True or False

Determine items required for operations in conjunction with relevant personnel.

Assess the quality and suitability of stock on hand.

Avoid wastage and unnecessary ordering by using appropriate existing stock.

Forecast how much of each item you need to order.

Determine any price limitations for the purchasing.

Determine alternative products in case what you require is not available.

Develop purchase lists and prioritise the purchases.

Supervisor

General Manager

Chef/head chef

Department manager

Stores personnel

Human Resources Manager

Event coordinator

Operations manager

True

False

The menu can form the basis of ordering.

Individual recipes and standard yield information can be used.

For buffets usually Banquet Analysis Sheets will collate the purchasing requirements for all items on the menu.

Requests from all partie chefs indicate the purchasing requirements.

Buffet designs

Event orders

Special requests from sponsors

Running sheets

Occupancy lists

Customer profiles

Reservation profiles

Special requests/VIP lists

True or False

The frequency of purchasing varies depending on exact needs.

Each business will only hold the exact amount of stock items needed for the day ahead.

Excess stock can spoil or go off, will be a negative impact on the cashflow, or there are restrictions to how much stock can be stored on site.

It is essential to identify stock levels before order as most establishments have no stock control measures in place.

In essence what is needed is the total list of requirements then an analysis of the existing stock levels to determine the actual purchasing needs.

Existing stock must be identified first and considered in the purchasing order to prevent any wastage.

Moving Average

Guessed Estimates

Popularity Index

Sales Forecasts

Quantities Previously Purchased

Yield Tests

1

Moving Average

a measurement of the proportion of total sales and is expressed as a percentage.

2

Popularity index

Purchased weight - Usable weight = Production loss

3

Sales Forecast

e.g. Forecast = (month 1 + month 2 + month 3) divided by 3

4

Yield Test

sales reports, occupancy reports and other indicators of past sales can be used as the basis for projecting future purchasing requirements.

True or False

Budgets drive all businesses and these must be considered in a holistic fashion for the business to ensure profitability.

Each function, tour, drink or recipe must make a profit and therefore need be costed correctly.

If a product on offer in an establishment is correctly calculated there is no requirement for purchase price guidelines.

In order to ensure profitability of each product or service offered in an organisation, the purchase price guidelines are defined to achieve the desired profit margin for the product or service.

Most jobs require a quote first and it is important to list all details, e.g. rental cost, food cost, staff cost, other related costs such as equipment hire, electricity and ancillary costs.

For events other associated costs such as entertainment or a music band, jugglers or other acts or performers may need to be considered.

1

Date required

determine the requirements based on price and quality considerations as well as customer expectations

2

Quality required

check on availability of products and appropriate supply choices. Contracts must be considered

3

Shelf life

consider perishables and shelf life as well as spoilage factor

4

Stock levels

allow for sufficient delivery time and check availability

5

Suppliers

check on existing levels and minimum stock levels

1

Product range

what is the service level guarantee?

2

Availability

is it extensive enough? Can they supply across a range of product needs or specific needs only?

3

Service provision

is it competitive? Remember cheapest may not always be the best!

4

Reliability

what is their reputation?

5

Price

HACCP needs, daily deliveries, deliveries at specific times, etc.

6

Specific requirements

are there any seasonal impacts or supply issues?

True

False

Many businesses have a preferred supplier list, which details which supplier/s should be chosen for each item or category of items to be supplied.

The preferred supplier list should always be your first choice when sourcing suppliers, as your business has an existing relationship with them.

A preferred supplier is generally selected on the basis of offering the cheapest price for a locked-in period.

In order to become a preferred supplier, the business generally conducts credit and trade checks on the supplier.

Before a supplier is selected the business implements payment and price terms, negotiates agreed mechanisms for faulty goods returns and has set Key performance indicators for the relationship.

