purchase control in hotels


The food and beverage control system

Purchase department (The aim of purchasing policy/ introduction)
The purchasing department’s role is to make sure that supplies, equipment and services are available to the operation in quantities appropriate to predetermined standards, at the right price and at a minimum cost to meet desired standards.
Generally, those responsible for purchasing have the authority to commit the establishment’s funds to buying required goods or services.
By following established purchasing procedures, an operation can avoid many purchasing pitfall such as panic buying, over or short purchasing, buying by price rather than by a combination of quality and price, pressure buying or what is probably quite common, satisfied buying.

Policies                       Determines what market segment is aimed at.
                                     Determines prices to be paid for purchases and prices that items are to be sold at
                                     Determines the quality to be purchased.
Menu                           determines the choice of item available to customer
Volume forecasting   determines the quantity to be purchased
Requisition                 indicates the particular requirements of each outlet
Purchasing                   Select suppliers, contracts, quantities to be purchased, specifications for        individual items.
                                     Ensures continuity of supply
Receiving                    inspects for quantity and quality
Storing                        correct storage for each item.
                                     Maintenance of stock records and security of items
                                     Correct stock level and correct issuing
Production                   preparation of items purchased
Selling                         provision of satisfactory products at the correct selling price.
Control                        the measurement of performance of all outlets involved.
                                    Feedback of information to management. 

Purchasing manager
The duties and responsibilities of purchase manager:-
1.    Responsibility for the management of the purchasing office, the receiving, storage and cellar areas.
2.    The purchasing of all commodities.
3.    Ensuring continuity of supply of all items to user departments.
4.    Finding cheaper (for same quality) and more efficient sources of supply.
5.    Keeping up to date with all the markets being dealt with and evaluating new products.
6.    Research into products, markets, price trends etc.
7.    Co-coordinating with production department to standardize commodities and therefore reduce stock levels.
8.    Liaising with production, control, accounts and marketing departments.
9.    Reporting to senior management.

Types of food purchases

I.    Purchasing by contract- this is basically of two types-
The specific period contract: This aims at determining the source of supply and the price of goods for a stated period often of three or six months. This reduces the time and labor of negotiating and ordering to a minimum, plus it has the added advantage of assisting with budgeting and pricing, when the prices of items are fixed for a period of time. Items with a fairly stable price, such as milk, cream, bread, etc. can be contracted in this way.
The quantity contract: This aims at ensuring continuity of supply of a given quantity of an essential item at an agreed price over a particular trading period. The purchase of frozen fruits and vegetable for use in a banqueting or a summer season are typical examples when the supply could be affected by the weather conditions with subsequent price fluctuations and where a quantity contract is advisable used.
II.    Purchasing by daily market list- this method is used when purchasing perishable food on a daily basis and when it is possible to have two or more approved suppliers.
iii.     Purchase by weekly/ fortnightly quotation list- this method is used to purchase grocery items where delivery of once or fortnight is adequate. The method is similar to that described when purchasing perishable food by daily market list.
IV.    Purchasing by cash and carry- this method is of particular interest to the medium and small establishments whose orders are often not large enough to be able to get regular deliveries from wholesalers and food manufacturers. Cash and carry food warehouses are situated in all towns and resemble in layout and operation that of very large food supermarkets
V.    Purchasing by paid reserve- this method is used when it is necessary to ensure the continuity of supply of an item for the menu which is of particular importance to a restaurant. Caterers are buying in advance a large quantity of a commodity to cover needs for several months ahead, and requisitioning their weekly requirements from suppliers, who holds the stock. Examples of products which are purchased by the method are frozen jumbo size pacific prawns and frozen fillets of beef.
VI.    Total supply- this method is relatively new. It is a method offered only by a few major suppliers who are able to offer a full supply service of all commodities to caterers. This has the advantage of only having to negotiate with one supplier; a reduce volume of paperwork and far fewer deliveries. The main disadvantage is that of being tied to one major supplier, whose prices may not be competitive as when using several suppliers and whose range of certain commodities may be limited.
VII.    Cost plus- this is method used frequently in the welfare sector of the industry. The establishment agrees to pay an approved supplier exactly the same price that the supplier paid for the commodities plus an agreed percentage, often 10-12 percent. This percentage would include the cost of handling, delivery charges, and a profit element for supplier

