WELCOME

1. WELCOME CHRM 2480 Inventory & Purchasing

2. Agenda • Ground Rules • Warm Up Activity • Syllabus Review • Purchasing Website • NRAEF ManageFirst Program • Chapter One – Introduction to Inventory & Purchasing

3. Ground Rules • Be on time – start on time • All cell phones, pagers and IPods should be turned off during class • No Internet use during class, unless part of classroom activity • Appreciate other points of view • Respect others’ desire to learn • End on time

4. Information Card • Please fill out the following information on the index card • Side ONE • Name • Phone • Email Address • Side TWO • Business affiliation & current position • Hospitality industry background

5. Warm Up Activity • Break into pairs • Interview each other – 2-3 minutes each person • Name, Occupation, Why are you taking Purchasing Class, etc…… • Introduce each other to the group

6. Syllabus Review • Course Information • Course Assessment • Schedule of Assignments • Can Cutting, March 31, 9 am room 108? • Tour of FSA, April 21st, 9 am? • Physical Inventory , Week of April 6th • OCC-April 6th, 8:30 am • NE Med Center-April 6th, 1:30 pm • Hilton Omaha-April 13th, 9 am • Stokes Restaurants- April 8th, 6 am

7. Syllabus Review • Projects (Individual & Group) • Attendance Sheets • Website • http://www.sharepoint.mccneb.edu/culinaryarts

8. NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE How can this book help me? • Part of a certificate program • Industry-driven • Resume builder Institute for the Culinary Arts – Metropolitan Community College

9. NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE Who is the NRAEF? • Educational arm of the National Restaurant Association • Bridge between academia and industry • Work with over 60,000 restaurant, hospitality and foodservice members companies Institute for the Culinary Arts – Metropolitan Community College

10. NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE Competency Guide Content • Management-focused • Application-based, not just theory • Professional Profiles give you a “sneak peek” into the field • “Real world” activities help build job skills Institute for the Culinary Arts – Metropolitan Community College

11. NRAEF ManageFirst Program Competency GuideIS REQUIRED FOR THIS COURSE How will this certificate help me? • Validated by over 200 restaurant, foodservice and hospitality organizations • Resume builder • Tangible accomplishment • Can give you a hiring advantage over peers who didn’t use ManageFirst Institute for the Culinary Arts – Metropolitan Community College

12. Academic Scholarship for NRAEF ManageFirst Program® Students http://www.nraef.org/scholarships/managefirst/ • Application deadline: March 31, 2009 • Award amount: $2,500 • You can apply online at the above link • Scholarships are for Undergraduate students enrolled in accredited culinary schools or ManageFirst Program students

13. Additional Scholarships • Metropolitan Community College Foundation scholarships – due 3/15/09 • Academic Dean scholarships • Spring quarter – due 3/13/09 • Summer quarter – due 6/16/09 • Must be pursuing Culinary Arts degree and have a 3.0 GPA • Apply online:https://scholarships.mccneb.edu/stars

14. Let’s Take a Break Please be back in 10 minutes

15. Agenda • Change in Schedule: • March 24th will be the Can Cutting • March 31st Chapter 3 & 4 and Inventory Book Set-up • U.S, Foodservices Tour – 9 am • Sign-up for Inventory & Group Presentations • Tuesday, April 21st, Tour of U.S Foodservice • Chapter One – Introduction to Inventory & Purchasing • Chapter Two - The Purchasing Function • Work on Group Projects

16. Introduction to Inventory and Purchasing • Inventory and Purchasing • Test Your Knowledge 1 OH 1-16

17. Chapter Learning Objectives • Define purchasing, procurement, and product selection. • Outline the objectives in the purchasing function. • Describe the importance of maintaining an operation’s competitive position. • List the types of goods and services that might be purchased by a foodservice organization.

18. Test Your Knowledge • Chapter One – page 2 Competency Guide

19. Purchasing vs. Procurement • Purchasing – to obtain products and services of a desired quality at a desired price. • Procurement – the entireprocess by which products and services are selected based on quality and cost, to include: what products and services are needed, the quality specifications, when the items will be needed, from which vendors you will purchase, managing the contracts, as well as establishing all the purchasing, receiving storing and issuing policies.

