Typical Ordering Typical Ordering ProceduresProcedures

• 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.

Knowledge Is the Force

Of Empowerment

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 expensesPercentage of monthly expenses– Days in InventoryDays in Inventory

Par Stock ApproachPar Stock Approach

• Accept the suppliers’ order procedures Accept the suppliers’ order procedures and delivery schedules.and 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 Just-in-Time – Not too much and not too little.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 Correct Order Size and Order TimeOrder Time

• 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)

Exercise – Steak Exercise – Steak DeliveriesDeliveries

• Need to limit inventory –Need to limit inventory –– WasteWaste– TheftTheft– Product QualityProduct Quality– Inventory Carrying CostInventory Carrying Cost

Combination ApproachCombination Approach

• Par stock approach for normal day Par stock approach for normal day to day operations.to day operations.

• Levinson approach for special events Levinson approach for special events and banquets.and banquets.– Limits leftovers and dead-stock.Limits leftovers and dead-stock.

Purchase OrdersPurchase Orders• Purchase Order (P.O.) – request that a Purchase Order (P.O.) – request that a

supplier deliver what the buyer wants at supplier deliver what the buyer wants at the time and place specified by the buyer.the time and place specified by the buyer.

• Up to 8 copies of the P.O. may be required.Up to 8 copies of the P.O. may be required.– Copy to the supplier.Copy to the supplier.– Additional copy to the supplier to be sent pack Additional copy to the supplier to be sent pack

with the order.with the order.– Third copy to the supplier to be initial and Third copy to the supplier to be initial and

returned to the buyer as confirmation of the returned to the buyer as confirmation of the order.order.

– Buyer keeps a copy.Buyer keeps a copy.– Receiving clerk receives a copy.Receiving clerk receives a copy.– Department head receives a copy.Department head receives a copy.– Accountant receives a copy.Accountant receives a copy.– Corporate office receives a copy.Corporate office receives a copy.

Purchase RequisitionsPurchase Requisitions

• Used in the hospitality industry whenever the Used in the hospitality industry whenever the buyer needs an item that they do not buyer needs an item that they do not regularly buyregularly buy

- Time consuming to manage this system- Time consuming to manage this system- Too many people making decisions- Too many people making decisions

+Training device for potential buyers+Training device for potential buyers+Relieves the buyer of ordering mistakes+Relieves the buyer of ordering mistakes+Limits paperwork for the buyer+Limits paperwork for the buyer+Provides an added level of control+Provides an added level of control

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

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

Delivery ArrivesDelivery Arrives• Check immediately for proper quantities.Check immediately for proper quantities.• Check for proper quality.Check for proper quality.• Check prices and price extensions.Check prices and price extensions.

Invoice ReceivingInvoice Receiving• Receiver uses the invoice to check Receiver uses the invoice to check

against the quality, quantity and prices against the quality, quantity and prices of the items delivered.of the items delivered.

• Receiver may also compare the invoice Receiver may also compare the invoice against the purchase order as a further against the purchase order as a further check.check.

Rejection of DeliveryRejection of Delivery

• Receiver may note a pricing Receiver may note a pricing discrepancy discrepancy – Request for Credit memo is sent back to Request for Credit memo is sent back to

the supplier.the supplier.– Supplier may authorize the driver to Supplier may authorize the driver to

adjust the total on the invoice.adjust the total on the invoice.

• Receiver may send back a portion of Receiver may send back a portion of the delivery due to poor quality.the delivery due to poor quality.

Additional Receiving Additional Receiving DutiesDuties

• Date / Day dot the delivered itemsDate / 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

Alternative Receiving Alternative Receiving PracticesPractices

• Standing Order ReceivingStanding Order Receiving• Blind Receiving – No information on Blind Receiving – No information on

quantity or pricequantity or price• Odd Hours ReceivingOdd Hours Receiving• Drop Shipment Receiving Drop Shipment Receiving • Mailed DeliveriesMailed Deliveries• COD DeliveriesCOD Deliveries• Key Drop DeliveriesKey Drop Deliveries

Breakdown of ExpensesBreakdown of Expenses

• Food and Beverage is generally 35%Food and Beverage is generally 35%• Labor costs are 30%Labor costs are 30%• Controllable Expenses range Controllable Expenses range

between 7.5% and 12%between 7.5% and 12%

– Repair and Maintenance is 1.5-3% Repair and Maintenance is 1.5-3% (estimated)(estimated)

– Supplies are 2.0-3.0% (estimated)Supplies are 2.0-3.0% (estimated)

Non Food Expense ItemsNon Food Expense Items

• Signature items that promote the image Signature items that promote the image of your restaurant.of 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.

Non Food Expense ItemsNon Food Expense Items

• Quality and Volume DiscountsQuality and Volume Discounts• Non Food Packers BrandsNon Food Packers Brands• Operating Supplies SchemesOperating Supplies Schemes• Safety Considerations for chemicals.Safety Considerations for chemicals.• New vs. used purchasesNew vs. used purchases• Equipment ProgramsEquipment Programs

– Coffee machines, Ice cream freezersCoffee machines, Ice cream freezers• Lifetime cost – you get what you pay Lifetime cost – you get what you pay

for.for.

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

Cleaning SuppliesCleaning Supplies

• As Used Cost – consider the efficiency of As Used Cost – consider the efficiency of the product.the product.

• Product EffectivenessProduct Effectiveness• AdaptabilityAdaptability• Product SafetyProduct Safety• Ease of UseEase of Use• OdorOdor• Container Size Dispensing UnitContainer Size Dispensing Unit• Supplier ServicesSupplier Services

Cleaning ToolsCleaning Tools

• Examples – Brooms, mops, buckets, Examples – Brooms, mops, buckets, vacuum cleaners, pot brushes and vacuum cleaners, pot brushes and squeegeessqueegees

• ConsiderationsConsiderations– CostCost– Employee SkillEmployee Skill– Materials used to make themMaterials used to make them– Used ToolsUsed Tools

Maintenance SuppliesMaintenance Supplies

• ConsiderationsConsiderations– CostCost– Labor AvailabilityLabor Availability– Used SuppliesUsed Supplies– SizesSizes– Capitalizing ExpensesCapitalizing Expenses

• Examples – Light bulbs, plumbing Examples – Light bulbs, plumbing parts, AC Filtersparts, AC Filters

Permanent WarePermanent Ware

• 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.

• Examples – plates, flatware, glasses, Examples – plates, flatware, glasses, S&P shakers.S&P shakers.

Permanent Ware - Permanent Ware - ConsiderationsConsiderations

• Determine your needs.Determine your needs.• AP pricesAP prices• The Need to MatchThe Need to Match• Source of SupplySource of Supply• Materials Used to Make the ItemMaterials Used to Make the Item• SizesSizes• Length of ServiceLength of Service• Used Permanent WareUsed Permanent Ware

Single Service Single Service Disposable WareDisposable Ware

• Determine what you need.Determine what you need.• Packaging –Packaging –

– To Go Silverware packetsTo Go Silverware packets– To Go Packaging vs. Take Home FoodTo Go Packaging vs. Take Home Food

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.