PURCHASING

• Purchasing


  An act of buying, process of securing the right product for a facility at the right time and in a form that meets pre-established standards for quantity, quality, and price
• Purchasing


  Sequence of consecutive actions
• Goals of purchasing to meet the needs of foodservice operations

  • Secure food
  • Secure supplies
  • Secure equipment
• The basic flow of purchasing activities

  1. Ideally needs by planning new or reviewing existing menus for each business unit

  2. Determine standards of quality for each food item and write specifications

  3. Estimate quantities needed

  4. Calculate desired inventory or stock levels for each item

  5. Decide when we will re-order

  6. Identify amounts to purchase by subtracting stock levels from desired quantities

  7. Develop purchase orders

  8. Conduct market research on potential vendors' product availability

  9. Ask permission to submit called purchase requisition, if approved then we will purchase order

  10. Select and negotiate with vendors
• Formal method


  Need formal documentation
• Informal method


  Restaurant or small scale only
• Types of storage


  • Cooling
  • Refrigerated
  • Dry
• Market


  The medium through which a change of ownership occurs, from "field to fork"
• Types of markets


  • Primary market - the commodities and regions in which they are grown, where the securities are created
  • Secondary market - where the commodities/securities are traded by investors, where investors buy and sell securities that they already own
• Market


  • Grocery stores
• Market distribution


  A collection of activities that results in transfer of ownership of food from producer to consumer
• Market channels


  The food processing and distribution system, beginning with the grower of raw food products and ending at the final customer or point of consumption
• Market channels

  • Plantation of coffee then into factory which will manufacture then into a grinder then will sell into retail
• Intermediaries


  Act as conduits between the manufacturers, distributors, and consumers; also called the "middlemen"
• Two most common intermediaries who influence the foodservice segment

  • Broker - serves as a sales representative for a manufacturer or group of manufacturers, paid on commission by the manufacturers
  • Manufacturer's representative - serves as a sales representative for a single manufacturer
• Channel


  A segment of the distribution process where an exchange of ownership occurs
• Buyer


  May be an individual, a purchasing department, or a cooperative arrangement with other institutions, someone who purchases food and supplies
• Negotiation


  The communication skill used by individuals to confer with others to reach an agreement or compromise agreement
• Ethics in purchasing


  The science of morals in human behavior, buying demands integrity, maturity, negotiation skills, and commitment to a high standard of ethics
• Centralized purchasing


  Centralized buying, in which a purchasing department is responsible for obtaining needed supplies and equipment for all units in the organization
• Group and cooperative purchasing

  Where members of the group are independent organizations and are not under the same management or within one organization, the main advantage is the price advantage gained by increased volume, which in turn may attract more prospective vendors
• Responsibilities of the buyer

  • Inquire about the product line, services, and reliability
  • Know the details of delivery schedules
  • Know the payment policies
  • Assess the availability of needed products
  • Ensure that the products meet the quality standards of the organization
  • Make contingency plans for situations in case standards are not met
• Key responsibilities of the buyer

  • Initiate a professional working relationship with a vendor
  • Carefully evaluate the vendor's scope of products and services
  • Follow purchasing ethics at all times
  • Make necessary inquiries into the vendor's reliability in meeting contract specifications
• Vendor


  A source of supply
• Ways to find vendors

  • The internet
  • Other foodservice operators
  • Trade journals and publications
  • Trade shows
• Broadline vendor


  Carries large inventories of food and supplies, representing numerous specialty vendors, they meet nearly every need that a single foodservice may have
• Specialty vendor


  Carries a limited product line, such as single commodities like meat, fish, or produce only
• Informal or open-market buying


  Common method used in buying especially in smaller foodservice operations, ordering needed food and supplies from a selected list of vendors based on daily, weekly, or monthly price quotations
• Formal or competitive bid buying


  Written specifications and estimated quantities are submitted to vendors with an invitation for them to quote prices within a stated time, bids are opened on a designated date, contracts are awarded to the vendor that offers the best price and meets product and service specifications
• Formal or competitive bid buying


  • Government hospitals, hotel restaurant, pagandahan
• Daily purchase order

  Use when menu is expensive
• Cost-plus purchasing


  A buyer agrees to buy certain items from a vendor for an agreed-on period of time based on a fixed markup over the vendor's cost
• Prime vending


  Involves a formal agreement (secured through a bid or informally) with a single vendor to supply the majority of the product needs, needs are specified in percent of total use by category, the agreement is based on a commitment to purchase a specified amount for a specified period of time
• Blanket purchase agreement


  Used when a wide variety of items are purchased from local suppliers but the exact items, quantities, and delivery requirements are not known in advance and may vary, "charge account basis"
• Just-in-time purchasing


  Products are purchased in exact quantities required for a specific production run and delivered "just in time" to meet the production demand, advantage is better space management and fresher products
• Purchase requisition


  Form used to start the purchasing process, submitted to the department that controls finances, required for goods over a certain peso/money threshold
• Purchase order


  Form used to actually make the purchase, issued by the buyer to the vendor once the purchasing department has approved the requisition
• Par stock system


  Stock is brought up to this level each time an order is placed regardless of the amount on hand at the time of the order
• Mini-max system


  Stock is allowed to deplete to safety level before new order is submitted to bring level up to maximum