PURCHASING

Definition – Ownership of commodity changes from one person to another in terms of money.

INTRODUCTIONPurchasing is the second important step for a complete operation.

Once the planning of menu is over, we concentrate on purchasing so that the following steps to be verified for an effective operation.

1. To balance the food cost.

2. Verification of stock for required purchasing.

3. Availability of raw material.

4. Availability of supplier.

5. On time supply.

OBJECTIVESMaintain adequate supplies.

Minimise investments.

To run a smooth operation.

Maximise quality.

PURCHASING RESPONSIBILITIES1. Determine when to order.

2. Control inventory level.

3. Establish quality standards.

4. Determine / write specifications.

5. Obtain competitive bids.

6. Investigate vendors.

7. Arrange financial terms.

8. Oversee deliveries.

9. Handle adjustments.

10.Arrange for storage.

Purchasing cycleDemand

from kitchen

Prepare specification for supplier

Prepare order

Expedite order

Send requirements

on requisition to

user department

Check order receipts & invoices

Inspect foodsReceive food

& delivery notes

Accounts for payment

Stores

Requisition with specification

Selection of supplier

Order to selected supplier

IMPORTANT STEPS FOR FOOD PURCHASING

1.Determine purchasing need.

2.Know the market.

3.Establish and use specifications.

4.Design the purchase procedure.

5.Receive and check materials.

6.Evaluate the purchasing task.

KNOW THE MARKETThe buyer has knowledge of the items to be purchased

1. Where they are grown.

2. Seasons of production.

3. Approximate rate.

4. Conditions of supply and demand.

5. Government laws and regulations.

6. Marketing agents and services.

7. Processing.

8. Storage requirements.

9. Commodity & product, class and grade.

PURCHASING ACTIVITIES1. Supplier selection

a. Priceb. Qualityc. Selectiond. Servicee. Delivery schedulef. Dependabilityg. Emergency orderh. Financing terms

2. Maintain appropriate inventorya. Proper amountsb. Proper items

3. Conduct negotiations4. Market survey5. Determine requirements6. Maintain supplier relation7. Educate suppliers about needs8. Purchase, receive, store and issue9. Record keeping and controls

(LIFO, FIFO & FEFO)

DIFFERENT METHODS OF PURCHASING

PURCHASING

By Contract By Daily Market

List

Weakly or Fortnightly Quotation

List

Cash &

Carry

Paid Reserve

Specific Period

Contract

Quantity Contract

Total Supply

Cost Plus

Purchasing by specific period contract

It determines the sources of supply and the price of goods for a fixed period. This reduces the time and labour of negotiating and ordering. It assists with budgeting and pricing, when he prices of items are fixed for a period of time. Items with a fairly stable price such as milk, cream, bread, etc can be contracted in this way.

Purchasing by Quantity Contract

It ensures continuity of supply of a given quantity of an essential item at an agreed price over a particular trading period. The purchase of frozen fruit and vegetables for use in a banqueting or a summer season are typical examples when the supply could be affected by the weather conditions with subsequent price fluctuations.

Purchasing by DAILY MARKET LIST

This method is used when purchasing perishable foods on a daily basis from 2 or more approved supplier. After a quick stocktake, the head Chef complete a daily market list according to the departmental requirements for next days business. The list would then be processed by purchase manager. Each approved supplier then asked to quote a price for each of the item required. After that the decision made by purchase manager as to where to place the order. This may result in 2 or 3 suppliers each receiving part of the total order.

Purchasing by weekly quotation list

This method is used to purchase grocery items. The head store keeper complete the stock in hand and based on business expected prepares the order list. Purchasing officer sends this list to all approved suppliers to quote their prices. On receipt of quotation a decision then made about where the orders for each items are to be placed. This would be based on the requirements in the next week.

Purchasing by cash & carry

This method is of particular interest to the medium and small establishments whose orders are often not large enough to be able to get regular deliveries from wholesalers and food manufacturers. ‘Cash and carry’ food warehouses are situated in all towns and resemble in layout and operation that of very large food supermarkets. The main difference is that the ‘cash and carry’ food warehouses is only available to traders.

Advantages of buying by cash & carry1. The hours of business are usually longer than the other

food wholesalers.

2. Small or large quantities may be purchased at competitive prices.

3. Customers are able to see, check and taste the particular products.

4. It helps to keep low stock in hand.

disadvantages of buying by cash & carry

1. Caterers have to provide their own staff and transport to collect the items.

2. Caterers have to pay cash for the items they purchased.

Purchasing by paid reserve

This method is used to ensure the continuity of supply of an item for the menu which is particularly important for the restaurant. Caterers are buying in advance a large quantity of commodity to cover the needs for several months ahead and requisitioning their weekly requirements from suppliers who would hold the stock. Example frozen jumbo pacific prawns.

Purchasing by total supply

This method is relatively new. It is a method offered only by a few major suppliers who are able to offer a full supply service of all commodities. Its reduces volume of paperwork's and far fewer deliveries. The main disadvantage is that prices may not be as competitive as when using several suppliers.

Purchasing by cost plus

This method is used frequently in the welfare sector. The establishment agrees to pay an approved supplier exactly the same price that the supplier paid for the commodities plus a minimum agreed percentage. The percentage includes the cost of handling and the delivery charges and a lowest profit element for the supplier.

Purchase specification for food

Purchase specification should be used whenever possible in purchasing. It is a concise description of the quality, size and weight required for a particular item.

The reason for preparing specification:1. It establish a buying standard of a commodity.

2. It informs the supplier in writing precisely what is required.

3. It provides detail information of the goods to the receiving clerk and storekeeper.

Purchasing tips

1. Keep update and sound knowledge of all commodities.

2. Be aware of different types of qualities of each commodity.

3. Keep eye on price variation.

4. Organise a efficient system of ordering.

5. Explore all possible supplier.

6. Request price list as frequently as possible.

7. Buy perishable goods when they are in full season.

8. Deliveries must all be checked against the orders.

Thank you

… an

anish banerjee

initiative