Unit 2
Purchasing Control
These are the steps involved in purchasing process in order to ensure
food cost control and avoid pilferage so that food costs does not go high.
a) Aims -
b) Purchasing
staff -
Purchasing is a function concerned with the search,
selection, purchase, receipt, storage and final use of a commodity in
accordance with the catering policy of the establishment. The person
responsible for purchase is also responsible for receiving, storing and
issuing. In large hotels, there is a full time purchase manager/officer
responsible for all purchases – F&B commodities and non-consumable. In
small hotels, the storeroom items (food) are purchased by an assistant manager,
and perishables (food) such as meat, poultry, fish, vegetables, etc. are
purchased by the chef.
c) Source of Supply –
A catering establishment depending on its size, type and
style and also on the quantity and quality of commodities required decides on
the source of supplies, they may be –
i) direct purchase in cash from market,
ii) through suppliers – on contract & in cash,
iii) direct from wholesalers.
d) Selection of supplier -
In case of selection of a supplier, a great deal of
exercise and detailed enquires have to be made –
i) details about the firm, to find its reputation,
ii) information from other customers about their product and
services,
iii) recent price lists,
iv) trade terms and conditions such as cash discount, trade
discount, etc.,
v) sample of products to check quality,
vi) a visit to the supplier’s firm,
vii) minimum order level,
viii) ordering procedures,
ix) delivery procedures,
x) part deliveries or standing orders,
On selection, the suppliers are put on an approved
“suppliers’ list” and periodically they are evaluated on –
i) price performance
ii) quality performance
iii) delivery performance
e) Types of food purchased –
There are 2 categories –
i) Perishables – these are those items that have a short
useful life after they are received. They are best to be procured on a daily
basis with 1-3 days stock in hand. E.g. – vegetables, dairy products, etc.
ii) Non – Perishables - these are those items that have a
longer shelf life. They can be stored for weeks or even months. E.g. – cereals,
pulses, etc.
f) Quality Purchasing –
The
quality of an item to be followed would be determined by
the
Purchase
Manager, Executive Chef and the F & B Manager as per
the
catering policy, the menu requirements and its price range, which
should
be stated in the Standard Purchase Specification (SPS).
The
quality to be purchased should be stated in terms of grade or brand .
E.g.
– Tomato Ketchup - Kissan
Prawn
– Grade A
Food
Quality
Factors for different commodities:
The food quality factor is mainly concerned with the
food i.e.:
Texture
Composition
Keeping qualities
Flavor
Smell etc.
The food quality factors for certain commodities are as
follows:
A) FRUITS&VEGETABLES
1. Count & weight
2. Wastage in terms of peel.
3. Shape and size
4. Color
5. Firmness
6. Smell
7. Taste
B) CANNED FOODS
1. Drained weight.
2. Density(juices etc)
3. Color
4. Taste and appearance
DEFINITION OF YEILD
It is the maximum usable amount that is obtainable from
a particular product.
TESTS TO ARRIVE AT A STANDARD YEILD
· Usually yield tests are performed on food bought as
purchased and need to be converted to ready to cook.
· Items received already proportioned need not undergo any
yield test.(soybean, cashew etc)
· Some foods received ready to cook might need yield tests.
· Yield test tells us:
1. Yield of kg, lts, grams, portions & so on.
2. Cost per kg, lt, gm, & so on.
· Yield
tests are pre control technique because we know the cost of the item
and we can adjust the menu selling price before serving the item.
The objective of yield testing is
simply to discover the respective yields of whole range of commodities
available for any one purpose and to determine the unit cost concerned.
Ø Example of test to arrive at standard yield:
a) BUTCHERY TEST
1. Waste
2. Useable
meat
3. Bones
4. No.
of portions
5. Fat
amount and color
6. Color
of meat flesh
7. Bone
structure
8. Color
of bones
b) COOKING TEST
1. Cooking
time
2. Cooking
losses
3. Taste
after cooking
4. Appearance
after cooking
5. Flavor
after cooking
6. Shrinkage
The above mentioned points are
observed in these tests. These tests can be used to compare two examples. They form
a basis for standard purchase specification.
g) Definition of SPS
Standard
Purchase Specification (SPS) is concise descriptions of quality, size, weight
or count factors desired for a particular item.
An SPS
must contain –
i) Definition of each item,
ii) Grade or brand name of the items,
iii) Size, weight or count,
iv) Unit against which prices should be quoted,
v) Special note for the commodity,
vi) Photograph of the ideal / standard item, e.g. – table apple,
cherry tomato.
Objectives
of SPS –
i) to
establish a suitable buying standard for a particular commodity for the
catering establishment,
ii) to
furnish to the suppliers in writing in specific terms the requirements of the
catering establishment,
iii) to
help in deciding the price of a commodity,
iv) to
obtain a standard product,
v) to
measure the performance against the standard product.
Advantages of SPS –
i) establishing
a buying standard of a commodity so that a standard product is available for
the customer,
ii) inform
the supplier in writing, by drawing, or with a photograph or describing
precisely what is required,
iii) Provides detailed information to the receiving department
and store as to the standard of foods to accept,
iv) makes everyone aware of the differences that can occur
because of the difference in size, weight, quality and quantity of
a product.
v) the
specifications act as an aide memoire to all concerned of what was agreed.
h) Purchase Procedure
The
purchase procedure will depend upon he nature, size, standard, location of the
establishment and the forecast of future requirements.
