Week 7 Procurement (Purchasing, Receiving And Storing) 3 2552

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Week 7 Procurement (Purchasing, Receiving And Storing) 3 2552

  1. 1. Week 7 PROCUREMENT Purchasing, Receiving, Storing and Inventory Email: tpavit@wu.ac.th . 2248 http://tourism.wu.ac.th
  2. 2. Objectives 1. Describe what is involved in purchasing, receiving, storage, and inventory control. 2. Understand the different between purchasing and buying 3. State the three areas within which the purchasing agent must work, as well as their importance and relationship 4. Name two reasons that a purchaser must know how the market works 5. List two advantages and two disadvantages of purchasing goods from master and specialty distributors 6. Explain two if the reasons that operations should use purchase specifications 7. Name three items that should be included in purchase specifications FBM-341 Food and Beverage Management 2
  3. 3. Outline 1. Introduction to procurement 2. Purchasing 3. Purchasing from the customer s point of view 4. The three area of purchaser familiarity 5. Who does the purchasing? 6. The different between purchasing and buying 7. Method of purchasing 8. The purchase specification: key to effective purchasing 9. Supplier selection 10. Buyer and seller relationships 11.Receiving 12.Storage 13.Inventory FBM-341 Food and Beverage Management 3
  4. 4. Procurement Four steps in Procurement Purchasing Receiving Storage Inventory Control FBM-341 Food and Beverage Management 4
  5. 5. PURCHASING 1
  6. 6. Purchasing Purchasing is an essential function for any foodservice operation. The nature of the foodservice biz, with its unpredictable flow, makes purchasing a difficult task. Operators have to be careful not to order to much it will spoil and become unusable, and , at the same time, they must be careful not to order so little FBM-341 Food and Beverage Management 6
  7. 7. Purchasing Purchasers do not buy only items for the kitchen, they also buy items for the various other departments of the operation. Therefore, they must be in close communication to ensure that they buy exactly what is needed. FBM-341 Food and Beverage Management 7
  8. 8. Purchasing Specifications, or the specific characteristics of the goods needed, must be developed so that both the buyer and the seller understand exactly what is needed. A large portion of goods purchased, such as fresh produce and meat items, are subject to the variations found in nature items FBM-341 Food and Beverage Management 8
  9. 9. Role of Purchasing Department Purchasing is profit center Better purchasing saves dollars for products, supplies, & services Savings go directly to bottom line Profit center department generates revenues greater than expenses Cost center does not generate profits to cover expenses FBM-341 Food and Beverage Management 9
  10. 10. Purchasing Cycle 1. Issuing Department completes an issue requisition to storeroom. Storeroom issues requested products. 2. Purchasing Storeroom sends purchase requisition to purchasing department. Purchasing department completes purchase order and sends to: Receiving Accounting Supplier FBM-341 Food and Beverage Management 10
  11. 11. Purchasing Cycle (continued) 3. Supplier Provides products and invoice to receiving department. 4. Receiving Checks products against delivery invoice and purchase order. Sends delivery invoice to accounting. 5. Accounting Pays supplier according to delivery invoice and purchase order. FBM-341 Food and Beverage Management 11
  12. 12. PURCHASING FROM THE CUSTOMER’S POINT OF VIEW 2
  13. 13. Purchasing from Customer’s Point of View Purchasing is a functions that occurs behind the scenes of a foodservice operation and out of view of the customers The result of the purchasing function are visible and important to the guests The quality of the product effect on their perceptions of management s commitment to quality An operator that uses the least expensive goods available will be seen as a cost cutter and will, accordingly, have problems in charging top dollar for its goods and services. FBM-341 Food and Beverage Management 13
  14. 14. Purchasing from Customer’s Point of View Customers expect a brand such as Coca- Cola or Pepsi-Brand which they are familiar- when they request a Cola Drink The substitution of an off-brand will most likely cause problems in the long run. FBM-341 Food and Beverage Management 14
