The purchase procedure will depend upon the nature, size, standard, location of the establishment, the forecast of future requirements. The full purchase procedure could be broken down into the following steps:
- Purchase requisition form
- Selection of the source of supply
- Entering into a contract with the supplier
- Acceptance of food and beverage raw material
- Transfer of commodities to ordering department or to stores or cellar.
PURCHASING METHODS
There are variations in purchasing methods. Basically because of location and availability of merchandise, however some of the methods practices in most of the food and beverage establishments are described below: –
- Contract purchasing:-
A contract is entered with a supplier for the commodities to be supplied at regular intervals, usually art advantageous price. A contract is a legal document and the conditions of the contract should be carefully prepared preferably by the solicitors of the firm. There are two common types of contracts:-
- Specific period contract: it aims at determining the source of supply and the price of goods for a slated period says three or six months. Such as bread, butter, milk, cream etc.
- Quantity contract: its aim is to secure continuity of supply of a given quantity of an essential item at an agreed price over a particular trading period. Most suitable for fruits, vegetables etc.
Clauses of a purchase:- the period, estimated quantities, reservation of the establishment to decide a contract between supplies, purchase specification, removal of rejected food by supplier, containers chargeable, power to purchase in default, in case of dispute-an agreed party, indemnity against damage, prevention of corruption, the place of delivery, invoices, payment of invoice, service of notice to break a contract.
- Periodical purchasing:-
The requirements of the establishment are periodically estimated and regular orders are placed on a weekly/fortnightly/monthly basis. This method ensures that stocks are being kept at regular level. A master quotation is prepared and on the basis of periodic requirements. The price quoted and the storage space available, the orders are place.
- Daily market list/daily market quotation/by requirement: this method is usually used for purchasing perishable goods on a daily basis. A list of approved suppliers is prepared. A daily market list is prepared by the executive chef on the basis of quick stock- taking of the food. On receipt of “daily market list” the purchase office contacts on telephone, each approved suppliers and asks to quote price for each of the item required. The quoted prices are entered on the daily market list and decision is taken by the purchase officer as to where to place the order of each item. See page no- 3.7 and 3.8
- Market purchasing:- the requirements of the establishment are estimated. Quotations are asked from the various suppliers of commodities. The quantity and prices are compared and orders are placed to the firm keeping in mind the price and quantity of provisions.
- Cash and carry method: – this is the most suitable method for small and medium sized establishments. There is a complete freedom for purchasing from the market at competitive price and the buyer can personally check the quantity and taste of the item. However, the caterer has to pay cash for all items purchased and has to provide his own staff and transport to collect the items from the place of purchase.
- Paid reserve method:- this method is used when it is necessary to ensure the quantity of supply of an item for the menu which is of particular importance for a specialty restaurant/establishment, such as jumbo size prawns, frozen fillets of beefs etc.
- Cost plus method:- this method is more suitable for welfare catering institutions such as hospitals, boarding houses etc. the approved supplier is paid exactly the same price that he paid for the commodities plus an agreed percentage to include the cost of handling, delivery charges and a margin of profit.
- Total supply method:- there are some suppliers who are able to offer a full supply service of all commodities. A food and beverage establishment may agree for such supplier. This system has the advantage of only having to negotiate with one supplier, a reduced volume of paper work and fewer deliveries. Under proper purchasing procedure it is necessary to secure for each item at least two quotations from two dealers before placing an order.
- Purchase indent: – non perishable items are purchased against the authority of purchase indent, which can originate. If one of the following occurs:-
- A regular storeroom inventory item has reached its pre-determined minimum stock level. The minimum stock level would be determined by the storekeeper/manager with the help of consuming department head.
- As non-storeroom inventory item is required by a department and the indent shall originate from the department head duly approved by the general manager.
All purchase indents be made in three copies:-
In case of regular storeroom items:
- Original to purchase department
- Duplicate to department head
- Triplicate to stores
In case of non-storeroom inventory items:-
- Original to purchase department
- Duplicate to stores
- Triplicate to indenting department.
All purchase indents would be marked ‘urgent’ or ‘routine’ depending upon all the urgencies of the requirement. Figure 3.9, for non perishable items, there is no need to prepare a purchase indent but a ‘steward list’ is prepared. Refer figure 3.7. it originated from the kitchen and prepared by chef in triplicate:-
- Original- purchase department
- Duplicate- receiving department
- Triplicate- chef
- Purchase order:- this is another important document to be issued for all items ordered. This should be prepared listing all items ordered, delivery time, terms of payment, the agreed price and other conditions/institutions. Figures 3.10, 3.11 and 3.11 (a)
All purchases should be made strictly as per the purchase indent or standard list. The purchase order is made for all items except standing rate contact items. It could be made in six duplicate:-
- Original (white)-supplier
- Duplicate (yellow)-accounts
- Triplicate (pink)-purchase
- Quadruplicate (blue)-master copy
- Quintuplicate (green)-receiving
- Six duplicate (orange)- indenting department
In the eventuality of the purchase order not being made in time, telephonic information must be sent to receiving department followed by their copy. The order on telephone is placed by the purchasing manager, which is recorded on the telephonic transmittal slip (TTS) and purchase order. Second copy goes to account dept. along with all bills.
- Centralized purchasing system: this system is very popular in chain operations. In this system the requirements of each individual unit are relayed to a central office. The central office determines total requirements of all units and then makes total purchases either for delivery to the individual units by the dealer or for centralized delivery. The decision as to centralize purchasing is taken by the top management. The main advantages of central purchasing are
- Volume purchasing which leads to lower price
- Opportunity to obtain desired quality because of greater choice of markets
- Purchases as per specifications
- Maintaining a larger inventory which ensures constant supply to individual units.
- Check and control over individual units food purchasers.
- Periodic order method:- non perishable items have longer shelf-life than perishable. These items require in-frequent ordering and leave the steward free to attend to perishables. The steward establishes with the advice of management periods for ordering purposes- once every week, or every two weeks or once in each month. The steward reviews the entire stock of non-perishable items and determines how much of each to order.
- Competitive buying-price method:- in this procedure quotations are requested from one or more purveyors/suppliers and orders are placed where terms are of best advantage to the buyer, after all elements of price, quality, yield and service have been considered.
- Spot checking the purchasing agent
- buying for use and not for stock
- mechanics of purchasing- must provide the necessary information
- daily investment on perishables
- distribution of market quotations and purchase order sheets
- Standing orders/standing purchase order: not all perishables need to be ordered against market quotation and purchase order as items such as milk, ice-cream etc. can be ordered without securing a quotation first. After taking into consideration the forecasted number of covers and previous consumption records, milk, cream must be ordered daily on a forecast need basis. However, it is most important the latest prices of these items available to the person checking the bills.
- Daily purchase price comparison work sheet: from the daily invoices the daily purchase comparison worksheet is posted with the unit price and weight of all meat purchases. Also to be posted daily for all other perishable food items, is the unit price but not quantity, this information is used for
- Costing purposes
- Monthly weighted/price competition report