Quality Purchasing

Just as it is not possible to determine inventory levels or items to be purchased without standardized recipes, it is not possible to manage costs where purchasing is concerned without the use of product specifications, or “specs.” A product spec is simply a detailed description of an ingredient or menu item. A spec is a way for you to communicate in a very precise way with a vendor so that your operation receives the exact item requested, delivery after delivery. A foodservice specification generally consists of the following information:
1. Product name or specification number
2. Pricing unit
3. Standard or grade
4. Weight range/size
5. Processing and/or packaging
6. Container size
7. Intended use
8. Other information such as product yield

Food quality factors for different commodities
The Format is also intended for use as a guide by the subsidiary bodies of the Codex Alimentarius Commission in presenting their standards, with the object of achieving, as far as possible, a uniform presentation of commodity standards. The Format also indicates the statements which should be included in standards as appropriate under the relevant headings of the standard. The sections of the Format require to be completed in a standard only insofar as such provisions are appropriate to an international standard for the food in question.
Perishable order sheet


To have an effective control the management must establish the number of standard portions that are obtainable from all major items that appear on restaurant's menu. For example from a carcass of 8 kg lamb meat the number of standard portions for mutton curry should be so many and each portion must weight so many grams. The standard weight of fat, bone and other specific joints should be so much and the following dishes and these many numbers of portions should be taken out from the carcass. The term 'Standard' is synonymous with the phrase "What it should be" Standards are aids to management for the control of food and beverage department and for the measurement of efficiency of kitchens and bars and specify the butchery department.
After establishing the standard yield for all the major items, it is possible to plan the menu costing and pricing. It also helps in volume forecasting for specific items into raw material requirements.
The control department should weight the standard portion size at random to maintain the portion standard. Even the number of portions taken out from a unit should also be calculating as this will help in controlling the food cost and maintaining the standard portion size. It should be also kept in mind that the exact yield of the cooked food will be different from the raw food's yield. In case of dry food the weight of the dish will reduce after cooking as the moisture will evaporate. For example a marinated portion of fish weight 250 grams before frying will reduce to say 230 grams after frying.
Test to arrive at standard yield
This test determines how much usable and non usable product an item yields.
Example; process a whole chicken to determine the weight for the breast, legs, wings, bones, etc.
Yield % is the percentage of product you will have remaining after cooking, trimming, portioning or cleaning.
Waste % is need to calculate the yield %, what is waste %.
Waste % is the percentage of product lost due to cooking, trimming, portioning or cleaning.
                                           Product Loss
                    Waste % =    ----------------
                                            AP Weight

