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Food Purchasing Control. HRT 276 – Chapter 4 Part II: Food Control. Thanks to…. The information in this presentation comes from Chapter 4: Principles of Food, Beverage, and Labor Cost Controls By Paul R. Dittmer 7 th Edition. 2003. New York: John Wiley & Sons. Introduction to Part II.

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food purchasing control

Food Purchasing Control

HRT 276 – Chapter 4

Part II: Food Control

thanks to
Thanks to…

The information in this presentation comes from Chapter 4:

Principles of Food, Beverage, and Labor Cost Controls

By Paul R. Dittmer

7th Edition. 2003. New York: John Wiley & Sons

introduction to part ii
Introduction to Part II
  • Purchase
  • Receive
  • Store
  • Issue
  • Produce
  • Sell & Serve
  • Purchasing decisions are driven by these key components:
    • Menu
    • Product specifications
    • Purchase method
    • Product forecasting
  • Other factors
    • Budgeted food cost goal
    • Labor and type of service
    • Equipment, storage space, and layout of facilities
purchasing the key factors
Purchasing: The key factors
  • Menu—determines needs
  • Product specifications—determines quality
  • Purchase method—determines price and supplier
  • Product forecasting—determines quantity
responsibility for purchasing
Responsibility for Purchasing
  • Manager, Chef, Steward
  • The book uses the steward
  • The primary issue in this step is to limit purchasing to one person if possible
the control process from ch 2
The Control Process (from Ch. 2)
  • Establish standards and procedures
  • Train
  • Monitor performance
  • Take appropriate action
    • With people
    • With products
  • Perishables
    • Comparatively short shelf life or useful life
    • Think “fresh” – purchased for immediate use
    • It’s a “quality thing” in most cases
    • Can be more costly and more wasteful
  • Non-perishables
    • Comparatively longer shelf life
    • Do no deteriorate as rapidly if stored closed and at proper temperatures
standards developing standards
Standards: Developing Standards
  • The primary purpose of establishing control over purchasing is to ensure a continuing supply of products:
    • In sufficient quantities
    • At the appropriate quality for its intended use
    • Purchased at the most favorable price
  • Standards dictate:
    • Quality
    • Quantity
    • Price
standards establishing quality
Standards: Establishing Quality
  • Before the first purchase, one must determine:
    • Type of food (menu-based decision)
    • Quality of food (market-based decision)
      • Brand
      • Size
      • Packaging
      • Grade
      • Degree of freshness
      • Other
standards establishing quality1
Standards: Establishing Quality
  • To produce meals of desired and consistent quality, then the raw products must be of desired and consistent quality
    • Commonly abbreviated “SPS”
    • These specifications dictate quality
standards establishing quality2
Standards: Establishing Quality
  • SPS
    • Establishes exact requirements in advance
    • Useful in menu preparation and development
    • Help eliminate misunderstandings between steward and purveyors (vendors)
    • When distributed to more than one purveyor, competitive bidding is possible
    • Limit or eliminate verbal descriptions each order
    • Aid in proper receiving
standards establishing quantity
Standards: Establishing Quantity
  • Principles are based primarily on useful life of the product
    • Perishable
    • Non-perishable
  • Other considerations
    • Projected business volume
    • Storage
    • Financial desires (cash-on-hand vs. on-shelf)
    • Purveyor minimums (quantity or value)
standards terms and considerations
Standards: Terms and considerations
  • Storage locations
  • Permanent locations / Limited Locations
  • Shelf tags and labels
  • FIFO
  • Bin Cards
  • Computerized assistance
standards establishing quantity1
Standards: Establishing Quantity
  • Perishables
    • Par or Par Stock
    • Minimum vs. maximum vs. always on-hand
    • Defined – for our use – as the quantity of any item required to meet anticipated demand in some specific upcoming period of time
    • The par level is established using historical information (remember the assumptions!)
    • Volume projections may dictate that more than normal is needed.
standards establishing quantity2
Standards: Establishing Quantity
  • Ordering Perishables
    • The par (standard for quantity) is established and used in calculating the needed purchase amount
    • Steward conducts a daily physical inventory (or at least a physical observation)
    • Par is sometimes called a “build-to” value
      • So, par is what we need
      • Inventory is what we actually have
      • Order is the difference between par and actual
    • More may be ordered as par can be considered a minimum
standards establishing quantity3
Standards: Establishing Quantity
  • Ordering Perishables (continued)
    • Steward’s Market Quotation List (figure 4.2)
    • For all purveyors holding the SPS for perishables, daily quoting is possible (price issue)
standards establishing quantity4
Standards: Establishing Quantity
  • Non-Perishables
    • Par methods can be used
    • The par level is established using historical information
    • Storage is a greater issue as the time period between orders may be longer
    • Issues:
      • Storage / Permanent Location
      • Theft
      • Waste & FIFO
      • Labor for maintenance
standards establishing quantity5
Standards: Establishing Quantity
  • Ordering Non-Perishables
    • Periodic Order Method