  15. 15. Purchasing from Customer’s Point of View There is generally a direct relationship between price and quality of goods purchased. Goods at a bottom of the price range are generally inferior to their more expensive counterparts and may eventually cost more for the operation Operators who look for the cheapest item may be losing money in two ways: 1. Customer goodwill (reputation) and business 2. Increased costs resulting from reduced product quality FBM-341 Food and Beverage Management 15
  16. 16. THE THREE AREA OF PURCHASER FAMILIARITY 3
  17. 17. The Three Area Of Purchaser Familiarity The role of the purchaser is to find the best-quality product at the best price and to ensure that it arrives at the proper time. 1. Market purchase the goods and services for the operations 2. Operation the establishment for which the purchaser works 3. Customer whose need expectations must be met FBM-341 Food and Beverage Management 17
  18. 18. Three Areas With Which Purchaser Must be Familiar FBM-341 Food and Beverage Management 18
  19. 19. 1. THE MARKET Market medium through which change in ownership moves commodities from producer to consumer Most goods that are purchased go through a chain of distribution from the producer (farmer) to the Processor (or a number of processors) to distributors FBM-341 Food and Beverage Management 19
  20. 20. THE MARKET Farmer or Producer Processor Processor Processor Broker Distributor Foodservice Retail Grocery operation Store Customer FBM-341 Food and Beverage Management 20
  21. 21. Purchasing & the Market Purchasing acquisition of products Right product, in right amount of time, at the right price Knowledge of market involves finding sources of supply & determining which food can be obtained from which supplier Buyers must know market and products, and have general business acumen Rely on sales representatives for advice on purchasing decisions & information on available food items & new products FBM-341 Food and Beverage Management 21
  22. 22. Marketing Channel Buyer has powerful influence on food distribution system Listens to desires of customers Determines what is grown & packaged Understands how items are processed or manufactured, shipped, sold , & consumed Marketing channel indicates exchange of ownership from producer through processor or manufacturer & distributor to the customer FBM-341 Food and Beverage Management 22
  23. 23. Marketing Channel FBM-341 Food and Beverage Management 23
  24. 24. Marketing Channel Five major components: 1. Producers 2. Processors or manufacturers 3. Distributors 4. Suppliers 5. Customers Value & cost added in each component & are reflected in final price FBM-341 Food and Beverage Management 24
  25. 25. 1. Producers Someone who produces raw food to sell Usually farmers or ranchers Sell to distributors or directly to foodservice operation; product then sold to customers Abundance in food result of applications of advances in science & technology Food produced per acre increased Improvements in production methods, animal/plant genetics, & farm mechanization FBM-341 Food and Beverage Management 25
  26. 26. 2. Processors or Manufacturers Transforms raw food items into packaged products for sale to consumers or foodservice operations Responsible for many forms of food available to customer FBM-341 Food and Beverage Management 26
  27. 27. 3. Distributor Transfer products from processor or manufacturer to supplier Classified as Wholesalers (included super distributors) Brokers Manufacturers representatives FBM-341 Food and Beverage Management 27
  28. 28. 3.1 Wholesalers Purchase from various manufacturers or processors, provide storage, sell, & deliver products to suppliers Full or broadline carry large stock Specialty particular product category Special breed distributors purchasing & product movement specialists FBM-341 Food and Beverage Management 28
  29. 29. 3.2 Brokers Sales & marketing representative who contracts with manufacturers, processors, or prime source producers sells & conducts local marketing programs with wholesalers, suppliers, or foodservice operations FBM-341 Food and Beverage Management 29
  30. 30. 3.3 Manufacturers’ Representatives Represents a manufacturing company & informs suppliers of products by manufacturer Companies pay flat commission on sales volume Economical because companies do not have sales officials in every area of customers Have greater product expertise than brokers FBM-341 Food and Beverage Management 30
  31. 31. 4. Suppliers Offers products for sale Foodservice manager buys from supplier more often than from wholesaler, broker, or manufactures representative One-stop shopping by dealing with prime supplier (single source supplier) Many prefer to bid out individual line items to receive competitive prices FBM-341 Food and Beverage Management 31
