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Chapter 3 ‐ Purchasing Control

KIỂM SOÁT CHI PHÍ TRONG KHÁCH  SẠN
3.1. Introduction to the purchasing agent
(COST CONTROL IN THE HOTEL)
Chapter 3 – Mua hàng cho khách sạn và 
kiểm soát mua hàng 3.1.1. Saving money
Purchasing control - How to increase profit?
If you operate a restaurant with a 5 percent profit margin, saving
PGS.TS. Đường Nguyễn Hưng $1 in purchasing generates as much profit as increasing sales by
Email: [email protected] A. $5. B. $10.
ĐT: 0905 364 989 C. $20. D. $50.
- Contribution to profit: Sales vs Saving money
- Control costs in purchasing vs Labor costs, Overheads

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.1. Introduction to the purchasing agent 3.1. Introduction to the purchasing agent

3.1.1. The responsibility of the purchasing agent 3.1.1. The responsibility of the purchasing agent
- Overall: to maximize value so that the company gets the most - Planning the Menu: assist with planning and writing the
menu
for its money; to evaluate the quality of materials and the - Writing Product Specifications: detailed lists of exactly what
services that vendors provide relative to the cost of the will buy and the conditions under which you will buy them.
products. Comprise the company’s standards and rules for purchasing
- Cost: purchase price of the product + additional costs of goods. The company’s image, menu, prices, and clientele will
putting the resulting food on a customer’s plate. dictate these standards.
Purchase specifications will depend on the market: what are
- Services: reliability, consistency, and convenient delivery appropriate standards in terms of fat content, price, consistency,
schedules shape, and speed of preparation?

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3.1. Introduction to the purchasing agent 3.1. Introduction to the purchasing agent

3.1.1. The responsibility of the purchasing agent 3.1.1. The responsibility of the purchasing agent
- Determining the Outlet’s Needs According to the Menu and - Collecting and Reviewing Vendor Bids.
Business Volume: essential to customer satisfaction and - Negotiating Prices and Conditions with Vendors. early-
profitability. payment discounts, volume discounts, delivery schedule, and
- Providing Input about Necessary Changes. Purchasers must contract pricing.
advise management about cross-utilization of products, - Issuing a Contract or Purchase Order. Purchasers -> vendors,
seasonal products, and difficult-to-get products so that last receiving department, accounting department
minute changes can be made and the menu can be revised. - Ensuring Proper Delivery: using proper equipment to deliver
- Assessing Potential Suppliers. the product on a timely basis.
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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.1. Introduction to the purchasing agent 3.1. Introduction to the purchasing agent

3.1.1. The responsibility of the purchasing 3.1.2. Independence and Ethics

agent - The purchaser’s role is to represent the company’s best
- Receiving, Storing, and Issuing Goods Pragmatically. interests from start to finish during the purchasing
should establish inventory targets and the inventory process.
turnover. - All dealings with vendors are the purchaser’s
responsibility, and they should be standardized,
transparent, and ethical.

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.1. Introduction to the purchasing agent 3.1. Introduction to the purchasing agent

3.1.2. Independence and Ethics 3.1.2. Independence and Ethics

- Independence: Why the purchaser be the direct contact - Ethics: deal with vendors who are known to have
questionable ethics
person? - become “known by the company you keep”
- must establish a network of trust with company - suppliers reveal proprietary information to competitors or use it
- consistently behaves professionally and ethically themselves
- “blackmail”: offer a low bid to get your business.
- bring new ideas to the company, exercise independent
- promise a delivery that they know they can’t
judgment in such matters
- “shop” the order to a different company
- must be free of any question involving unethical practices - resort to commercial bribery to get your business

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Chapter 3 ‐ Purchasing Control

3.1. Introduction to the purchasing agent

3.1.3. Online Ordering

- Online vs. Offline?
- Online ordering eliminates the distance effect.
- Automation and timing are transformed.
- The Internet can be very cost-effective.
- Ordering online gives access to a larger—nearly infinite product
database.
- Unethical vendors have a new way to reach your company.
- There is a growing network effect from Internet connectivity.