Existing suppliers for all products with an analysis of the service and pricing

Other suppliers in the market place that could provide the services and products needed

Location of suppliers - local, state and interstate as well as online including overseas

Wholesale and retail suppliers

Recommendations or referrals from other businesses

The incentives they offer you if you choose to purchase their products

True or False

Each enterprise will have specific rules in regards to ordering or negotiating supplies.

Handling negotiations and contractual arrangements is mostly done by management staff such as the business owner, general or operations manager, restaurant manager, head chef or maître d'hôtel.

The common guidelines for purchasing in an establishment include the type of goods, list of suppliers and authorities in regards to purchasing.

In many organisations the head chef, headwaiter or other department heads may be able to purchase goods up to certain monetary limits or limits set out in the monthly budget.

In small businesses supplies are generally ordered as required and checked against budget at the end of the financial year.

Organisational processes often apply to the systems such as requirement for purchase orders; invoicing and relevant checks; as well as requisition procedures and all associated documentation.

Good practice usually requires that the relevant authority is obtained before any purchase can be made.

A key task for any business that orders goods is to develop precise specifications in order to avoid miscommunication with suppliers and to ensure consistency.

Providing suppliers with specifications will ensure that all products will be received to standard on every delivery.

All industries have specific terminology and defined specifications will avoid confusion or incorrect product or service supply.

Common specifications relate to size, quantity, quality grade, vintage, temperature requirements, price limitations and specifications to industry standards like Ausmeat standards etc.

True

False

All business needs must be considered to ensure that there are sufficient stock levels for the ongoing operations.

As the business often cannot hold excessive stock it is essential to ensure that suppliers can deliver supplies within timeframes that accommodate the business' needs.

Prices for goods must be relatively stable as many businesses are unable to change sale prices daily in line with commodity price fluctuations.

You must have a par stock of non-perishable supplies to cover at least a 2 month trading period to prevent any negative effects from limited supplies or price fluctuations.

Droughts, thunderstorms or floods impact on harvests and prices often rise due to limited availability of product, or difficulty of delivering products.

Businesses can limit the effects from price fluctuations by having annual supply contracts with guaranteed prices and by amending the product offerings with different products or cheaper alternatives.

True or False

Price negotiations are a simple matter to finalise as there is ample competition in the market.

Price negotiations are always delicate and are normally handled by experienced staff or the General Manager.

Price negotiations should be handled by the individual staff member that makes purchases in each department or the organisation.

Some suppliers may change prices at short notice and may inform line staff or even stores staff.

Most businesses will have processes in place to alert supervisory staff of changes and they in turn will contact the supplier to negotiate changing costs.

If you become aware of changes in sudden changes in prices or other difficulties associated with purchasing, you should alert your supervisor who will determine the appropriate thing to do.

Obtain, inspect or test a sample product

Talk to your industry connections

Obtain references

Request a quality assurance guarantee

Define specification standards

Is the item correct?

Is the weight correct?

Is the quality correct?

Is the price correct?

Are there better choices from competitors?

Have the item prices been added correctly?

Are all details on the invoice correct?

1

Requisition form

record of the stock held within a section of the store, or 'bin'

2

Stock transfer form

details the type and amount of stock to be transferred from 1 department to another

3

Bin card

used to record the amount of stock on hand for tracking periodic usage or for comparison to computerised records

4

Stocktake sheet

record of the amount and type of goods received from the supplier

5

Purchase order

record of the amount and type of goods ordered from a supplier

6

Delivery docket

details the type and amount of stock to be issued to different departments by the store

Furniture

Alcoholic and non-alcoholic beverage items

Linen and housekeeping supplies

Equipment

Cleaning materials and chemicals

Event supplies

Vouchers and tickets

Price

Conditions e.g. delivery time frames

Availability

Account Requirements

Payment terms

Item/Product

Qty In Stock

Purchase Qty

Specification

Comparable size/Qty/Quality

Exist.

X

Z

Existing Supplier

Supplier X

Supplier Z