Purchasing and Product Identification

2. Purchasing and Product Identification Mr. Cervantes – Instructor Phone: 281 – 218 - 0075 Cell: 517 – 303 – 5539 Email:cervantf@yahoo.com

3. Education Michigan State University Masters Degree in Instructional Design Michigan State University B. S. Degree in Hospitality Business Johnson & Wales University Associates Degree in Culinary Arts The Greenbrier Hotel & Resort Two year Chef Apprenticeship

4. Required Text Purchasing Selection and Procurement For the Hospitality Industry Fifth Edition or Sixth Edition

5. Positions Held Sous Chef Kellogg Center Production Manager Student Union Café Cook / Baker Michigan State University Chef Apprenticeship The GreenGrier

6. Overall Objective To make informed decisions with regards to Purchasing and Product Identification • What to buy • How much to buy • From whom to buy • When to buy Based on the best quality for the intended use at the best price.

7. Maintain an Adequate Supply. Minimize Investment. Maintain Quality. Obtain the Lowest Possible EP Cost. Maintain the Company’s Competitive Position. Purchasing Objectives What Lies Behind Us And What Lies Before Us Are Nothing Compared To What Lies Within Us. Ralph Waldo Emerson

8. Class Ground Rules • Class Ground Rules • On time and On task • One person speaking • Everyone participate, no one dominate • Active listening • OK to disagree • When you disagree, focus on the issue, not the person

9. Class Ground Rules • Speak the truth clearly and respectfully • Have fun as we work and learn • Respect and protect the confidentiality of the group • Cell phone and pager turned off

10. Why Purchasing and Product Identification? • Cost Control • Capstone Project • Important to your career Information presented in Purchasing and Product Identification supplements the objectives of Cost Control, Capstone and your career

11. What Affects Your Purchasing Activities? • The Menu determines your purchasing needs • The Standardized Recipe determines your specific purchasing needs. • The Budget will determine your purchasing strategy. • The Inventory will affect your purchasing decisions.

12. Opening Inventories Maintaining an inventory will affect your purchasing decisions. • Necessary items to start and sustain operation of the business 1. Food Inventory – Enough product to sustain your business for two weeks based on standardized recipes and product mix 2. China / Glassware / Flatware / Table top purchases 3. Furniture for all front of the house needs specified and priced. 4. Small-wares – All items necessary for the kitchen specified and priced 5. Capital Equipment – Based on design to include all kitchen equipment, brands and prices • All these costs must be included and totaled for justification of a bank loan

13. Purchasing – Starting Point • Purchasing – Paying for an item or service. • Selection – Choosing from among various alternatives on various levels. • Procurement – Orderly systematic exchange between a seller and a buyer.

14. Types of Hospitality Operations • Commercial Segment • Institutional Segment • Military Segment

15. Hotels Motels Casinos Resorts Lodges Spas Quick Service (QSRs) Off Premise Caterers Vending Machine Companies Table Service Restaurants Snack Bars Food Courts Taverns, Lounges, Bars Cafeterias Buffets On-premise Caterers Ice Cream Parlors In Transit Food Services Commercial Foodservice Operations

16. Independent Purchasing Operations • Small Independent – typically run by the owner / operator who does all the buying for the business. • Medium Independent – generally involves more than one person in the purchasing function. The General manager may coordinate the activities of the other managers. • Large Independent – Similar to medium independent. May employ a full time buyer. The buyer would be responsible for housekeeping, engineering, maintenance and food service purchases

17. Co-op Buying • System whereby hospitality operations come together to achieve savings through the purchase of food and supplies in bulk. • There are some companies that will coordinate this pooling function. They will charge a fee for participation or pad pricing (or both) to cover their expenses.

18. Multi-Unit Purchasing(May Include Franchisees) • Centralized purchasing function to minimize cost and improve consistency among all locations. • Other considerations • Central commissaries • Distribution warehouses

19. Determine when to order Control inventory levels Establish quality standards Determine specifications Obtain competitive bids Investigate vendors Arrange payment terms Oversee delivery Negotiate refunds Handle adjustments Arrange for storage Key Purchasing Activities - Large Independent

20. Recipe development Menu development Specification writing Approval of buying source Designation of approved brands Supplier evaluation Negotiation with suppliers Change of brands Substitution of approved items Approve new products Invoice approval Invoice payment Order placement with supplier Key Purchasing Activities – Large Foodservice Firms

21. Pre-purchase Activities • Plan menus • Determine specifications of product qualities needed • Determine appropriate inventory levels • Determine appropriate order sizes • Prepare ordering documents

22. Informal Purchasing Generally applies to smaller and medium size operators • Contact vendors • Obtain price quotes • Select vendor • Place order • Receive shipment • Issue products to production and service departments

23. Formal Purchasing Generally applies to larger operators • Contact Vendors • Establish formal competitive bid process. • Solicit competitive bids. • Evaluate bids. • Award contract to vendor. • Receive shipments • Issue products to production and service departments. • Monitor future contract performance. • Evaluate and follow up.

24. Selection and Procurement Plan Determine Requirements Supplier Selection Sourcing Maintain a Convenient and Sufficient Inventory. Conduct Negotiations Research Activities Maintain Supplier Diplomacy Educate Suppliers Purchase, Receive, Store and Issue Products Disposal of Excess and Un-salable Items Recycling Develop Record Keeping Controls Organize and Administer the Purchasing Function Help Competitors To Do an Efficient Buying Job, Hospitality Organizations Must Usually Perform (Minimally) the Following:

25. More Research Activities • Make or Buy Analysis – Decision to use value added products. • Consistent quality. • Consistent portion control. • Diverse menu regardless of skill level. • Operating Efficiencies. • Less food handler supervision. • Reduce employee skill requirements. • Reduction in leftovers. • Reduction in raw material inventory. • Reduction in ordering costs. • Potential to add more guest spaces.

26. Problems of the Buyer • Backdoor Selling • Excessive time spent with Salespersons • Ethical Traps • Responsibility without Authority • Coordination with all departments • Late deliveries, Subs and shorts • Protection of the goods once they are in house. • Credits and Returns.

27. Purchasing – Organization and Administration • Planning – Make sure that you are consistent with your objectives. • Organizing – Set up your chain of command depending on the size of your operation. • Staffing – Areas of expertise and range of responsibilities • Training – Continuing Education and Certifications. • Budgeting – Non-Revenue producing personnel. • Directing – Supervising • Controlling – Larger organizations have less direct control.

28. When you are out and around town this week, take notice of food service delivery trucks…. • Who has the cleanest trucks? • Who has the least desirable trucks?