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Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
Food purchasing control
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Food purchasing control

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  • 1. Food Purchasing and Receiving ControlWednesday, April 17, 2013 Slide 1 /40 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control
  • 2. Recap of the Previous session• What is the Cost/Volume/ Profit equation?• How is Variable Rate defined?• What Contribution Rate?• When is the business considered in the state of Break Even.• How is Contribution Margin defines? Wednesday, April 17, 2013 Slide 2 /40 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control
  • 3. KCM of the session1. Outline the purchasing process in the operations of foodservice establishments.2. Describe how quality standards for food purchases are established.3. Reasons that standard purchase specifications are important4. Describe the process used to determine the quantity of perishable food purchased. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 3 /40
  • 4. Scope of the session• Purchasing Objectives and Procedures.• Purchasing responsibilities.• Selecting suppliers.• Purchasing Proper quantities.• The Purchase order system.• Security Concerns and Reducing costs in the Purchasing function.• Purchasing in Multi Unit Organizations. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 4 /40
  • 5. Introduction• The beginning of it all begins with the menu.• The common situation shared by Bars and Restaurants.• Improper purchase practices lead to serious problems.• The system implementation begins with Wednesday, April 17, 2013 Slide 5 /40 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control
  • 6. Purchasing Objectives• Purchasing:• Defined as a series of activities designed to obtain products:1. Of the standardized quality and Packing.2. Of the standardized quantity.3. Of the negotiated and approved price.4. At the right time.5. From the right source. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 6 /40
  • 7. Purchasing Procedures 6 2 Receiving 6 Food and 1 3 4 5 Store Purchasing Accounting Beverage Room Dept Dept1. Issue Requisition 72. Issues required Products. 43. Purchase Requisition.4. Purchase Order Record. Supplier5. Supplies Products with delivery Invoice.6. Stores Products7. Payment.
  • 8. Purchasing Responsibilities• Ultimate responsibility with the Food and Beverage Manager.• Smaller establishments have the Chefs or the Steward in charge of the Purchases.• Slightly bigger properties need a Purchasing agent member of the staff on rotation.• In large hotels the Purchase department headed by Manager Purchase and staff. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 8 /40
  • 9. Selecting Suppliers….1• Essentially supplier evaluations should be based on the consistency of:• Correct quality products.• Reasonable prices.• Prompt delivery.• Service including product information Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 9 /40
  • 10. Selecting Suppliers….2• Location• Quality of the suppliers operation.• Technical ability of the suppliers staff.• Value.• Compatibility.• Honesty and fairness.• Delivery Personnel Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 10 /40
  • 11. Purchasing Proper Quality…1• Quality in the purchasing function refers to the suitability of the product for its intended use.• First estimate the value in terms of adequacy…which means whether the product is giving value for its price.• Accurately describe the minimum quality requirements.
  • 12. Purchasing Proper Quality…2• Realistically define needs, yet not limit the number of acceptable suppliers.• Make specification for most used or high volume items. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 12 /40
  • 13. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 13 /40
  • 14. Purchase Specification Purchase Specification Dish Sirloin Steak Sandwich Ingredient Sirloin Steak Country of Origin United Kingdom Weight 170g +/- 10g Trim Min 8mm of fat to remain Packed Individual vacuum / packed in 10’s Specific Requirements Aged 21 days minimum Delivery Temperature Below 5ºc Minimum Order 10 individualMaximum Order ex autho 30 individual Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 14 /40
  • 15. Purchasing Proper Quantities..1• Problems arising out of improper purchase:• Cash Flow problems resulting from excessive money tied up in inventory.• Increased storage costs for Interest, Insurance and sometimes rented storage space.• Deterioration of product quality or damaged products.• Increase potential for theft and pilferage. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 15 /40
  • 16. Purchasing Proper Quantities..2• On the other hand purchasing insufficient quantities may lead to:• Dissatisfied guests.• Lost guests.• Stock outs.• Emergency purchases.• Disappointed staff.• System breakdown. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 16 /40
  • 17. Factors affecting Purchase of proper quantities• Popularity of menu items.• Product cost concerns and use of speculative purchasing.• Available storage space.• Safety level(Minimum quantity in inventory)• Supplier constraints.(Definite quantity supplied which is even without breaking cases) Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 17 /40
  • 18. Concept in Purchasing Perishable Products• Quantity Needed- Quantity available= Quantity to Purchase for Immediate use.• Normal Usage rates.• Assess the amount of each item in the current inventory.• Calculate the Qty to purchase by subtracting from the above formula.• Adjust routine quantities as necessary taking into account special functions, holidays etc… Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 18 /40
  • 19. Concept in Purchasing Non Perishable Products…1• Minimum/Maximum ordering system.• Minimum level is also known as safety level.• Maximum level is also known as Apex level.• Usage rate normal usage for a period.• Lead time quantity is the number of purchase units withdrawn from inventory between the time the order is placed and when it is delivered. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 19 /40
