28
Purchasing and Purchasing and Product Product
IdentificationIdentification
Mr. Cervantes – InstructorMr. Cervantes – Instructor
Phone: 281 – 218 - 0075Phone: 281 – 218 - 0075
Cell: 517 – 303 – 5539Cell: 517 – 303 – 5539
Email:Email: [email protected]@yahoo.com
EducationEducation
Michigan State University Michigan State University
Masters Degree in Instructional Masters Degree in Instructional DesignDesign
Michigan State University Michigan State University
B. S. Degree in Hospitality B. S. Degree in Hospitality BusinessBusiness
Johnson & Wales University Johnson & Wales University
Associates Degree in Culinary ArtsAssociates Degree in Culinary Arts
The Greenbrier Hotel & Resort The Greenbrier Hotel & Resort
Two year Chef ApprenticeshipTwo year Chef Apprenticeship
Required Required TextText
PurchasingSelection and Procurement
For the Hospitality Industry
Fifth Edition
or
Sixth Edition
Positions HeldPositions Held
Sous Chef Sous Chef
Kellogg CenterKellogg Center
Production Manager Production Manager
Student Union CaféStudent Union Café
Cook / BakerCook / Baker
Michigan State Michigan State UniversityUniversity
Chef ApprenticeshipChef Apprenticeship
The GreenGrierThe GreenGrier
Overall ObjectiveOverall Objective
To make informed decisions with regards To make informed decisions with regards to Purchasing and Product to Purchasing and Product IdentificationIdentification
• What to buyWhat to buy• How much to buyHow much to buy• From whom to buyFrom whom to buy• When to buyWhen to buyBased on the best quality for the Based on the best quality for the
intended use at the best price.intended use at the best price.
Purchasing ObjectivesPurchasing Objectives
• Maintain an Adequate Supply.Maintain an Adequate Supply.• Minimize Investment.Minimize Investment.• Maintain Quality.Maintain Quality.• Obtain the Lowest Possible EP Cost.Obtain the Lowest Possible EP Cost.• Maintain the Company’s Competitive Maintain the Company’s Competitive
Position.Position.
What Lies Behind Us And What Lies Before Us Are Nothing Compared To What Lies
Within Us.
Ralph Waldo Emerson
• Class Ground RulesClass Ground Rules• On time and On taskOn time and On task• One person speakingOne person speaking• Everyone participate, no Everyone participate, no
one dominateone dominate• Active listeningActive listening• OK to disagreeOK to disagree• When you disagree, When you disagree,
focus on the issue, not focus on the issue, not the personthe person
Class Ground RulesClass Ground Rules
• Speak the truth clearly Speak the truth clearly and respectfullyand respectfully
• Have fun as we work Have fun as we work and learnand learn
• Respect and protect Respect and protect the confidentiality of the confidentiality of the groupthe group
• Cell phone and pager Cell phone and pager turned offturned off
Class Ground RulesClass Ground Rules
Why Purchasing and Why Purchasing and Product Identification?Product Identification?
• Cost Control Cost Control • Capstone ProjectCapstone Project• Important to your careerImportant to your career
Information presented in Purchasing Information presented in Purchasing and Product Identification and Product Identification supplements the objectives of Cost supplements the objectives of Cost Control, Capstone and your careerControl, Capstone and your career
What Affects Your What Affects Your Purchasing Activities?Purchasing Activities?
1.1. The Menu determines your The Menu determines your purchasing needspurchasing needs
2.2. The Standardized Recipe The Standardized Recipe determines your specific purchasing determines your specific purchasing needs.needs.
3.3. The Budget will determine your The Budget will determine your purchasing strategy. purchasing strategy.
4.4. The Inventory will affect your The Inventory will affect your purchasing decisions.purchasing decisions.
Opening InventoriesOpening InventoriesMaintaining an inventory will affect your Maintaining an inventory will affect your
purchasing decisions.purchasing decisions.• Necessary items to start and sustain operation of the businessNecessary items to start and sustain operation of the business
1. Food Inventory – Enough product to sustain your business 1. Food Inventory – Enough product to sustain your business for for two weeks based on standardized recipes and product two weeks based on standardized recipes and product mixmix2. China / Glassware / Flatware / Table top purchases2. China / Glassware / Flatware / Table top purchases3. Furniture for all front of the house needs specified and 3. Furniture for all front of the house needs specified and priced.priced.4. Small-wares – All items necessary for the kitchen specified 4. Small-wares – All items necessary for the kitchen specified and pricedand priced5. Capital Equipment – Based on design to include all kitchen 5. Capital Equipment – Based on design to include all kitchen
equipment, brands and pricesequipment, brands and prices
• All these costs must be included and totaled for justification of All these costs must be included and totaled for justification of a bank loana bank loan
Purchasing – Starting Purchasing – Starting PointPoint
• Purchasing – Paying for an item or Purchasing – Paying for an item or service.service.