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3.2. Quality Specifications and Product  3.2. Quality Specifications and Product 
Testing Testing

3.2.1. Purchase Specification 3.2.1. Purchase Specification

Product Information
- cuisine, theme, and market – Menu – Purchase decisions - The name of the item
- create purchase specifications in conjunction with all - The amount or quantity needed
- The grade, packer brand, USDA number, or other quality
interested parties information about the item
- creating purchase specifications - evaluate the quality, - The price of the item
quantity, consistency, reliability, availability, service, - The packaging size and method of delivery
- Other miscellaneous information, such as the item’s area or country
safety, and price of the items (purchasing decisions) of origin or the number of days the item (such as beef) should be
aged

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.2. Quality Specifications and Product  3.2. Quality Specifications and Product 
Testing Testing

3.2.1. Purchase Specification 3.2.2. Yield Tests

- make sure the quality of the products you receive from a - to determine how much actual, usable product comes out of
the raw product a vendor sends you.
vendor matches your specifications
- stated either as a number of portions (e.g. eight 10-ounce
- Vendors often send sample products: test the quality for steaks from a tenderloin, 4 servings of red potatoes from a 1-
yourself pound bag) or as a yield percentage (e.g. if your tenderloins
usually weigh 11 pounds, and after trimming you get 9.5
- tests determine whether the product meets the criteria usable pounds from the original 11, your yield is 86.4 %).
detailed in your purchasing specifications - If your portion weight for a steak is 8 ounces, or 0.5 pound,
- test the product using the same production procedures an 11-pound tenderloin will net 9.5 pounds, or potentially
that will commonly be used nineteen 8-ounce steaks.

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3.2. Quality Specifications and Product  3.2. Quality Specifications and Product 
Testing Testing

3.2.2. Yield Tests 3.2.3. ButcherTests

- end-product price: (EP) the price of usable product, including - to determine the actual portion cost of meat, poultry,
the price of wastage. fish, or seafood after accounting for waste, trim, and
- as-purchased price: (AP) the original price paid for a product. cooking losses.
- Eg.
- can be used in what is called a make-or- buy decision:
Should you buy the product raw and prepare it yourself,
- If you purchase a 25-pound case of green beans for $16.00
or should you buy it preportioned and save on labor and
and it yields 20 pounds of edible beans, what is the end price
waste costs?
for a 4-ounce portion of the beans?
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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.2. Quality Specifications and Product  3.2. Quality Specifications and Product 
Testing Testing

3.2.3. ButcherTests 3.2.4. Raw Food Test

- to determine the actual portion cost of meat, poultry, - to determine which vendor supplies the best count and
fish, or seafood after accounting for waste, trim, and weight of fruits and vegetables for specific uses.
cooking losses.
- Eg. how many tomatoes come in a case or how many
- Eg.
slices you get from one tomato.
- can be used in what is called a make-or- buy decision:
Should you buy the product raw and prepare it yourself,
or should you buy it preportioned and save on labor and
waste costs?

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3.2. Quality Specifications and Product  3.2. Quality Specifications and Product 
Testing Testing

3.2.5. Canned Food Test/Can-Cutting Test 3.2.6. “Blind” Taste Test

- to determine the yield of canned goods, either through - Using samples from more than one vendor, prepare the
weighing or counting the drained contents of the products as you would normally prepare them for
container. service.