Yield % =     1.00 – Waste%
purchase cycle

perishable order sheet

supplier selection I
supplier selection II

Standard purchase specification

Purchase specifications should be used whenever possible in purchasing.
A purchase specification is a concise descrip¬tion of the quality, size and weight (or count) required for a particular item. Each specification would be particular to an establishment and would have been determined by members of the management team (for example, the purchasing manager, head chef and the food and beverage manager) by reference to the catering policy, the menu requirements and its price range. Copies of the specifications should be kept by the rele¬vant members of the management; the goods received clerk and the food control clerks and sent to all suppliers on the 'approved suppliers list’.
The reasons for preparing specifications are:
1.    It establishes 11 buying standard of a commod¬ity for an establishment so that a standard product is available for the kitchen and restau¬rant to prepare for the customer.
2.    It informs the supplier in writing (and often aided by a line drawing or photograph) pre¬cisely what is required, and it assists the sup¬plier in being competitive with pricing.
3.    It provides detailed information to the goods received clerk and the store man as to the stan¬dard of the foods to accept.
4.    It makes staff aware of the differences that can occur in produce, for example, size, weight, quality; quantity, etc.
Unfortunately, preparing specifications in the UK and many other countries is rather difficult owing to a lack of government grading of many foods. The position has improved with the grad¬ing of fruits and vegetables produced in the EC, and with the recommended classificationof carcase meat by the meat liverstock commission.
Specifications are easy to write when there is an official recognized grading scheme for the particular commodity It is necessary, however, to know and understand any grading system fully to be able to obtain the maximum benefit.
When writing specifications it is convenient to write them in a standard form giving the follow¬ing information:
Definition of the item:. Care must be exercised here that the common catering term used by the buyer means exactly the same thing to the supplier.
Grade or brandname:, for example apples grade extra class; Lea and Perrins 'Worcester sauce'.
Weight, size or count,: for example pounds, hun¬dredweights, kilos, etc.; A2%s, AlOs, etc.; lemons 120s, pineapples 12s etc.
Unit against which prices should be quoted,: for example per pound, per case, etc.
Special notes for the commodity:  for example for meat it could contain details of the preparation of a particular cut of meat or details of special packaging requirements.
Advantages of standard purchase specification and standard yield
1.    Required those who prepare them to think carefully and document exactly
2.    what their product requirements are
3.    Leave no doubt in suppliers’ minds about what they are quoting on thus
4.    reducing or eliminating misunderstanding between supplier and
5.    establishment
6.    Eliminate, for frequently purchased items, the time that over the telephone
7.    or directly to sales persons each time the product is needed
8.    Permit competitive bidding
9.    Allow the person responsible for receiving to check the quantity of delivered
10.    goods against a written description of the quality desired

Purchasing Procedure: Purchase procedure has the following stages
1.    Kitchens, Restaurants, Bars, etc send their requisitions to the store and stores intimates purchase department regarding the requirements. The procedure and specimen for making requisition slip can be seen in the chapter 'Storing and Issuing Control'.
2.    Purchase officer makes the final list of items to be purchased and decides the department./ supplier from whom to purchase and the quantity and quality required.
3.    Either he places order on telephone and sends the purchase order later or the order is placed against purchase order. A copy of the purchase order is marked to stores department so that stores can receive the items as per the purchase specifications.
4.    The goods are received along with the supply order by the stores department,The stores check the quality, quantity, weight etc. and checks the purchaser order and supply order/After ensuring the right quality and quantity he signs the supply order and returns the copy of supply order to the supplier. A copy of the supply order is also send to purchase department and accounts department. The supplier sends the bill along with a supply order and purchase order to accounts department for settlement of the bill.
5.    The stores receive the goods; enter in the stores and supplies to the respective department.

Purchase order
These are the formal agreement that a product is going to be bought at a specific price. Purchase orders are submitted by a steward to the purveyor. This is a promise to purchase goods as opposed to an invoice, which is created by the purveyor for goods already delivered.
1.    Written verification of quoted price.
2.    Written verification of quantity ordered.
3.    Written verification of the receipt of all goods ordered.
4.    Written and special instruction to the receiving clerk, as needed
5.    Written verification of conformance to product specification
6.    Written authorization to prepare vendor invoice for payment.

Sources of Supplies
1.    Wholesalers
2.    Local producers
3.    Manufacturers
4.    Packers
5.    Local farmers
6.    Retailers
7.    Cooperative associations
In most instances, the food service operator will deal with several of these sources of supply to obtain the necessary foods. For example, a restaurant may turn to a local producer for dairy and bakery products, a packer for canned meats, a wholesaler for fresh meats, a different wholesaler for canned fruits and vegetables, and a local farmer for eggs.

Centralized purchasing
Widely used by chain operations and occasionally established by small groups of independent operators with similar needs. Under a centralized purchasing system, the requirements of individual units are relayed to a central office, which determines total requirements of all units by the dealer or for delivery to a central warehouse. This method obviously requires that a whole system for distribution be maintained and operated by the organization doing the centralized purchasing.
Advantages of centralized purchasing:
1.    Food and beverage can be purchased at lower prices because of volume.
2.    Desired quality can be obtained more readily because the purchasing agent has a greater choice of markets.
3.    Food can be obtained that meet the purchaser’s exact specifications.
4.    Larger inventories can be maintained, ensuring reliable supply to individual units.
5.    The possibilities for dishonest purchasing in individual units are greatly reduced.
1.    Each unit must accept the standard item in stock and has little freedom to purchase for its own particular needs.
2.    Individual units may not be able to take advantage of local specials at reduced prices.
3.    Menus are normally standardized thus limiting the individual unit manager’s freedom to change a menu.

