Chapter 4 HRM13


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Chapter 4 HRM13

  1. 1. Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition
  2. 2. <ul><li>Who does the purchasing? </li></ul><ul><ul><li>Owners </li></ul></ul><ul><ul><li>Managers </li></ul></ul><ul><ul><li>Chef </li></ul></ul><ul><ul><li>Steward </li></ul></ul><ul><li>One person responsible so they can be held accountable </li></ul>
  3. 3. <ul><li>Perishables; those items that are typically fresh foods, and have a relatively short shelf life </li></ul><ul><li>Non-perishables; those food items that have a relatively longer shelf life </li></ul><ul><ul><li>Groceries </li></ul></ul><ul><ul><li>Staples </li></ul></ul><ul><ul><li>Storeroom items </li></ul></ul>
  4. 4. <ul><li>Quality of food purchased </li></ul><ul><li>Quantity of food purchased </li></ul><ul><li>Prices at which food is purchased </li></ul>
  5. 5. <ul><li>They force owners or managers to determine exact requirements in advance </li></ul><ul><li>They are often useful in menu preparation </li></ul><ul><li>They eliminate misunderstandings between stewards and purveyors </li></ul><ul><li>Allows for true competitive bidding </li></ul><ul><li>Eliminates need for detailed verbal descriptions </li></ul><ul><li>They facilitate checking food as it is received </li></ul>
  6. 6. <ul><li>Steward’s market quotation list - a form often used as a tool by food purchasers for; </li></ul><ul><ul><li>Taking daily inventory of perishables </li></ul></ul><ul><ul><li>Determining suitable order quantities </li></ul></ul><ul><ul><li>Recording market quotations </li></ul></ul><ul><ul><li>Selecting vendors </li></ul></ul><ul><li>Par stock – maximum quantity that should be on hand at any given time </li></ul>
  7. 7. <ul><li>Periodic order method: </li></ul><ul><ul><li>Amount required for the upcoming period </li></ul></ul><ul><ul><li>- Amount presently on hand </li></ul></ul><ul><ul><li>+ Amount wanted on hand at the end of the period to last until the next delivery </li></ul></ul><ul><ul><li>= Amount to order </li></ul></ul>
  8. 8. <ul><li>Perpetual inventory method: </li></ul><ul><ul><li>Par stock </li></ul></ul><ul><ul><li>Reorder point </li></ul></ul><ul><ul><li>= Subtotal </li></ul></ul><ul><ul><li>+ Normal usage until delivery </li></ul></ul><ul><ul><li>= Reorder quantity </li></ul></ul>
  9. 9. <ul><li>Storage space </li></ul><ul><li>Limits on total value of inventory prescribed by management </li></ul><ul><li>Desired frequency of ordering </li></ul><ul><li>Usage </li></ul><ul><li>Purveyors’ minimum order requirements </li></ul>
  10. 10. <ul><li>Wholesalers </li></ul><ul><li>Local Producers </li></ul><ul><li>Manufacturers </li></ul><ul><li>Packers </li></ul><ul><li>Local farmers </li></ul><ul><li>Retailers </li></ul><ul><li>Cooperative associations </li></ul>
  11. 11. <ul><li>Advantages: </li></ul><ul><li>Foods and beverages can be purchased at lower prices because of volume </li></ul><ul><li>Desired quality can be obtained more readily because the steward has a greater choice of markets </li></ul><ul><li>Foods can be obtained that meet specs </li></ul><ul><li>Larger inventories can be maintained, ensuring reliable supply to individual units </li></ul><ul><li>Possibility of dishonest purchasing in individual units are greatly reduced </li></ul>
  12. 12. <ul><li>Disadvantages: </li></ul><ul><li>Each unit must accept the standard item in stock and has little freedom to purchase for its own particular needs </li></ul><ul><li>Units can’t take advantage of local specials </li></ul><ul><li>Menus are ordinarily standardized, limiting the individual unit managers’ freedom </li></ul>
  13. 13. <ul><li>Telephone </li></ul><ul><li>Fax </li></ul><ul><li>Quotation sheets obtained by mail </li></ul><ul><li>Fax modem </li></ul><ul><li>Information supplied by salespersons </li></ul><ul><li>Direct computer links with purveyors via the internet or dedicated telephone line </li></ul>
  14. 14. <ul><li>The quantity delivered should be the same as the quantity listed on the Steward’s Market Quotation List and the invoice </li></ul><ul><li>The quality delivered should conform to the establishment’s specifications </li></ul><ul><li>The prices on the invoice should match those circled on the Steward’s Market Quotation List </li></ul>
  15. 15. <ul><li>Meats R’ Us </li></ul><ul><li>777 Cow Pasture Way </li></ul><ul><li>Bulls tail, IO </li></ul><ul><li>To: Grandview Bistro Date: October 3, 20XX </li></ul><ul><li> </li></ul><ul><li>Quantity Unit Description Unit Price Amount </li></ul><ul><li>20 lbs. Beef tenderloin 9.20 184.00 </li></ul><ul><li>20 lbs. Leg of lamb 12.40 248.00 </li></ul><ul><li> $432.00 </li></ul>
  16. 16. <ul><li>Regardless of the methods used by employees to requisition food and beverage products, or management to issue these, inventory levels will be affected. </li></ul><ul><li>It will be your responsibility and that of your purchasing agent to monitor this movement and purchase additional products, as needed. </li></ul><ul><li>Re-stocking the inventory is critical if product shortages are to be avoided and if product necessary for menu item preparation is to be available. </li></ul>