• Selection – Choosing from among various Selection – Choosing from among various alternatives on various levels.alternatives on various levels.
• Procurement – Orderly systematic Procurement – Orderly systematic exchange between a seller and a buyer.exchange between a seller and a buyer.
Types of Hospitality Types of Hospitality OperationsOperations
• Commercial SegmentCommercial Segment• Institutional SegmentInstitutional Segment• Military SegmentMilitary Segment
Commercial Foodservice Commercial Foodservice Operations Operations
• HotelsHotels• MotelsMotels• CasinosCasinos• ResortsResorts• LodgesLodges• SpasSpas• Quick Service (QSRs)Quick Service (QSRs)• Off Premise CaterersOff Premise Caterers• Vending Machine Vending Machine
CompaniesCompanies
• Table Service Table Service RestaurantsRestaurants
• Snack BarsSnack Bars• Food CourtsFood Courts• Taverns, Lounges, Taverns, Lounges,
BarsBars• CafeteriasCafeterias• BuffetsBuffets• On-premise CaterersOn-premise Caterers• Ice Cream ParlorsIce Cream Parlors• In Transit Food In Transit Food
ServicesServices
Independent Purchasing Independent Purchasing OperationsOperations
• Small Independent – typically run by the owner / Small Independent – typically run by the owner / operator who does all the buying for the operator who does all the buying for the business.business.
• Medium Independent – generally involves more Medium Independent – generally involves more than one person in the purchasing function. The than one person in the purchasing function. The General manager may coordinate the activities General manager may coordinate the activities of the other managers.of the other managers.
• Large Independent – Similar to medium Large Independent – Similar to medium independent. May employ a full time buyer. independent. May employ a full time buyer. The buyer would be responsible for The buyer would be responsible for housekeeping, engineering, maintenance and housekeeping, engineering, maintenance and food service purchasesfood service purchases
Co-op BuyingCo-op Buying
• System whereby hospitality operations System whereby hospitality operations come together to achieve savings come together to achieve savings through the purchase of food and through the purchase of food and supplies in bulk.supplies in bulk.
• There are some companies that will There are some companies that will coordinate this pooling function. They coordinate this pooling function. They will charge a fee for participation or pad will charge a fee for participation or pad pricing (or both) to cover their expenses.pricing (or both) to cover their expenses.
Multi-Unit PurchasingMulti-Unit Purchasing (May Include (May Include Franchisees)Franchisees)
• Centralized purchasing function to Centralized purchasing function to minimize cost and improve minimize cost and improve consistency among all locations.consistency among all locations.
• Other considerationsOther considerations– Central commissariesCentral commissaries– Distribution warehousesDistribution warehouses
Key Purchasing Activities - Key Purchasing Activities - Large Large IndependentIndependent• Determine when to Determine when to
orderorder• Control inventory Control inventory
levelslevels• Establish quality Establish quality
standardsstandards• Determine Determine
specificationsspecifications• Obtain competitive Obtain competitive
bidsbids
• Investigate vendorsInvestigate vendors• Arrange payment Arrange payment
termsterms• Oversee deliveryOversee delivery• Negotiate refundsNegotiate refunds• Handle adjustmentsHandle adjustments• Arrange for storageArrange for storage
Key Purchasing Activities – Key Purchasing Activities – Large Large
Foodservice FirmsFoodservice Firms• Recipe developmentRecipe development• Menu developmentMenu development• Specification Specification
writingwriting• Approval of buying Approval of buying
sourcesource• Designation of Designation of
approved brandsapproved brands• Supplier evaluationSupplier evaluation• Negotiation with Negotiation with
supplierssuppliers
• Change of brandsChange of brands• Substitution of Substitution of
approved itemsapproved items• Approve new Approve new
productsproducts• Invoice approvalInvoice approval• Invoice paymentInvoice payment• Order placement Order placement
with supplierwith supplier
Pre-purchase ActivitiesPre-purchase Activities
• Plan menusPlan menus• Determine specifications of product Determine specifications of product
qualities neededqualities needed• Determine appropriate inventory Determine appropriate inventory
levelslevels• Determine appropriate order sizesDetermine appropriate order sizes• Prepare ordering documentsPrepare ordering documents
Informal PurchasingInformal Purchasing
Generally applies to smaller and Generally applies to smaller and medium size operatorsmedium size operators
• Contact vendorsContact vendors• Obtain price quotesObtain price quotes• Select vendorSelect vendor• Place orderPlace order• Receive shipmentReceive shipment• Issue products to production and service Issue products to production and service
departmentsdepartments
Formal PurchasingFormal Purchasing
Generally applies to larger operatorsGenerally applies to larger operators• Contact VendorsContact Vendors• Establish formal competitive bid process.Establish formal competitive bid process.• Solicit competitive bids.Solicit competitive bids.• Evaluate bids.Evaluate bids.• Award contract to vendor.Award contract to vendor.• Receive shipmentsReceive shipments• Issue products to production and service Issue products to production and service
departments.departments.• Monitor future contract performance.Monitor future contract performance.• Evaluate and follow up.Evaluate and follow up.