Amount required for upcoming period 40

- Amount presently on hand - 12

+ Amount wanted on hand at the end of the +15

period to cover needs until the next delivery

= Amount to order = 43

    • Ideally, physical inventory is used to determine on-hand amounts
standards establishing quantity6
Standards: Establishing Quantity
  • Ordering Non-Perishables
    • Perpetual Order Method
      • It is like a check book (In, Out, Balance)
    • Requires some type of tracking
      • Perpetual Inventory Cards (not bin cards)
      • Paper or Computer
    • Reorder Point - the amount at which a new order is placed
    • Reorder Quantity – the amount ordered regularly once stock reaches the reorder point
standards establishing quantity7
Standards: Establishing Quantity
  • Ordering Non-Perishables (continued)
    • Perpetual Order Method

Par stock 32

- Reorder Point - 15

= Subtotal 17

+ Normal usage until delivery +10

= Reorder quantity (minimum needed) 27

    • Note that the standardized Reorder Quantity is 24, so a determination of number of cases is needed (case may be 6, 12, 24 of each item)
standards establishing price
Standards: Establishing Price
  • Quality – what to buy
  • Quantity – how much to buy
  • Price – how much to spend
  • Factors:
    • Quality / Market segment
    • Quantity / Economies of Scale
    • Seasonality of product
    • Location
    • Availability of more than one purveyor
standards establishing price1
Standards: Establishing Price
  • Price Quote
    • Daily
    • Longer (bulk buying, commitments, etc.)
  • Methods
    • Phone
    • Fax
    • Email / Web / Direct On-line Links with Purveyor
    • Salesperson
    • Mail
standards establishing price2
Standards: Establishing Price
  • Perishable
    • Daily
    • Weekly
    • More than one purveyor is likely
  • Non-Perishable
    • More likely one primary purveyor and one back-up
    • Individual items may vary between purveyors, but keep the big picture in mind
training for purchasing
Training for Purchasing
  • Training of the Purchaser
    • Formal education
    • On-the-job training
    • Owner / Manager
    • Purveyors / Food Shows / Specialized training
    • Use of SPS and other Standards
    • Use of general policies and procedures regarding the operation that relate to purchasing
    • Knowing the other steps in the flow of food
monitoring purchasing
Monitoring Purchasing
  • Purchasing
    • Standard Purchase Specifications (SPS)
    • Monitor purveyor performance
    • Monitor purchaser performance
  • Who does what?
    • Owner / Manager works with purchaser (steward)
    • Both Owner or Manager and Steward monitor SPS and purveyors
    • Steward must have two-way communication with the receiver
taking corrective action
Taking Corrective Action
  • With Purchaser
    • Further training and development
    • Re-training
    • Discipline
  • By Purchaser
    • Contact with salesperson
    • Contact with purveyor directly
  • Any variation from standards must be investigated: people or product
purchasing centralized purchasing
Purchasing: Centralized Purchasing
  • Needs of individual operations (“units”) are consolidated to a central location
  • Total needs are purchased
  • Purchased items be distributed to individual operations by the purveyor or by the company (central location)
purchasing centralized purchasing1
Purchasing: Centralized Purchasing
  • Advantages
    • Volume pricing
    • More choice of purveyors may lead to better quality
    • SPS more likely to be met
    • Larger inventories can lead to more reliable supply
    • The possibilities for dishonest purchasing in individual units are reduced
purchasing centralized purchasing2
Purchasing: Centralized Purchasing
  • Disadvantages
    • Restricts individual unit operator’s freedom
      • Selection (variety)
      • Needs (timing)
    • Individual unit operators can not take advantage of local specials
    • Limits individual menu variations
purchasing standing orders
Purchasing: Standing Orders
  • Delivery without order
    • Specific quantity on a set day
    • Building an item up to a specified level
  • Convenient
  • Possible waste or excessive cost
purchasing computer applications
Purchasing: Computer Applications
  • Simple
    • Excel
    • Database
    • HOH only
  • More complex
    • HOH and FOH communication
    • May include
      • Recipes
      • Labor