Purchasing – Review Purchasing – Review

Looking Back Is A Reminder From Looking Back Is A Reminder From Whence You Came!Whence You Came!

Purchasing – Starting PointPurchasing – Starting Point

Purchasing – Paying for an item or Purchasing – Paying for an item or service.service.

Selection – Choosing from among Selection – Choosing from among various alternatives on various levels.various alternatives on various levels.

Procurement – Orderly systematic Procurement – Orderly systematic exchange between a seller and a buyer.exchange between a seller and a buyer.

Pre-purchase ActivitiesPre-purchase Activities

Plan menusPlan menus Determine specifications of product Determine specifications of product

qualities needed.qualities needed. Determine appropriate inventory Determine appropriate inventory

levels.levels. Determine appropriate order sizes.Determine appropriate order sizes. Prepare ordering documentsPrepare ordering documents

Informal PurchasingInformal Purchasing

Contact vendorsContact vendors Obtain price quotesObtain price quotes Select vendorSelect vendor Place orderPlace order Receive shipmentReceive shipment Issue products to production and Issue products to production and

service departments.service departments.

Formal PurchasingFormal Purchasing Contact VendorsContact Vendors Establish formal competitive bvs. process.Establish formal competitive bvs. 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.

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.

Product SpecificationsProduct Specifications

Description of all the characteristics Description of all the characteristics in a product required to fill certain in a product required to fill certain production and / or service needs.production and / or service needs.

Use the USDA, vendors and industry Use the USDA, vendors and industry sources to develop complete sources to develop complete specifications.specifications.

Advantages to SpecsAdvantages to Specs

They serve as quality and cost control They serve as quality and cost control standards.standards.

Help to avoid misunderstandings between Help to avoid misunderstandings between buyers, suppliers, users and other company buyers, suppliers, users and other company officials.officials.

They allow someone else to fill in temporarily.They allow someone else to fill in temporarily. They serve as useful training devices.They serve as useful training devices. They aid in the bidding process to level the They aid in the bidding process to level the

playing field.playing field.

Fresh Produce PurchasingFresh Produce Purchasing

Inherent DifficultiesInherent Difficulties Soil and climate conditions can effect Soil and climate conditions can effect

qualityquality Seasonal changes, natural or manmade Seasonal changes, natural or manmade

disasters and changes in demand can disasters and changes in demand can effect quality.effect quality.

Quality is subjective – What looks good Quality is subjective – What looks good to your supplier may not look good to to your supplier may not look good to you.you.

TRIVIATRIVIA Net Weight – Weight of product in the Net Weight – Weight of product in the

packagepackage Gross Weight – Weight of product and Gross Weight – Weight of product and

the packagethe package Tare – Weight of the packaging.Tare – Weight of the packaging. Julian Dates – Date expressed as year to Julian Dates – Date expressed as year to

date day number. For example, October date day number. For example, October 14, 2004 is 04287.14, 2004 is 04287.

How Does the Distributor How Does the Distributor Make His Money?Make His Money?

Mark Up Fee – Cost of the goods Mark Up Fee – Cost of the goods multiplied times a set markup multiplied times a set markup percentage.percentage.

Margin Fee – Cost of the goods divided Margin Fee – Cost of the goods divided by a set percentage. Sound better than by a set percentage. Sound better than markup but is actually higher.markup but is actually higher.

Case Fee - Assigned regardless of the Case Fee - Assigned regardless of the value of the cost of goods. value of the cost of goods.

Markup Floor – Minimum amount of Markup Floor – Minimum amount of distributor charge. distributor charge.

Sources of SupplySources of Supply

Growers - provide fresh food products to Growers - provide fresh food products to the hospitality industry.the hospitality industry.

Manufacturers - controls the manufacture Manufacturers - controls the manufacture of an item from raw materials.of an item from raw materials.

Processors – takes one or more foods and Processors – takes one or more foods and assembles them into a new end product.assembles them into a new end product. Value-addedValue-added EfficiencyEfficiency ConvenienceConvenience

IntermediariesIntermediaries Distributors – purchase products directly Distributors – purchase products directly

from growers, manufacturers and from growers, manufacturers and processors for resale and delivery to processors for resale and delivery to customers.customers. Specialty Distributor – handles only one type or Specialty Distributor – handles only one type or

classification of product – Houston’s Finestclassification of product – Houston’s Finest Full-Line Distributor – Provides food and non-Full-Line Distributor – Provides food and non-

food supplies – Martin Preferred.food supplies – Martin Preferred. Broad-Line Distributor – Provides food, non-food Broad-Line Distributor – Provides food, non-food

and equipment – SYSCOand equipment – SYSCO Custom Distributor – Provides specified product Custom Distributor – Provides specified product

for chain restaurants – Performance Food Groupfor chain restaurants – Performance Food Group

Typical Ordering ProceduresTypical Ordering Procedures

Buyer is most concerned with buying the Buyer is most concerned with buying the right amount of the right quality at the right right amount of the right quality at the right time with the right supplier services for the time with the right supplier services for the right edible portion (EP) costright edible portion (EP) cost

First step, determine an ordering schedule..First step, determine an ordering schedule..