  32. 32. 5. Customers Anyone affected by a product or service Typical person consumes average of 4.2 meals prepared away from home per week Customer satisfaction goal of foodservice industry Purchasing quality food & related products should be first objective FBM-341 Food and Beverage Management 32
  33. 33. THE MARKET The purchaser must be aware of the advantages and disadvantages of the various links in order to know which can best be bypassed. When some items were available only at certain times of the year and foodservice operations had to develop different menus for the various growing seasons In order to provides the best quality at the best price, THE PURCHASER MUST KNOW THE BEST TIME TO PURCHASE THE FRESH PRODUCE NEEDED. FBM-341 Food and Beverage Management 33
  34. 34. 2. THE OPERATION The role of the purchaser is to buy the food and supplies for the various areas of the operation An operation s goal may be to get the best value for the dollar, with quality secondary, or to provide guests with the best that money can buy FBM-341 Food and Beverage Management 34
  35. 35. THE OPERATION A purchaser must avoid judging between two items solely on the basis of price without considering the intended use When given a choice of product, some purchasers may tend to choose the least expensive “ YOU GET WHAT YOU PAY FOR” An item maybe cheaper, but if it is not useable, it represents a total waste of money FBM-341 Food and Beverage Management 35
  36. 36. 3. THE CUSTOMER The key to the success of any operation is to MEET or EXCEED the needs and desires of its customers Customer expect a certain level of quality, which depends on the menu prices and the perceived value of the operation s offerings REMEMBER!!! Customers are aware of the quality brands and expect to see some of them when they dine out FBM-341 Food and Beverage Management 36
  37. 37. THE CUSTOMER Example if an operation serves ketchup on the table as a condiment, it will most likely be Heinz ketchup rather than any of the numerous other brands that are available from grocery stores. Note: Pepsi, Coca-Cola, Heinz are not the cheapest brands, but they are the brands used visibly in most operations because customers equate them with quality and have come to expect them FBM-341 Food and Beverage Management 37
  38. 38. WHO DOES THE PURCHASING? 4
  39. 39. WHO DOES THE PURCHASING? The size of the operation, as well as whether it is an independent operation or part of chain, can have a dramatic effect on the role and function of the purchaser FBM-341 Food and Beverage Management 39
  40. 40. SMALLER OPERATIONS A possible advantage is that the person who places the order is also the one to receive it, a control problem may arise An unscrupulous person could steal some goods with a driver to defraud the foodservice op. Whenever possible, the person who places an order should not be the person who will receive the goods. FBM-341 Food and Beverage Management 40
  41. 41. SMALLER OPERATIONS Smaller ops cannot justify or afford having a person whose sole responsibility The task of purchasing is usually delegated to the chef to be performed along with his or her other duties An advantage because the user of the goods is the person doing the buying, there is no chance for miscommunication FBM-341 Food and Beverage Management 41
  42. 42. LARGER OPERATION Usually with in Hotel, hospital and resort, have full time purchasing agent and staff. The role of the purchasing agent is to deal with suppliers, supervise receiving clerk, and manage the storeroom By managing the storeroom area they can monitor the goods and notify the kitchen staff of any slow moving foods that must be used before they FBM-341 Food and Beverage Management spoil 42
  43. 43. CHAIN OPERATIONS The purchasing function done by the corporate or regional office of the company Most chain restaurants serve generally the same menu at all of their locations Because consistency is so important to chains, they usually write up specification for food items and distribute them to their operations Companies have also found that they can generally obtain better prices and services if they negotiate on a regional or national basis, rather than having each property negotiate on its own for the items needs. FBM-341 Food and Beverage Management 43
  44. 44. THE DIFFERENT BETWEEN PURCHASING AND BUYING 5