20. Franchise vs. Independent • Franchise – a business purchased from a company along with the right to use that company’s name, logo and products. • Provides for purchasing through franchisor’s central commissary • Independent – stand alone operation • Cooperative buying or co-op buying occurs when independent operators combine their purchasing power to cooperatively purchase all goods and services as a collective group in order to get lower pricing

21. Economies of Scale • Franchise owners may purchase either through their commissaries or through a co-op • Independent owners may purchase through a co-op or independently • Profit is earned after all operating expenses have been paid by either operation

22. Goals of the Purchasing Function

23. Purchasing Impacts The availability of items for sale: • Too few items means product outages • Too many items means spoilage, waste, and theft

24. Maintain Adequate Supply • Utilize customer count histories. • Sources of data include: • The point-of-sale (POS) system • Guest checks • Physical counts • Count customers by day part.

25. Maintain Adequate Supply continued • Monitor popularity index of items sold. • The popularity index measures the popularity of a specific menu item in relation to other items in its category. • The popularity index also measures the popularity of one menu category relative to other categories.

26. Maintain Adequate Supply continued Additional areas of concern include: • Vendor delivery schedules • Availability of items from vendors • External factors that can influence item sales

27. Maintain Quality Standards Foodservice managers maintain quality by: • Following the operation’s specifications (specs) on each menu item or ingredient purchased • Clearly communicating these standards to current and potential vendors

28. Maintain Quality Standards continued • Customers expect the same quality product each time they visit their favorite foodservice operations.

29. Minimize Investment • Tying up excessive dollars in inventory can damage a foodservice operation by restricting the amount of cash available for bill payment. • Ideal inventory levels are directly related to cash availability and to storage capability.

30. Minimize Investment continued • In most cases, prices increase rather than decrease. As a result, effective foodservice managers: • Minimize investment by purchasing the maximum amount of quality product available at the minimum price possible. • Negotiate reduced prices for large quantity purchases.

31. Maintain an Operation’s Competitive Advantage • Choose vendors who: • Deliver frequently • Deliver at convenient hours • Can deliver in an emergency outage situation • Provide flexible payment options • Deliver consistent quality

32. Obtain the Lowest Possible EP or AS Price • EP = Edible portion price • AS = As served price • EP and AS refer to the price of an item after all trim and waste has been taken into account. Example: peeled, cubed potatoes • AP= As purchased price • AP refers to the price of an item before any trim or waste are considered. Example: unpeeled, whole potatoes

33. Comparison of AP and EP (AS) Methods

34. Mismanaging the Purchase Function • Leads to product outages • Results in lost sales • Alienates customers • Ties up excessive amounts of cash • Increases operating (food and beverage) costs

35. Food items Alcoholic beverages Nonalcoholic beverages Nonfood items Furniture, fixtures, and equipment (FF&E) Business supplies and services Support services Maintenance services Utilities What to Buy Foodservice managers buy many items including:

36. Meat Poultry Eggs Processed foods Fish Dairy Produce Dry and canned goods Buying Food Items

37. Spirits Beer Wine Buying Alcoholic Beverages

38. Soda Coffee Tea Juice Bottled water Buying Nonalcoholic Beverages

39. Linens and uniforms China and glassware Bar supplies Paper goods Cleaning supplies Menus and beverage lists Candles Flowers Music and entertainment Kitchen utensils and supplies Buying Nonfood Items

40. Tables, chairs, and barstools Lighting fixtures Bars Cooking equipment Refrigeration equipment Plumbing fixtures Heating, ventilation, air conditioning (HVAC) Entertainment pieces Buying Furniture, Fixtures, and Equipment

41. Office equipment and supplies Cash registers POS systems Computers Credit card processors Financial and legal services Insurance Marketing and advertising Buying Business Supplies and Services

42. Linen and uniform rental Waste removal Flower services Music services Pest control Parking and valet services Buying Support Services

43. Cleaning services Plumbing repair HVAC repair Groundskeeping Painting Carpentry Equipment maintenance Equipment repair Equipment replacement Buying Maintenance Services

44. Gas Oil heating Electricity Water Sewage services Telephones Internet access Buying Utilities

45. How Would You Answer the Following Questions? • A (popularity/frequency) index can be used to help estimate how many of a specific menu item are likely to be sold. • Which of the following is not a goal of the purchasing function: • Obtain the lowest possible EP price. • Maintain adequate supply. • Maximize investment. • Maintain quality standards • A goal of a quality purchasing program is that of maintaining an operation’s __________ advantage. • The cost of most AP food products is higher than their AS cost. (True/False)

46. Chapter Learning Objectives— What Did You Learn? • Define purchasing, procurement, and product selection. • Outline the objectives in the purchasing function. • Describe the importance of maintaining an operation’s competitive position. • List the types of goods and services that might be purchased by a foodservice organization.

47. Next Week • Review Your Learning questions from Chapter One • Read Chapter One & Two