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WELCOME. CHRM 2480 Inventory & Purchasing. Agenda. Ground Rules Warm Up Activity Syllabus Review Purchasing Website NRAEF ManageFirst Program Chapter One – Introduction to Inventory & Purchasing. Ground Rules. Be on time – start on time

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Welcome l.jpg


CHRM 2480

Inventory & Purchasing

Agenda l.jpg

  • Ground Rules

  • Warm Up Activity

  • Syllabus Review

  • Purchasing Website

  • NRAEF ManageFirst Program

  • Chapter One – Introduction to Inventory & Purchasing

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Ground Rules

  • Be on time – start on time

  • All cell phones, pagers and IPods should be turned off during class

  • No Internet use during class, unless part of classroom activity

  • Appreciate other points of view

  • Respect others’ desire to learn

  • End on time

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Information Card

  • Please fill out the following information on the index card

    • Side ONE

      • Name

      • Phone

      • Email Address

    • Side TWO

      • Business affiliation & current position

      • Hospitality industry background

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Warm Up Activity

  • Break into pairs

  • Interview each other – 2-3 minutes each person

    • Name, Occupation, Why are you taking Purchasing Class, etc……

  • Introduce each other to the group

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Syllabus Review

  • Course Information

  • Course Assessment

  • Schedule of Assignments

    • Can Cutting, March 31, 9 am room 108?

    • Tour of FSA, April 21st, 9 am?

    • Physical Inventory , Week of April 6th

      • OCC-April 6th, 8:30 am

      • NE Med Center-April 6th, 1:30 pm

      • Hilton Omaha-April 13th, 9 am

      • Stokes Restaurants- April 8th, 6 am

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Syllabus Review

  • Projects (Individual & Group)

  • Attendance Sheets

  • Website

  • http://www.sharepoint.mccneb.edu/culinaryarts

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NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE

How can this book help me?

  • Part of a certificate program

  • Industry-driven

  • Resume builder

Institute for the Culinary Arts – Metropolitan Community College

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NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE

Who is the NRAEF?

  • Educational arm of the National Restaurant Association

  • Bridge between academia and industry

  • Work with over 60,000 restaurant, hospitality and foodservice members companies

Institute for the Culinary Arts – Metropolitan Community College

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NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE

Competency Guide Content

  • Management-focused

  • Application-based, not just theory

  • Professional Profiles give you a “sneak peek” into the field

  • “Real world” activities help build job skills

Institute for the Culinary Arts – Metropolitan Community College

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NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE

How will this certificate help me?

  • Validated by over 200 restaurant, foodservice and hospitality organizations

  • Resume builder

  • Tangible accomplishment

  • Can give you a hiring advantage over peers who didn’t use ManageFirst

Institute for the Culinary Arts – Metropolitan Community College

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Academic Scholarship for NRAEF ManageFirst Program® Students


  • Application deadline: March 31, 2009

  • Award amount: $2,500

  • You can apply online at the above link

  • Scholarships are for Undergraduate students enrolled in accredited culinary schools or ManageFirst Program students

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Additional Scholarships

  • Metropolitan Community College Foundation scholarships – due 3/15/09

  • Academic Dean scholarships

    • Spring quarter – due 3/13/09

    • Summer quarter – due 6/16/09

    • Must be pursuing Culinary Arts degree and have a 3.0 GPA

  • Apply online:https://scholarships.mccneb.edu/stars

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Let’s Take a Break

Please be back in 10 minutes

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  • Change in Schedule:

    • March 24th will be the Can Cutting

    • March 31st Chapter 3 & 4 and Inventory Book Set-up

  • U.S, Foodservices Tour – 9 am

  • Sign-up for Inventory & Group Presentations

  • Tuesday, April 21st, Tour of U.S Foodservice

  • Chapter One – Introduction to Inventory & Purchasing

  • Chapter Two - The Purchasing Function

  • Work on Group Projects

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Introduction to Inventory and Purchasing

  • Inventory and Purchasing

  • Test Your Knowledge


OH 1-16

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Chapter Learning Objectives

  • Define purchasing, procurement, and product selection.

  • Outline the objectives in the purchasing function.

  • Describe the importance of maintaining an operation’s competitive position.

  • List the types of goods and services that might be purchased by a foodservice organization.

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Test Your Knowledge

  • Chapter One – page 2 Competency Guide

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Purchasing vs. Procurement

  • Purchasing – to obtain products and services of a desired quality at a desired price.

  • Procurement – the entireprocess by which products and services are selected based on quality and cost, to include: what products and services are needed, the quality specifications, when the items will be needed, from which vendors you will purchase, managing the contracts, as well as establishing all the purchasing, receiving storing and issuing policies.

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Franchise vs. Independent

  • Franchise – a business purchased from a company along with the right to use that company’s name, logo and products.