  45. 45. THE DIFFERENT BETWEEN PURCHASING AND BUYING Formal Process, called PURCHASING Informal, considered BUYING Must be aware of this distinction and of the respective Advantages and Disadvantages Although the net effect for the operation is basically the same it receives the good and service it needs-the process of receiving the good (and most likely the price) can differ FBM-341 Food and Beverage Management 45
  46. 46. FORMAL PURCHASING Is the systematic and Written Specifications planned process of Check Prices determining what is needed, checking prices, Negotiate with Suppliers negotiating with suppliers, Price and obtaining the need Delivery Schedules goods Credit Terms Receive Goods FBM-341 Food and Beverage Management 46
  47. 47. INFORMAL BUYING Less complex then formal Call Supplier purchasing. The op, call one suppliers Place Order and orders what the rest needs. Specification not used, Receive Goods Price are not checked with a number of supplier FBM-341 Food and Beverage Management 47
  48. 48. PURCHASING AND BUYING Formal purchasing is generally used in larger operations that can afford a specialized staff with time to devote to the more complex formal method Smaller operations generally use the informal system; however, combining the purchasing responsibility with a person s other duties may make it difficult to perform both functions well FBM-341 Food and Beverage Management 48
  49. 49. METHOD OF PURCHASING 6
  50. 50. Methods of Purchasing Informal price quotes by telephone or personally with salesperson Amount of purchase is small no time for formal purchasing practices Item can be obtained only from 1 or 2 sources Need is urgent & immediate delivery required Stability of market (& prices) is uncertain Size of operation too small for formal purchasing FBM-341 Food and Beverage Management 50
  51. 51. Methods of Purchasing Formal tax supported institutions usually required to use competitive bidding Culminates in formal contract between buyer & supplier Understanding legal implications of contract buying is important for both parties FBM-341 Food and Beverage Management 51
  52. 52. Independent & Centralized Purchasing 1. Independent purchasing done by unit or department that has been authorized to purchase 2. Centralized purchasing purchasing activity is done by one person or department FBM-341 Food and Beverage Management 52
  53. 53. Centralized Purchasing Advantages Better control & one complete set of records Development of personnel with specialized knowledge, skills, & procedures Better performance in other departments Economic & profit potentials of purchasing, making it a profit rather than a cost center FBM-341 Food and Beverage Management 53
  54. 54. Centralized Purchasing Disadvantages: Each unit must accept the standard item in stock and has little freedom to purchase for its own particular needs Units can t take advantage of local specials Menus are ordinarily standardized, limiting the individual unit managers freedom FBM-341 Food and Beverage Management 54
  55. 55. Group Purchasing Bringing together foodservice managers from different operations for joint purchasing Advantage - volume of purchases is large enough for volume discounts Site is selected, purchasing personnel hired, & managers serve as advisory committee FBM-341 Food and Beverage Management 55
  56. 56. THE PURCHASE SPECIFICATION: KEY TO EFFECTIVE PURCHASING 7
  57. 57. THE PURCHASE SPECIFICATION A Purchaser cannot call the produce supplier and order a case of LETTUCE The supplier needs more information-the type of lettuce, size of the case, pack of the case (number of heads), the amount of processing A purchase specification would include all this information and would make the jobs much easier and more efficient. FBM-341 Food and Beverage Management 57
  58. 58. THE PURCHASE SPECIFICATION Purchase specification is a precise written statement of the product s characteristics required by a user List of detailed characteristics desired in a product for a specific use Primary safeguard of foodservice quality is adherence to specification FBM-341 Food and Beverage Management 58
  59. 59. THE PURCHASE SPECIFICATION To write the specification will help the control the fluctuation of nature, freshly grown produce and the difference in size and quality of animals The lack of brand names for a majority of foodservice products also makes the written specification desirable. FBM-341 Food and Beverage Management 59