  17. 17. <ul><li>Operators must be careful not to overload storage capacity. Increased inventory of items generally leads to greater spoilage and loss due to theft. </li></ul><ul><li>  Shelf life is the amount of time a food item retains its maximum freshness, flavor, and quality while in storage. The shelf life of food products varies greatly. </li></ul><ul><li>  The cost to the vendor for frequent deliveries will be reflected in the cost of the goods to the operator. </li></ul>
  18. 18. <ul><li>1. Storage capacity </li></ul><ul><li>2. Item perishability </li></ul><ul><li>3. Vendor delivery schedule </li></ul><ul><li>4. Potential savings from increased purchase size </li></ul><ul><li>5. Operating calendar </li></ul><ul><li>6. Relative importance of stock outages </li></ul><ul><li>7. Value of inventory dollars to the operator </li></ul>
  19. 19. <ul><li>Verify the quantity, quality, and price for each item conforms exactly to the order placed </li></ul><ul><li>Verify invoice with rubber invoice stamp </li></ul><ul><li>List foods delivered each day on the receiving Clerk’s Daily Report for that day </li></ul><ul><li>Forward paperwork to proper personnel </li></ul><ul><li>Move food to appropriate storage areas </li></ul>
  20. 20. <ul><li>Verification of the date food received </li></ul><ul><li>Signature of the receiving clerk who vouches for the accuracy of the order </li></ul><ul><li>Steward’s signature, acknowledging delivery of food items </li></ul><ul><li>Food controller’s verification calculations are correct on the invoice </li></ul><ul><li>Signatory approval of the bill for payment by an authorized individual before a check is drawn </li></ul>
  21. 21. <ul><li>Directs – foods that extremely perishable by nature, purchased daily. </li></ul><ul><ul><li>For immediate use </li></ul></ul><ul><ul><li>Considered to be issued on delivery </li></ul></ul><ul><ul><li>Go directly onto today’s food cost </li></ul></ul><ul><li>Stores – perishable but have a relatively longer shelf life. </li></ul><ul><ul><li>Not for immediate use </li></ul></ul><ul><ul><li>Included on food cost when they are issued </li></ul></ul>
  22. 22. <ul><li>The great problem in employing receiving personnel is with the vast amount of knowledge of foods these workers require </li></ul><ul><li>This may explain why some restaurants do not require quality checks upon delivery </li></ul><ul><li>Someone has to do it!!! </li></ul><ul><li>If not your customers will!!! </li></ul>© John Wiley & Sons, Inc. 2009
  23. 23. CASE STUDY – BUSINESS ETHICS <ul><li>Maria’ s bistro is a publicly owned corporation that owns several restaurants in regions across the country. Marco is the president of the bistro; Lucia is the purchasing agent; and Keean is the executive assistant. All three have been with Maria’s bistro for about five years. Mary is Maria’s bistro controller, and she has been with the company for two years. </li></ul>
  24. 24. <ul><li>Marco: Hi Mary come on in. So you say you have a confidential matter to discuss. What’s on your mind? </li></ul><ul><li>Mary: Marco I was reviewing our increased purchases from Sysco last week and wondered why our volume has tripled last year. When I discussed this with Lucille she seemed a bit evasive and tried to dismiss the issue by stating that Sysco can give us one-day delivery on our orders. </li></ul>
  25. 25. <ul><li>Marco: Well, Lucia is right. You know we have been trying to implement “just-in-time” purchasing and trying to get our inventory asset down. </li></ul><ul><li>Mary: We still have to look at the overall cost. Sysco is more of a jobber than a warehouse. After investigating orders placed with them. I found that only 10 percent are delivered from their warehouse and the other 90 percent are drop-shipped from the manufacturers. The average mark-up by Sysco is 30 percent </li></ul>
  26. 26. <ul><li>Which is about 500,000.00 on our orders for the past year. If we had ordered directly from the manufacturers when Sysco didn’t have the item in stock, we could have saved about 450,000.00. In addition, some of the orders were late and incomplete. </li></ul><ul><li>Marco: Now look, Mary we get quick delivery on most items and who knows how much we are saving by not having to stock this stuff in advance or worry about it becoming obsolete. </li></ul>
  27. 27. <ul><li>Mary: Well, Marco, as a matter of fact, I ordered a Dun & Bradstreet credit report on Sysco and discovered that Bruce Temple is the principal owner, isn’t he your brother in law? </li></ul><ul><li>Marco: Sure he is. But don’t worry about Bruce. He has a Harvard MBA, and he understands this just-in-time philosophy. </li></ul><ul><li>Mary (saying to herself): This conversation has been enlightening, but it doesn’t really respond to my concerns. Can I legally or ethically ignore this apparent conflict of interest? </li></ul>
  28. 28. QUESTIONS: <ul><li>Would Mary be justified in ignoring this situation, particularly since she is not the purchasing agent? </li></ul><ul><li>State the specific steps Mary should follow to resolve this matter. </li></ul>