    • Provides for purchasing through franchisor’s central commissary

  • Independent – stand alone operation

    • Cooperative buying or co-op buying occurs when independent operators combine their purchasing power to cooperatively purchase all goods and services as a collective group in order to get lower pricing

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Economies of Scale

  • Franchise owners may purchase either through their commissaries or through a co-op

  • Independent owners may purchase through a co-op or independently

  • Profit is earned after all operating expenses have been paid by either operation

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Purchasing Impacts

The availability of items for sale:

  • Too few items means product outages

  • Too many items means spoilage, waste, and theft

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Maintain Adequate Supply

  • Utilize customer count histories.

  • Sources of data include:

    • The point-of-sale (POS) system

    • Guest checks

    • Physical counts

  • Count customers by day part.

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Maintain Adequate Supply continued

  • Monitor popularity index of items sold.

    • The popularity index measures the popularity of a specific menu item in relation to other items in its category.

    • The popularity index also measures the popularity of one menu category relative to other categories.

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Maintain Adequate Supply continued

Additional areas of concern include:

  • Vendor delivery schedules

  • Availability of items from vendors

  • External factors that can influence item sales

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Maintain Quality Standards

Foodservice managers maintain quality by:

  • Following the operation’s specifications (specs) on each menu item or ingredient purchased

  • Clearly communicating these standards to current and potential vendors

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Maintain Quality Standards continued

  • Customers expect the same quality product each time they visit their favorite foodservice operations.

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Minimize Investment

  • Tying up excessive dollars in inventory can damage a foodservice operation by restricting the amount of cash available for bill payment.

  • Ideal inventory levels are directly related to cash availability and to storage capability.

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Minimize Investment continued

  • In most cases, prices increase rather than decrease. As a result, effective foodservice managers:

    • Minimize investment by purchasing the maximum amount of quality product available at the minimum price possible.

    • Negotiate reduced prices for large quantity purchases.

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Maintain an Operation’s Competitive Advantage

  • Choose vendors who:

    • Deliver frequently

    • Deliver at convenient hours

    • Can deliver in an emergency outage situation

    • Provide flexible payment options

    • Deliver consistent quality

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Obtain the Lowest Possible EP or AS Price

  • EP = Edible portion price

  • AS = As served price

    • EP and AS refer to the price of an item after all trim and waste has been taken into account. Example: peeled, cubed potatoes

  • AP= As purchased price

    • AP refers to the price of an item before any trim or waste are considered. Example: unpeeled, whole potatoes

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Mismanaging the Purchase Function

  • Leads to product outages

  • Results in lost sales

  • Alienates customers

  • Ties up excessive amounts of cash

  • Increases operating (food and beverage) costs

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Food items

Alcoholic beverages

Nonalcoholic beverages

Nonfood items

Furniture, fixtures, and equipment (FF&E)

Business supplies and services

Support services

Maintenance services


What to Buy

Foodservice managers buy many items including:

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Processed foods




Dry and canned goods

Buying Food Items

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Buying Alcoholic Beverages

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Bottled water

Buying Nonalcoholic Beverages

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Linens and uniforms

China and glassware

Bar supplies

Paper goods

Cleaning supplies

Menus and beverage lists



Music and entertainment

Kitchen utensils and supplies

Buying Nonfood Items

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Tables, chairs, and barstools

Lighting fixtures


Cooking equipment

Refrigeration equipment

Plumbing fixtures

Heating, ventilation, air conditioning (HVAC)

Entertainment pieces

Buying Furniture, Fixtures, and Equipment

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Office equipment and supplies

Cash registers

POS systems


Credit card processors

Financial and legal services


Marketing and advertising

Buying Business Supplies and Services

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Linen and uniform rental

Waste removal

Flower services

Music services

Pest control

Parking and valet services

Buying Support Services

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Cleaning services

Plumbing repair

HVAC repair




Equipment maintenance

Equipment repair

Equipment replacement

Buying Maintenance Services

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Oil heating



Sewage services


Internet access

Buying Utilities

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How Would You Answer the Following Questions?

  • A (popularity/frequency) index can be used to help estimate how many of a specific menu item are likely to be sold.

  • Which of the following is not a goal of the purchasing function:

    • Obtain the lowest possible EP price.

    • Maintain adequate supply.

    • Maximize investment.

    • Maintain quality standards

  • A goal of a quality purchasing program is that of maintaining an operation’s __________ advantage.

  • The cost of most AP food products is higher than their AS cost. (True/False)

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    Chapter Learning Objectives— What Did You Learn?

    • Define purchasing, procurement, and product selection.

    • Outline the objectives in the purchasing function.

    • Describe the importance of maintaining an operation’s competitive position.

    • List the types of goods and services that might be purchased by a foodservice organization.

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    Next Week

    • Review Your Learning questions from Chapter One

    • Read Chapter One & Two