  60. 60. DEVELOPING AND USING SPECIFICATIONS Written specifications accomplish the following objectives: 1. Communicate the characteristics of products and services needed for the operation, and help eliminate misunderstanding between the buyer and seller 2. Provide the receiver with the product characteristics he or she needs to see before accepting goods delivered to the operation 3. Help to ensure consistency in the items served by the operation by providing consistent product 4. Allow the operation to solicit bids from more than one supplier 5. Facilitate the training of purchasers, and allow other people to step in for the purchaser if the need arises FBM-341 Food and Beverage Management 60
  61. 61. THE CONTENTS OF A SPECIFICATION Specs can vary greatly in length. Items with a recognizes brand name, such as cans of Pepsi-Cola, can have a specification as simple a s the name, size of can, and number of can in a case Specifications for items that do not have brand names, such as apples, require much more detail in order to be effective FBM-341 Food and Beverage Management 61
  62. 62. THE CONTENTS OF A SPECIFICATION 1. The intended use of the product or service 2. The specific, definitive name of the product 3. Packer's or producer s brand name 4. U.S quality grades 5. Size or Size range of the items needed 6. Package size 7. Preservation and/or processing method 8. Point of origin 9. Method of packing FBM-341 Food and Beverage Management 62
  63. 63. Example Item: Prime Rib, Bone in, Oven Ready Grade: USDA choice, Upper Half Weight range: 18lb min 22lb Max average 20ib (9Kg) State of Refrigeration: Chilled when delivered Fat Limitation: 0.25-0.75 inch (average 0.5) on outside moderate marbling Color: Light red to lightly dark Quantity requirement: approximately 300 lb per week FBM-341 Food and Beverage Management 63
  64. 64. SUPPLIER SELECTION 8
  65. 65. SUPPLIER SELECTION Purchaser have several options when choosing the type of supplier(s) with which whey will deal Supplier can either limit themselves to a few types of goods or they can be master distributors A number of factors must be considered in making selection Within most geographical areas, purchasers have the choice of a number of different distributors in each of the categories of the items they need Purchaser must be sure to choose the supplier that best suits the operation s needs FBM-341 Food and Beverage Management 65
  66. 66. CHOICE OF SUPPLIERS Traditionally, suppliers generally specialized in only one type, such as produce, such as produce, dairy, or seafood, rather than a wide range of goods. Nowadays, the trend in the industry is toward distributions handle a wide range of both food and nonfood items. Foodservice operators should be aware of the advantage and disadvantages with various types of supplier. FBM-341 Food and Beverage Management 66
  67. 67. 1. SPECIALTY DISTRIBUTORS This is similar to the ADVANTAGE (+) original types of retail a limited type of goods, it stores where customers would gain expertise with brought their food those goods Specialty Distributors, who DISADVANTAGE (-) offered only a single type purchaser has to contact a or carried only a limited number of supplier to range of goods suppliers to place an order FBM-341 Food and Beverage Management 67
  68. 68. 2. WAREHOUSE CLUBS Warehouse club allow operators to buy items in LARGER PACKAGES than those available in retail grocery store but Smaller than packages available from the wholesale distributors FBM-341 Food and Beverage Management 68
  69. 69. 3. MASTER DISTRIBUTOR Large distributors can offer a wide range of both food and nonfood items. They carry fresh, frozen, and canned produce. A large-scale distributor may carry as many as 10,000 items in inventory, providing the operator with one-stop shopping service FBM-341 Food and Beverage Management 69
  70. 70. SPECIALTY VS MASTER DISTRIBUTORS Type of Supplier Advantage (+) Disadvantage (-) Master Distributors Increase product offerings Lack of expertise regarding all of the product sold Increase convenience; one Lack of competition phone call, one delivery Specialty Distributor Generally more personal Limited product offering service Increase competitions; can Possibility of higher prices promote better prices and because of increased costs service and reduction of volume Increase product expertise More time spent ordering; receiving, and doing paperwork FBM-341 Food and Beverage Management 70
  71. 71. CONSIDERATION IN SELECTING SUPPLIERS Operators must realize that, for the most part, all suppliers pay much the same prices to obtain the goods they sell; the prices at which they sell the items are fairly comparable. A significant lower price on an item quoted from one supplier may mean that the supplier will have to raise prices on other items to make up for it, or that possibly the product is inferior in some way. FBM-341 Food and Beverage Management 71