How do you buy groceries for your house?How do you buy groceries for your house? Do you buy more when you are hungry?Do you buy more when you are hungry?

Order SchedulesOrder Schedules

Help to promote efficient scheduling.Help to promote efficient scheduling. Plan weekly expenses.Plan weekly expenses. Develop supplier relationships.Develop supplier relationships. Understand lead times for different Understand lead times for different

vendors.vendors.

ORDER SCHEDULE

TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY SUNDAY MONDAY

Produce Produce Produce Produce Produce Produce

Sysco Sysco

Edward Don Edward Don

Spice

RECEIVER SCHEDULE

TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY SUNDAY MONDAY

Produce Produce Produce Produce Produce Produce

Sysco Spice Sysco

Edward Don Edward Don

Dairy Coffee Dairy

Knife Service (every other)

Aramark Aramark

Optimal Inventory LevelOptimal Inventory Level

Inventory Levels – Determine the Inventory Levels – Determine the amount of inventory that will amount of inventory that will adequately serve the operation adequately serve the operation without having to suffer the costs of without having to suffer the costs of excess inventory.excess inventory. Percentage of SalesPercentage of Sales Percentage of monthly expenses.Percentage of monthly expenses. Days in InventoryDays in Inventory

Par Stock ApproachPar Stock Approach

Accept the suppliers’ order procedures and Accept the suppliers’ order procedures and delivery schedules.delivery schedules.

Allows the buyers to balance shelf life with Allows the buyers to balance shelf life with inventory levels.inventory levels.

Just in Time – Not too much and not too little.Just in Time – Not too much and not too little. Buyer need to adjust for special parties and Buyer need to adjust for special parties and

business fluctuations.business fluctuations. Requires periodic adjustment.Requires periodic adjustment. Frequent deliveries require additional Frequent deliveries require additional

attention to prep schedules.attention to prep schedules.

Correct Order Size and Order Correct Order Size and Order TimeTime

Par Stock Approach – Build up each Par Stock Approach – Build up each item to at least a pre-determined item to at least a pre-determined level.level. ItemsItems Par LevelPar Level On HandOn Hand OrderOrder Usage (Optional)Usage (Optional)

account # 21214 MGR DATE MGR

PARS UPDATED CHECK DAILY

08/30/2004 ORDER DAY 'ON 'ON

Produce UNIT MN/TS WD/TH FR/ST HAND ORDER HAND

Avocado (4ea) PAC 2.00 3.00 4.00

Cucumbers (12EA) CS 1.20 1.80 2.00

Kale (24ct) CS 1.50 2.00 2.50

Lettuce- Iceburg CS 1.80 2.00 2.50

Lettuce- Romaine CS 2.00 2.50 3.00

Pepper- Green Bell Large (25LB CASE)CS 0.50 0.75 1.00

Pepper Red (5 Pound ) BAG 1.50 2.00 2.50

Pepper Jalepeno (POUND) LB 1.00 1.00 1.50

Parsley- Case 60ct CS 0.50 0.75 1.00

Cilantro - (3ea) PAC 0.75 1.00 1.00

Onion- Green Iceless CS 2.00 2.50 3.00

Mushrooms Silver Dollar (10lb) CS 2.00 2.50 3.50

Garlic- Whole Husk - check freezer CS A/N A/N A/N

Garlic- Whole Pealed (4/5lb) GAL 2.00 3.00 5.00

Lemons Fancy 200ct CS 2.50 3.00 5.00

Tomato- 6x6 Bulk (25lb) CS 1.50 2.50 3.50

Limes 200 CT (40lb) CS 0.75 1.50 2.00

Prep Produce

Shred- Lettuce (4-5LB) BAG 3.00 5.00 5.00

Shred- Cabbage- Red (4-5LB) BAG 3.00 4.00 5.00

Shred- Carrot (4-5LB) BAG 2.00 3.00 4.00

Diced- Onion (4-5LB) BAG 5.00 6.00 8.00

Diced-Cellery (4-5LB) BAG 5.00 6.00 8.00

ReceivingReceiving

Receiving is the proof of purchasing – Receiving is the proof of purchasing – Need to be sure that what you ordered Need to be sure that what you ordered is what you got.is what you got.