The
purchase procedure has the following steps –
i) preparing standard purchase specification
ii) contacting new suppliers
iii) taking quotations from both new and approved suppliers
iv) selecting suppliers
v) discussing and deciding delivery needs with the
suppliers
vi) placing purchase order form.
Ø Sources
of supply
· A establishment depending upon its size,
type and style and also on its quantity and quality of commodities required
decides its sources of supply.
· It may be direct purchase in cash form market
or suppliers on contract basis or directly from the whole seller.
· In case of selection of a supplier a great
deal of exercises and detailed enquires have to be made on selection, the
supplier are put on an approved suppliers list and periodically they are
evaluated on price, quality and delivery performances.
Purchasing
Methods –
i) Contract Purchasing
A
contract is entered with a supplier for the commodities to be supplied at
regular intervals, usually at an agreed upon price which is advantageous for
both.
a) The specific period contract - it determines the source
of supply and the price of goods for a stated period i.e. for 3 to 6 months
suitable for items which has fairly stable price like bread, butter, milk etc.
b) Specific quality contract - it aims to secure continuity
of supply of a given quality of an essential item
of an agreed price over a particular trading period- suitable for
fruits, vegetables etc.
ii) Periodical Purchasing
The
requirements of the establishment are periodically estimated and orders are
placed on a weekly / fortnightly / monthly basis. This is suitable for
groceries.
iii) Daily Market List / Daily Market Quotation
This method is used for purchasing perishables on a daily basis.
A daily market list is prepared by the executive chef on the basis of quick
stock taking of food. On receipt of the ‘Daily Market List’ the purchase
officer contacts approved suppliers for their prices and then orders for the
supplies.
iv) Cash & Carry
It
is purchasing from the market at a competitive price, and the buyer can
personally check the quantity and quality of each item. The purchaser has to
pay in cash and has also to arrange for the goods to be transferred to the
establishment.
v) ‘Paid Reserve’
In
this the caterer buys in advance a large quantity of items like beef, jumbo
prawns, etc. to cover the needs of future months and stocks of which is kept
with the supplier, and the supplier is paid for this. The caterer requisitions
his requirements from the supplier.
vi) Cost Plus
In
this case, the approved supplier is paid exactly the same price that he has
paid for the commodities plus an agreed percentage to include the cost of
handling, delivery charges and a margin of profit. Suitable for welfare
catering establishments.
vii) One Stop Shopping / ‘Total Supply’
There
are some suppliers who are able to offer a full supply service of all
commodities. The advantage of this system is that the establishment has to
negotiate with one supplier, a reduced volume of paper work and fewer
deliveries.
viii) Centralized Purchasing
Suitable
in chain operations. In this system the requirements of each individual unit is
relayed to a central office. The central office decides the total requirements
of all units and then makes total purchases either, for delivery to the
individual units by he dealer, or, for centralized delivery.
ix) Sealed Bids / Tender Purchase
In
this procedure sealed quotations are required from one or more suppliers and
orders are placed where the terms are of best advantage to the buyer, after all
elements of price, quality, yield and service are considered. For a Govt.
institute the offer goes to the lowest bidder.
x) Standing Order
The
supplies of certain food items (especially of highly perishables like – milk,
ice-cream, bread, etc.) can be asked for a supply without securing price
quotation first. However, it is very important that the latest prices of these
items are available to the person when checking the bill for these items.
Additional
Methods
Apart
from the above mentioned method of food purchase the following methods are also
applicable in hotels:
EMERGENCY
PURCHASE
To
purchase an item on an emergency basis, a risk purchase form has to be filled
up& sent to the supplier.
TOTAL
SUPPLY METHOD
There
are some suppliers who are able to offer supply service of all the commodities.
The advantage of this system is that the company has to negotiate with one
supplier & there is a reduced volume of paper work.
PURCHASE
ORDER FORMS
It
is a complete record of all orders made and it helps the receiving department
to take necessary action for any foodstuffs arriving late.
The
purchase order is made in 1 + 5 copies…
Original
copy--- to the supplier
1st copy ------
to accounts
2nd copy ------
to purchase department
3rd copy ------
receiving department
4th copy ------
indenting department
5th copy ------
master copy.
j)
Ordering Cost –
it
is the cost incurred in placing an order with a supplier, e.g.
– stationery, manpower, time, transportation, etc.
k)
Carrying Cost –
It
is the cost incurred in making arrangement for the commodities to be delivered
to the establishment, e.g. – manpower, transportation, etc.
l) Economic Order Quantity (EOQ) –
The quantity, which is most economical to order & to
stock considering all factors bearing on the situation. the basis of the EOQ is
the usage rate, ordering cost and the time taken. Basically the focus is on
maintaining optimum levels of each units are there in each lot and the speed at
which they are used up from the stores.
E.O.Q
= (2A x Cp) / Sc.
Where A = Annual Usage, Cp= Cost of Purchase, Sc=Storage
Cost (per unit).
The size of the economic order quantity depends upon
·
Cost of
Purchasing.
·
Consumption
·
Interest
on Capital
·
Quantity
discount.
Sometimes Economic Order Quantity is called Re-Order Quantity.
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