  72. 72. CONSIDERATION IN SELECTING SUPPLIERS The following are factors that purchasers should consider when selecting suppliers 1. Credit terms offered 6. Delivery schedule 2. Reputation 7. Level of technology 3. Reliability 8. Lead time 4. Substitution Policy 9. Delivery vehicles and 5. Accuracy drivers 10. Willingness to break case FBM-341 Food and Beverage Management 72
  73. 73. BUYER AND SELLER RELATIONSHIPS 9
  74. 74. BUYER AND SELLER RELATIONSHIPS There are some aspect in the buyer-seller relationship of which both parties must be aware entering into a transaction. Some of these matters are governed by laws and regulation, and others are ethical issues. FBM-341 Food and Beverage Management 74
  75. 75. ETHICAL AND PROFESSIONAL STANDARD Ethics deals with behavior that may not be illegal, but may still be wrong or improper according to commonly accepted practices. All employee who work in a foodservice operation must be made aware of the ethical and professional standards of the company and the industry Purchaser must make sure that their relationship with suppliers are kept strictly professional-not for the personal gain of the purchaser. FBM-341 Food and Beverage Management 75
  76. 76. KICKBACK A kickback is the illegal practice whereby a supplier or salesperson pays back money or goods to a purchaser in exchange for an order This practice is illegal because it gives an unfair advantage to one supplier over other FBM-341 Food and Beverage Management 76
  77. 77. LOW-BALL PRICING Suppliers may offer lower prices on a few items in order to entice the purchaser to buy from them, and then raise prices on other items This practice advertise a few items at or below cost as Loss Leaders to draw customer into a store then hope to make up the lost money with the rest of the groceries Purchaser must be aware to avoid being overcharge in long run. FBM-341 Food and Beverage Management 77
  78. 78. CONFLICTS OF INTEREST Buyers must be sure that they do not benefit personally from their dealing with the operation for which they work Purchasers must be careful to avoid the temptation of accepting loans, gift, items for their personal benefit, or cash in exchange for either giving a supplier an advantage over other company FBM-341 Food and Beverage Management 78
  79. 79. EXAMPLE OF ETHICAL POLICY The following are examples of precepts that should be included in policy governing the ethical standard of purchasers: 1. To treat all supplier equally, and not be swayed by the offering of gift or other consideration for personal benefit of the purchaser 2. To keep the best interests of the company in mind when negotiating all transaction; to conduct all business with others according to company policies 3. To either limit the value of a gift allowed to the given to a purchaser by a supplier, or establishment company policy forbidding the acceptance off all gifts FBM-341 Food and Beverage Management 79
  80. 80. RECEIVING 10
  81. 81. Receiving Activity for ensuring products delivered by suppliers are those that were ordered Verifying quality, size, & quantity meet specifications Price on invoice agrees with purchase order Perishable goods are tagged or marked with the date received Consistent & routine procedures are essential Adequate controls to preserve quality & prevent loss during delivery & receipt FBM-341 Food and Beverage Management 81
  82. 82. Elements of Receiving Activity Competent personnel Separate duties of purchasing & receiving basic to check-and- balance system Well trained employees to perform receiving tasks competently Facilities & Equipment Need enough space to permit all incoming products to be inspected & checked at one time Equipment scales, unloading platform, table for inspection, & some tools FBM-341 Food and Beverage Management 82
  83. 83. Elements of Receiving Activity Specifications Employee receiving order must know standards the supplies must meet Critical controls in receiving Procedures for inspection & standards for acceptance necessary to prevent food borne illness Sanitation Receiving area designed for easy cleaning FBM-341 Food and Beverage Management 83