Receiving is the act of inspecting and Receiving is the act of inspecting and either accepting or rejecting deliveries.either accepting or rejecting deliveries.

Essentials of Good Essentials of Good ReceivingReceiving

Competent PersonnelCompetent Personnel Proper Receiving EquipmentProper Receiving Equipment Proper Receiving FacilitiesProper Receiving Facilities Appropriate Receiving HoursAppropriate Receiving Hours Copy of All SpecificationsCopy of All Specifications Copy of the Purchase OrderCopy of the Purchase Order

Delivery ArrivesDelivery Arrives

Check immediately for proper Check immediately for proper quantities.quantities.

Check for proper quality.Check for proper quality. Check prices and price extensions.Check prices and price extensions.

Additional Receiving DutiesAdditional Receiving Duties

Date / Day dot the delivered items.Date / Day dot the delivered items. Price all delivered itemsPrice all delivered items Create bar codes – large hospitality Create bar codes – large hospitality

operationsoperations Apply “Meat tags”Apply “Meat tags” Maintain Fresh Oyster tagsMaintain Fresh Oyster tags Housekeeping dutiesHousekeeping duties Update AP pricesUpdate AP prices

Non Food Expense ItemsNon Food Expense Items

Signature items that promote the image of Signature items that promote the image of your restaurant.your restaurant. Functional ComponentFunctional Component Advertising ComponentAdvertising Component

Variety of Non food items to choose.Variety of Non food items to choose. Degree of product convenience.Degree of product convenience.

Disposable vs. reusable itemsDisposable vs. reusable items Impulse purchasing – Want vs. NeedImpulse purchasing – Want vs. Need Supervising the use of non food items.Supervising the use of non food items.

Typical Non Food ItemsTypical Non Food Items

Cleaning SuppliesCleaning Supplies Cleaning ToolsCleaning Tools Maintenance SuppliesMaintenance Supplies Permanent WarePermanent Ware Single Service Disposable WareSingle Service Disposable Ware Preparation and Service UtensilsPreparation and Service Utensils FabricsFabrics Other Paper ProductsOther Paper Products Miscellaneous ItemsMiscellaneous Items

Preparation and Service Preparation and Service UtensilsUtensils

Initial investment is capitalized as a Initial investment is capitalized as a start up expense.start up expense.

Replenishment orders are part of the Replenishment orders are part of the cost of doing business.cost of doing business.

Project Management 3 Phase ProcessProject Management 3 Phase Process

1.1. Design & PlanningDesign & Planning

2.2. Procurement and Procurement and ConstructionConstruction

3.3. Installation/Post Installation/Post ConstructionConstruction

Phase One - Design & PlanningPhase One - Design & Planning

Pre-Design ProgrammingPre-Design Programming Schematic Design Schematic Design

DrawingsDrawings Preliminary Plans Preliminary Plans Budget Estimating & Budget Estimating &

Value EngineeringValue Engineering Working Drawings & Working Drawings &

SpecificationsSpecifications A/E CoordinationA/E Coordination Special Design AssistanceSpecial Design Assistance

Phase Two - Procurement/ConstructionPhase Two - Procurement/Construction

Don Buying PowerDon Buying Power Unlimited SourcesUnlimited Sources Autoquote SystemAutoquote System Custom Fabrication & Custom Fabrication &

MillworkMillwork FurnitureFurniture Field CoordinationField Coordination Consolidation and Consolidation and

DeliveryDelivery

Phase Three -InstallationPhase Three -Installation

Continue Field Continue Field Coordination Coordination

Install Equipment per Install Equipment per ScheduleSchedule

Assist with ConnectionsAssist with Connections Start-up,Check-out, & Start-up,Check-out, &

TrainingTraining Review Project Review Project

Manuals, Warranties Manuals, Warranties and Service Agenciesand Service Agencies

Develop Post Develop Post Installation ReviewInstallation Review

Factors that effect costFactors that effect cost

Commodity stockCommodity stock ColorColor ShapeShape QuantityQuantity Domestic vs. ImportedDomestic vs. Imported How many other items can be How many other items can be

purchasedpurchased