  • 20. Concept in Purchasing Non Perishable Products…2• Order Point is the number of purchase units in stock when an order is placed.• The order point is reached when the number of purchase units in Inventory equals the lead time quantity plus the safety level.• Purchase units at Order point = Purchase units in lead time + Purchase units in safety level. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 20 /40
  • 21. Numerical Example usingMinimum/Maximum order system…1• Purchase unit= Case (6 # 10)• Usage Rate = 2 cases per day• Order Period = monthly(30 days)• Monthly usage rate = 2 cases/day x 30 days = 60 cases.• Lead time = 4 days.• Lead time usage rate = 4 days @ 2 cases/day = 8 cases.• Safety level = 4 days @ 2 cases/day = 8 cases Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 21 /40
  • 22. Numerical Example usingMinimum/Maximum order system..2• Order Point = Lead Time + Safety level• 68 Cases = 60 Cases + 8 Cases.• When ordering at the order point, the quantity to order is the monthly usage rate:• Order Point = 16 cases• Monthly Usage rate = 60 cases• Total available = 76 cases• Less lead time usage rate =8• Maximum Level = 68 cases Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 22 /40
  • 23. Numerical Example usingMinimum/Maximum order system..2• Amount in storage = 25 cases• Less Order Point = 16 cases• Excess over order Point = 09 cases• The amount to order is the usage rate minus the number of cases in excess of the order point.• 51 cases = 60 cases – 9 cases Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 23 /40
  • 24. Numerical Example usingMinimum/Maximum order system..2• The decision to order 51 cases can be proved.• Cases ordered = 51• Amount available = 25• Total = 76 cases• Less lead Time usage rate = 8• Maximum level = 68 cases. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 24 /40
  • 25. Using Technology in Purchasing Systems• Electronic Price quotations.• Electronic Bid acceptance.• Supplier Notification(Purchase Order).• Computer generated shopping lists.• Software which has Ingredient files, Menu Item files, Inventory files.• Auto requisition generation.• Electronic data Interchange. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 25 /40
  • 26. Class Assignment• As an Operations Manager of a large Multi Unit Chain operation of restaurant.• Your first priority is to automate the supply line and implement modern methods of procurement using computerized systems.• How are you going to go about it explain diagrammatically and use flow plans. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 26 /40
  • 27. Security Concerns in Purchasing• Kickbacks.• Fictitious companies.• Reprocessing Invoices.• Delivery Invoice errors.• Credit Memo Problems.• Quality Substitutions.• Purchaser theft. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 27 /40
  • 28. Cost reduction in the Purchasing Function…1• Negotiate Prices.• Review quality standards.• Evaluate the need to purchase convenience products.• Discontinue unnecessary supplier services.• Combine orders.• Purchase in larger quantities.• Pay Cash Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 28 /40
  • 29. Cost reduction in the Purchasing Function…2• Change Purchase unit size.• Consider cooperative purchasing.• Consider promotional discounts. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 29 /40
  • 30. Receiving Controls• Receiving Personnel• Receiving Procedures.• Security concerns in Receiving.• Use of Technology in receiving systems. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 30 /40
  • 31. Receiving Personnel• Training to be provided identification, procedures, complete internal receiving records.• Nomination of right and pivotal personnel.• Follow clean business and personal practices.• Able to manage physical tasks and get manpower at a given notice.• Committed to protecting establishment interest. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 31 /40
  • 32. Receiving Procedures…1• Check incoming products against purchase orders or purchase records.• Check incoming products against purchase specifications.• Check incoming products against delivery invoices.• Accept incoming products.• Move accepted products to storage immediately. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 32 /40
  • 33. Receiving Procedures…2• Complete necessary receiving documentation, by segregation and preparing daily receiving report.• Issuing credit notes or credit memos.• Using approved marking procedures. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 33 /40
  • 34. Security Concerns in Receiving…1• Delivery of sub standard or products of questionable quality.• Short weight or short count products.• Thawed products represented as fresh.• Using adulterants like ice, soya products or non fat dry milk extenders.• Ice used in increasing weight. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 36 /40
  • 35. Security Concerns in Receiving…2• Expensive steaks and inexpensive meat combined in one container.• Use different people to receive in order to minimize collusion.• Train employees to receive properly.• Scheduling deliveries.• Accurate weighing equipment.• After receiving move immediately top storage. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 37 /40
  • 36. Security Concerns in Receiving…3• Do not permit sales persons to access the back area of operation.• Lock the back door as a policy.• Install an audio signal so delivery people can ring when they arrive. Wednesday, April 17, 2013 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control Slide 38 /40
  • 37. Direct reference• Planning and Control for Food and Beverage Operations 7th Edition, 2009 American Hotel and Lodging Association 2113 N High street, Lansing Michigan 48906-4221.• Jack. D. Ninemeir• ISBN: 978-0-86612-339-6 Wednesday, April 17, 2013 BAC-5132 Food and Beverage Management-III Menu Engineering Slide 39 /19
  • 38. Questions CommentsWednesday, April 17, 2013 Slide 40 / 30 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

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