To Do an Efficient Buying Job, To Do an Efficient Buying Job, Hospitality Organizations Must Hospitality Organizations Must
Usually Perform (Minimally) Usually Perform (Minimally) the Following:the Following:
• Selection and Selection and Procurement PlanProcurement Plan
• Determine Determine RequirementsRequirements
• Supplier SelectionSupplier Selection• SourcingSourcing• Maintain a Convenient Maintain a Convenient
and Sufficient Inventory.and Sufficient Inventory.• Conduct NegotiationsConduct Negotiations• Research ActivitiesResearch Activities• Maintain Supplier Maintain Supplier
DiplomacyDiplomacy
• Educate SuppliersEducate Suppliers• Purchase, Receive, Purchase, Receive,
Store and Issue Store and Issue ProductsProducts
• Disposal of Excess and Disposal of Excess and Un-salable ItemsUn-salable Items• RecyclingRecycling• Develop Record Develop Record
Keeping ControlsKeeping Controls• Organize and Organize and
Administer the Administer the Purchasing FunctionPurchasing Function
• Help CompetitorsHelp Competitors
More Research ActivitiesMore Research Activities
– Make or Buy Analysis – Decision to use Make or Buy Analysis – Decision to use value added products.value added products.• Consistent quality.Consistent quality.• Consistent portion control.Consistent portion control.• Diverse menu regardless of skill level.Diverse menu regardless of skill level.• Operating Efficiencies.Operating Efficiencies.• Less food handler supervision.Less food handler supervision.• Reduce employee skill requirements.Reduce employee skill requirements.• Reduction in leftovers.Reduction in leftovers.• Reduction in raw material inventory.Reduction in raw material inventory.• Reduction in ordering costs.Reduction in ordering costs.• Potential to add more guest spaces.Potential to add more guest spaces.
Problems of the BuyerProblems of the Buyer
• Backdoor SellingBackdoor Selling• Excessive time spent with SalespersonsExcessive time spent with Salespersons• Ethical TrapsEthical Traps• Responsibility without AuthorityResponsibility without Authority• Coordination with all departmentsCoordination with all departments• Late deliveries, Subs and shortsLate deliveries, Subs and shorts• Protection of the goods once they are Protection of the goods once they are
in house.in house.• Credits and Returns.Credits and Returns.
Purchasing – Purchasing – Organization and Organization and AdministrationAdministration• Planning – Make sure that you are consistent Planning – Make sure that you are consistent
with your objectives.with your objectives.• Organizing – Set up your chain of command Organizing – Set up your chain of command
depending on the size of your operation.depending on the size of your operation.• Staffing – Areas of expertise and range of Staffing – Areas of expertise and range of
responsibilitiesresponsibilities• Training – Continuing Education and Training – Continuing Education and
Certifications.Certifications.• Budgeting – Non-Revenue producing personnel.Budgeting – Non-Revenue producing personnel.• Directing – Supervising Directing – Supervising • Controlling – Larger organizations have less Controlling – Larger organizations have less
direct control.direct control.
When you are out and around When you are out and around town this week, take notice of town this week, take notice of
food food service delivery trucks….service delivery trucks….
•Who has the cleanest trucks?Who has the cleanest trucks?
•Who has the least desirable Who has the least desirable trucks?trucks?
