1

Food and Beverage Management

Ch 8 Preparing for Production

2

The Flow of Food

Purchasing

Receiving

Storing

Issuing

Tracking and Control

3

Purchasing

Always purchase from a reputable Supplier

An Operation can save or lose money with a Purchasign System – Directly affects the bottom line

Purchase systems includeRequisitionsPurchase ordersDelivery Invoices

4

Purchasing Flow

5

Goals of a Purchasing System

Buy the right product

Buy the right amount

Pay the right price

Deal with the right supplier

6

Buying the Right Product

Develop Purchase specificationsQualitySizeWeightRipeness

Needed for each important item (ex. Filet)Ex. – 8 up PSMO Choice Filet

Clearly communicated to Suppliers & Receivers

7

Make or Buy

Convenience Foods –

Prepared off site

Some managers believe that quality is less than on site prep

Might be less costly

May be easier to purchase, receive, store and issue

8

Make or Buy AnalysisExample

Bloody Mary MixPurchase in 5 case lots - $31 case for 12 quart

bottlesCost per bottle = $2.45 after 5% discount on bulk

purchase

Make on site – Ingredient cost use standard recipe = $1.81 per

quartLabor Cost = .31 per quart (15 minutes of labor)Total = $2.12 per quart

On site cost is $.33 cheaper than purchasing ready made

9

Purchasing the Right Quantity

Cash Flow is adversely affected if inventory levels are too high

Too low – no product means lost sales and unhappy customers

10

Minimum Maximum Ordering

Uses par levels – the minimum level of stock acceptable

Par Levels are determined by

Lead time quantity – number of units that will be used between the time the replacement stock is ordered and delivered

Safety Stock Level – in case of shortages, spoilage, etc

Get Bids from Several Suppliers

11

Other Factors in Purchasing LevelsChanging Prices

Available Storage

Storage and handling costs

Waste and Spoilage

Theft

Market Conditions

Quantity discounts

Minimum Order requirements

Transportation and delivery

Order Costs

Freshness -

12

Paying the Right Price

Get bids from Several Suppliers

Negotiate

Consider lower quality products

Do you really have to buy it? Can it be made better or cheaper on site?

Combine Orders

Re evaluate high cost items, especially things such as garnishes

13

Paying the Right Price

Pay Cash – use discounts for paying promptly

Speculate on price trends

Change purchase unit size

Be innovative

Use Promotional Discounts

Bypass the supplier

14

SuppliersLocation

Facility

Financial Stability

Technical Knowledge of the staff

Honesty and fairness

Dependability

Facility Inspections (own and regulatory)

HACCP Programs

15

Other Concerns

TheftTrack InventoryKickbacksFictitious Companies

EthicsDevelop standards and policies Integrity

16

Receiving Inspect each delivery against PO

Compare delivered Product against specifications – weights, etc.

Inspect against Delivery invoice Verify Price per unit (against PO) Verify math! If not delivered (or rejected) – get a credit memo (signed!)

Accept Product (or reject) If needed check temperatures Check for pests

Store – label and date (for FIFO)

Complete reports (some PO ‘s are also HACCP Records)

17

StorageSecurity includes:

Lockable Storage areas

Precious storage

Limited Access

Effective inventory control proceduresPerpetual inventory system

Central Inventory control

Secure Design

Lighting and monitoring

18

Quality

Rotate Food Stocks (FIFO)

Store foods at proper temperatures

Clean storage areas frequently

Ensure proper ventilation and air circulation

19

Recordkeeping

Perpetual Inventory SystemSimilar to a checkbookConfirm at regular intervals (use different people)

Physical Inventory SystemTypically done once per month

Combination Systems

20

Reducing Inventory Costs

Carry a smaller amount of inventory

Be sure required levels are correct

Decrease the number of items carried

Refuse to accept early deliveries

21

Issuing Products

Issue only on proper authority

Depends on system – Perpetual Inventory needs a requisition

Requisitions should be entered daily

22

Special Beverage Concerns

Typically buy by brand nameHouse or well brandCall brand Premium brands

Laws regarding suppliers vary by state

Laws regarding discounts vary by state

Inventory turnover rates are lower

23

Special Beverage Concerns

More prone to theft

After received – move immediately to storage

Always use secured storage

Purchasing and receiving tasks should be separated

Issue on a bottle for bottle basis

Mark bottles with dates and times.

24

Technology and Control

E Commerce – facilitates ordering with suppliers

JIT = Just in Time Inventory systems

Ordering Systems (FoodTrak) (www.foodtrak.com)

Customized software systems integrating recipe cards & purchasing

UPC codes