  84. 84. Elements of Receiving Activity Adequate Supervision Management check security to ensure receiving procedures are being followed Scheduled hours Suppliers should deliver at specified times Security Different person responsible for purchasing & receiving Follow scheduled hours Move products immediately from receiving to storage Do not allow delivery personnel in storage area FBM-341 Food and Beverage Management 84
  85. 85. Receiving Process 1. Inspection against purchase order 2. Inspection against the invoice 3. Acceptance or rejection of orders 4. Completion of receiving records 5. Removal to storage FBM-341 Food and Beverage Management 85
  86. 86. Inspection Against Purchase Order Purchase Order written record of all orders. Includes: Brief description of the product Quantity Price Supplier Ensures: Products were actually ordered. Correct quantities have been delivered. FBM-341 Food and Beverage Management 86
  87. 87. Inspection Against the Invoice Invoice supplier s statement of what is being shipped & the expected payment. Receiving Methods: Invoice checks quantity against purchase order. Blind records quantity received on invoice or purchase order with quantity column blanked out. Electronic Use of tabulator scales, bar coded cartons & packages, & handheld scanner aid receiving. FBM-341 Food and Beverage Management 87
  88. 88. Acceptance or Rejection of Orders Delivered products become the property when the purchase order, specifications, & supplier s invoice are in agreement. Rejection at time of delivery is easier than returning products. FBM-341 Food and Beverage Management 88
  89. 89. Completion of Received Records Receiving record provides an accurate list of: All deliveries of food & supplies Date of delivery Supplier s name Quantity Price data Provides a checkpoint in control system. FBM-341 Food and Beverage Management 89
  90. 90. Removal to Storage Products should be transferred immediately from receiving to the secure storage area. Marking information about delivery date & price directly on the case, can, or bottle before it is placed into storage. Tagging information such as date of receipt, name of supplier, brief description of product, weight or count upon receipt, & place of storage are written on a tag. FBM-341 Food and Beverage Management 90
  91. 91. RECEIVING KEY POINT IN RECEIVING You Do Not Get What You Expect, You Get What You INSPECT FBM-341 Food and Beverage Management 91
  92. 92. IMPORTANCE OF RECEIVING The Entire Purchasing System can fall apart if a receiver is not careful to check items properly when they arrive from the supplier. Receiver must check three key factors for each items that arrives: 1. Quantity 2. Quality 3. Adherence to company specification FBM-341 Food and Beverage Management 92
  93. 93. IMPORTANCE OF RECEIVING It is important in the receiving function to ensure that all that was ordered is received A distributor charges the foodservice operation for all items on the invoice Nonreceipt of an order items or receipt of a quantity less than that ordered can cause a significant problem if the discrepancy is not spotted at the time of delivery so that it can be rectified FBM-341 Food and Beverage Management 93
  94. 94. PROPER TOOLS FOR THE RECEIVER The person who does the receiving must be supplied with a number of tools in order to perform the job properly. 1. The Knowledge necessary 2. Scales 3. An adequate area in which to work 4. Specification Sheets 5. The time 6. A list of what was ordered FBM-341 Food and Beverage Management 94
  95. 95. STORAGE 11
  96. 96. Storage Holding of products under proper conditions to ensure quality until time of use. Links receiving & production. Storage employees: Check in products from the receiving unit Provide security for products Establish good material-handling procedures FBM-341 Food and Beverage Management 96
  97. 97. Storage Theft premeditated burglary Pilferage inventory shrinkage Storage facility types include: 1. Dry storage 2. Low-temperature storage 3. Nonfood item storage FBM-341 Food and Beverage Management 97
  98. 98. 1. Dry Storage Provides orderly storage for foods not requiring refrigeration or freezing. Should provide protection of foods from the elements, insects, rodents, & theft. Temperature of 50º F to 70º F. Relative humidity of 50% to 60%. FBM-341 Food and Beverage Management 98
  99. 99. 2. Low-Temperature Storage Provides storage for perishable foods to preserve quality & nutritive value. Types: Refrigerators designed to hold the internal temperature of food products below 41ºF. Tempering boxes units for thawing frozen foods. Steady temperature of 40ºF. Storage freezers units for frozen foods. Constant temperature of -10ºF to 0ºF. FBM-341 Food and Beverage Management 99