Periodical purchasing
Certain items are not purchased on regular basis and are procured periodically. The procedure adopted for their purchase is usually quotation, cash and carry or contract purchasing. Usually either the non perishable items are purchased through periodical purchase system or those items which may not be required on regular basis.

The selection of a supplier
When seeking a new supplier caution must be exercised and detailed enquires made to cover at least the following points:
1.    Full detail of the firm and the range of items they are selling.
2.    Copies of recent price list
3.    Details of trading terms.
4.    Details of other customers.
5.    Samples of products.
Having selected supplier s and placed them on an approved suppliers list and after having purchased from them, it is necessary to periodically evaluate their performance using a rating system. There are three main performance criteria which are normally used in a rating system:
a)    Price
b)    Quality
c)    Delivery performance
Price performance
The cheapest item is not necessarily the best buy; often a cheap item is of a low quality. One sup¬plier may specialize in lower quality goods at a lower price while another may specialize in high quality goods at higher prices. Both suppliers are specialists and both may supply the same buyer with similar goods but of different qualities. Which supplier the buyer chooses depends on the quality required - the corresponding price will then have to be paid. Price, however, is not always related to quality. The purchasing man¬ager needs to guard against this.
The lower the price coupled with an above average quality of goods the higher is the price performance rating.
Quality performance
This is the ability of a supplier to supply the buyer consistently with goods of the desired quality as laid down in the purchasing specifica¬tion. Consistency in meeting the purchasing specifi¬cation would give a high quality performance rating.
Delivery performance
This is the ability of the supplier to meet agreed delivery times and dates with the buyer. Prompt deliveries mean that the goods will be delivered when required and when staff are available to check them efficiently for quantity and quality. Late deliveries will often add to the pressure of work at the receiving department, when other goods are also being checked in, and to possible complications in the production department.
The nearer the scheduled delivery date and time the higher the delivery performance rating.
The rating of suppliers using these three crite¬ria provides a guide to the buyer, in an objective way, for negotiating further purchasing agree¬ments between suppliers of similar commodi¬ties.

Numerical supplier rating system
The numerical supplier rating system reduces price, quality and delivery performance to a mark each out of ten. The best rating that a sup¬plier could achieve would be 10-10-10.
Price is measured by comparing the prices of each supplier for an order, over a known trading period (for example, one week, twenty eight days) against those of other suppliers of the same group of commodities. The lower the price, the higher the rating figure.
Quality is measured by the ability of the sup¬plier to provide commodities consistently to the required specification. The performance is calcu¬lated as a percentage of the total orders made. Thus goods returned to the supplier because of poor quality would lower the rating figure.
Delivery performance would be calculated against the percentage of deliveries made on time. The majority of deliveries made on time would give a high rating figure.
A supplier rated 6-9-10 by the buying depart¬ment would be understood to offer goods at a fairly high price (four suppliers being cheaper), to supply goods initially which were 90 per cent satisfactory, and to have a first class delivery record.

Economic order quantity
There are costs involved in carrying an inventory of supplies of any kind. These costs include the cost of money that is either borrowed to carry the inventory or that is tied up by the firm and thus not available for the purpose . There are also costs associated with having to store the inventory, such as the necessity to include storage areas in the building (thus increasing the building costs), inventory insurance, labor costs (storekeepers and other personnel) and the cost of control forms (for example, perpetual inventory cards and requisitions). These costs could generally vary from 10 to 30 percent of the value of the inventory.
The economic order quantity equation can be used, where appropriate to minimize the costs associated with purchasing and carrying inventories. The equation is:
Where EOQ = Economic order quantity
F = Fixed cost of placing an order
S = Annual sales or usage in units
C = Carrying costs (insurance, interest, storage) as Percent of the dollar amount of the inventory
P = Purchase price per unit


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