned fruit and vegetables from a different wholesaler and eggs from a local farmer.In recent years there has been a trend for wholesalers to diversify or expand their product lines to better meet the needs of their restaurant customers. Some wholesalers can now supply virtually all of the food-related needs of a restaurant.

How to obtain competitive prices while maintaining qualityTo ensure that purchases are made at the lowest favourable price, the purchasing officer must obtain quotes from several competing suppliers for each commodity they intend to buy. The procedures differ for perishable and non-perishable items.The prices for perishables often fluctuate or change on a daily basis. The purchasing officer should telephone several different suppliers of the same item to find out current prices each time an order is to be placed. It's a good idea to get prices from at least three separate suppliers.

How to obtain competitive prices while maintaining qualityAssuming that copies of the relevant purchase specification forms have been sent to the supplier, the purchasing officer knows that each supplier is quoting for items of the same quality. The quotations can be entered on a Quotation list including the name of the supplier, the item and the price they quote. The purchasing officer will call the supplier to place the order (usually the lowest bidder) and circle the relevant price quotation on the Quotation list. In this way the purchasing officer has a complete record of the items ordered, the prices, quantities and suppliers.In reality, you might need to consider other factors beyond the purchase price including:different delivery times from supplier to supplier the manager's possible preference for one supplier over another the reliability of the supplier in sending food that meets the specifications.

Inventory (stock) controlInventoryInventory describes the stock on hand to operate the business. Inventory figures may vary according to the methods used in managing and controlling stock. For example:Are bulky items guesstimated or weighed? ExamplesDoes stock use depict averages used or accurate stock takes taken? Is the first-in-first-out method used – What is this?

Inventory (stock) controlInventory is an expensive asset which you can control with accurate reporting. When the information generated is timely, accurate, reliable and consistent, you can:1. work out how much your stock is worth for accounting purposes 2. carry less inventory and reduce your costs 3. show food and beverage usage 4. track slow-moving items 5. know how much stock is on hand at any time so that you can maintain the correct par levels 6. decide when to order stock and how much to order 7. exercise greater control over theft and other undesirable fluctuations in stock 8. establish an efficient stock control system.

There are two basic inventory record keeping systems - physical and perpetual.Physical inventoryA physical inventory system periodically assesses the value of the stock in hand. This is usually done on a monthly basis as part of developing the business accounts. It can be done more regularly if any problems are identified.Perpetual inventoryA perpetual inventory system keeps a running balance of the quantities of each individual item in stock. It operates like a bank account - when more items are received in stores the balance is increased, when items are removed the balance is decreased. This means that, at any time, the amount of individual items in stock is known.As a general rule, most establishments use a combination of both physical and perpetual inventory. When the physical count of any product is different from the perpetual record (book balance), the variations can be investigated and controlled.

Minimising stock losses Security concerns during the purchase phaseThere are three main areas where financial loss can occur during purchasing.Collusion is where the employee placing the order works with an employee of the supplier to defraud or cheat the purchasing company. Products are purchased at a higher price than normal and the two employees pocket the difference. The abnormally high food/beverage cost usually gives it away that collusion is happening.Non-existent companieswhen the employee placing the order pretends to buy goods from a fictitious company. Cheques being sent to a post office box can give this away. Processing theftwhere a supplier may request payment for an invoice more than once. The purchasing officer may not pick this up and approve the additional payment.

Minimising stock losses Ethics in the purchasing phaseAn organisation should establish, and monitor, policies to ensure that all purchasing staff know what is/is not acceptable practice when purchasing stock.Policies might cover:the acceptance of gifts from suppliers favouritism towards specific suppliers reciprocal purchases personal shopping

Minimising stock losses How to combat supplier theftYou can avoid excessive food costs and prevent unethical behaviour by:1. ensuring that different people carry out the purchasing and receiving functions 2. training the receiving personnel in correct procedures 3. scheduling deliveries in slow times so that receiving procedures aren't rushed 4. having deliveries made in only one area, and having the appropriate equipment at hand 5. moving items directly to their correct storage areas as soon as they've been delivered 6. not allowing unauthorised personnel in the storage or receiving areas 7. installing security cameras to monitor specific areas of concern (if possible).

Ordering equipmentEquipment includes everything (that is not food, beverage or linen) that allows the hospitality industry to operate.You may be surprised at some of the consumables which have to be maintained at par stock levels based on past losses.Teaspoons, for example, can be very difficult to locate and count in a hotel situation. They might be found in a guest's room, the coffee shop, the staff lunch room, administration offices, restaurants, bars, kitchens, even a customer's handbag, the maintenance man's toolbag and the rubbish bin.In fact, up to 40% of a hotel's teaspoons can disappear within a stocktake period. Other consumables can include glassware, cutlery and crockery.Some equipment lends itself nicely to the Just In Time (JIT) system - the only conditions being that equipment must be available when needed and in sufficient quantity to meet maximum anticipated usage.

Ordering equipmentThis equipment can include:chairs tables uniforms audio visual equipment stoves pots and pans cots and rollaways. All this equipment can be stored wherever there is space available

Ordering quality stock for a restaurantIf a restaurant is to produce products of consistent quality,it must use raw materials that are of consistent quality.It is important that purchasing , in co-operation with other members of the management team:1. draws up a list of all food items to be purchased 2. lists in appropriate detail the specific and distinctive characteristics that best describe the desired quality of each food item. These carefully written descriptions are known as standard purchase specifications. The specifications are often based on grading standards established.Many knowledgeable individuals write specifications that are far more precise and, consequently, more useful when telling suppliers the exact quality desired.Once standard purchase specifications have been written and agreed upon by the management team, they are often duplicated and distributed to potential suppliers to make sure that each supplier understands the exact requirements of the restaurant.

CONTROL & ORDER STOCK