  100. 100. 2. Low-Temperature Storage Recommended humidity range of 75% & 95% (85%- 95% for perishable foods). Low-Temp Thermometers: Remote reading placed outside unit. Recording mounted outside the unit. Refrigerator/Freezer mounted or hung on shelf in the warmest area inside unit. Should be checked at least twice a day. FBM-341 Food and Beverage Management 100
  101. 101. INVENTORY 12
  102. 102. Inventory Supported by the actual presence of products in the storage area. Access to storage areas should be restricted. Requires maintenance of accurate records. FBM-341 Food and Beverage Management 102
  103. 103. Issuing Products Issuing process used to supply food to production units after it has been received. Direct purchases or direct issues products sent directly from receiving to production. Storeroom issues foods that are received but not used the day they are purchased. FBM-341 Food and Beverage Management 103
  104. 104. Inventory Records Objectives: Provision of accurate information of food & supplies in stock. Determination of purchasing needs. Provision of data for food cost control. Prevention of theft & pilferage. FBM-341 Food and Beverage Management 104
  105. 105. Physical Inventory Periodic actual counting & recording of products in stock in all storage areas. Involves two people: 1st person counts the products. 2nd person records the data on the physical inventory form. One of the people should not be directly involved with storeroom operations as a control measure. FBM-341 Food and Beverage Management 105
  106. 106. Perpetual Inventory Purchases & issues continuously are recorded for each product in storage. Balance in stock is available at all times. Generally restricted to products in dry & frozen storage. FBM-341 Food and Beverage Management 106
  107. 107. Universal Product Code System of identifying food products Code Digit #1 always zero except for meat and produce with variable weight Digits 2 - 6 manufacturer s or processor s code Digits 7-11 product code Digit 12 check digit FBM-341 Food and Beverage Management 107
  108. 108. Inventory Control Tools Major functions of a control system: Coordinate activities Influence decisions & actions Assure that objectives are met Decision making FBM-341 Food and Beverage Management 108
  109. 109. Minimum-Maximum Method Involves establishment of minimum & maximum inventory levels. Safety stock a backup supply. Lead time interval between requisition & receipt of a product. Usage rate speed at which a product is used; determined by experience & forecasts. Reorder point lowest stock level that safely can be maintained to avoid a stock-out or emergency purchasing. FBM-341 Food and Beverage Management 109
  110. 110. Ethical Considerations Ethics principles of conduct governing an individual or a business. Personal ethics a person s religion or philosophy of life derived from definite moral standards. Business ethics self-generating principles of moral standards to which a substantial majority of business executives gives voluntary assent. FBM-341 Food and Beverage Management 110
  111. 111. Code of Ethics Set of rules for standards of professional practice or behavior established by a group. Influenced by codes of individuals. Standard the measurement of what is expected to happen. FBM-341 Food and Beverage Management 111
  112. 112. Ethical Issues Ethical dilemmas: Efforts to gain inside information about competitors that will benefit competition. Activities that allow buyers to gain personal benefits from suppliers. Activities that manipulate suppliers to benefit the purchasing organization. FBM-341 Food and Beverage Management 112
  113. 113. Ethics Management By implementing planning, organizing, staffing, leading, & controlling, management can be sure ethics are established formally & explicitly into daily organizational life. Leadership is the principal mechanism for increasing ethical performance in business. FBM-341 Food and Beverage Management 113
  114. 114. Materials Management The unifying force that gives interrelated functional subsystems a sense of common direction. Transforms materials that enter the system into an output that meets standards for quantity & quality. Organizational concept of centralized responsibility for those activities involved in moving materials into the organization. FBM-341 Food and Beverage Management 114
  115. 115. SUMMARY FBM-341 Food and Beverage Management 115
  116. 116. SUMMARY FBM-341 Food and Beverage Management 116

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