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.3. Quantity Specifications 3.3. Quantity Specifications

- inventory management, including how much to order and

how much to keep on hand - Establishes an inventory order schedule - daily, weekly,
- a great deal to consider or more or less frequently—based on the operation’s
- Balance needs.
- Spoilage
- sets par levels for the inventory: set amounts that
- volume price discounts
- unexpected needs maintain enough stock, but not more than is necessary
- how quickly your business consumes the products for your business volume.
- how long it takes your vendor to deliver
- how much safety stock is required
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3.3. Quantity Specifications 3.3. Quantity Specifications

How much of a product to order: How much of a product to order:

- Inventory on Hand: stock of the food and other products you - Cost of Acquisition: cost to implement the acquisition.
buy and store for use.
- Costs involved? - Costs involved?
- a delicate balance between ordering more than you need (and - Volume Pricing: Lower prices when products are
therefore having waste) and ordering less than you need (and purchased in larger quantities.
therefore running out)
- should match par levels of stock - Vendor Minimum Order Quantity: Required minimum
- Lead Time: the time between the receipt of a purchase order amounts for orders from a vendor.
and the receipt of the goods from the vendor.

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.3. Quantity Specifications 3.3. Quantity Specifications

How much of a product to order: how much of a product to order:

- Safety Stock: Extra inventory kept on hand to ensure
that you will have time to order more before running
out.
- a judgment made by assessing the operations, your
suppliers’ delivery schedules, and the general economic
conditions.
- vary from item to item and from one season to the next.

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3.3. Quantity Specifications 3.3. Quantity Specifications

How much of a product to order - Perishable Products: How much of a product to order - Perishable Products:
- Differ from nonperishable products
- Seasonal Assume it is Thursday afternoon and your restaurant is open every day. The
- more frequently purchased restaurant usually uses between five and six flats of strawberries every three
- prices are less stable days, or about 1.83 flats per day. Today the banquet chef has submitted a
- Planning for ordering perishable products: purchase order for two flats of strawberries for a function on Monday. The
- Use market reports vendor only delivers on Tuesdays and Thursdays, and you must call by 9:00
- Review your company’s business forecast A.M. the day before these delivery dates to place an order. Now assume you
- Review anticipated banquet functions and special events
counted seven flats of strawberries in your storeroom (this is your inventory
- Consider the lead time and how much you will need before placing
this order on hand); you’ve already received your deliveries for the day and filled your
- Determine inventory on hand requisitions. Your seven flats will likely be gone before Monday’s banquet
- Ensure both quality and timely delivery function, and you can’t get a delivery from your vendor either.
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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.3. Quantity Specifications 3.4. Vendor Selection

How much of a product to order - 3.4.1. Competitive Bids from Vendors

Nonperishable Products: - the price and quantity proposals that vendors present to your company.
- at least three bidding vendors. Find from:
- determined by usage, storeroom space, cash availability, - a specifi c investigation involving a supplier and a trial transaction
price, and lead time. - choosing from an established list
- making a routine selection based on the purchaser’s experience
- using a well-established, well-known company
- consulting a classifi ed directory
- reading manufacturers’ catalogs and sales literature
- Perpetual inventory A system of accounting for - consulting industry sources such as professional associations
inventory changes, in which beginning and ending - interviewing salespeople or other buyers
inventories are noted alongwith any sales or purchases. - attending trade and product shows

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3.4. Vendor Selection 3.4. Vendor Selection

3.4.1. Competitive Bids from Vendors

Vendor Selection Criteria:
- Quality needs.
- Sales support and other services.
- Necessary contractual obligations.
- Technical capabilities and support.
- Manufacturing capabilities.
- Management capabilities.

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.4. Vendor Selection 3.4. Vendor Selection

3.4.2. The Make-or-Buy Decision

- for the most expensive items and for high-volume items.
Vendor Selection Criteria: - whether to make or buy the product: all relevant costs are considered
- Financial strength. - evaluate the prime cost: The labor, material, and overhead costs identified in
product preparation.
- Labor-to-management relations. - many hidden costs in preparing products:
- Past performance. - Managing the raw materials: ordering, receiving, inspecting and storing.
- Utility costs: water usage, refrigeration, storage, and waste disposal
- References. - Labor costs: underutilization of labor capacity, delays and downtime, scheduled
and nonscheduled breaks, training, taxes, FICA, insurance, and so on
- Pricing structure and incentives. - Employee support and training, supervision, and quality control
- Favorable delivery schedules. - Workstation preparation, cleanup, and employee hygiene
- Additional square footage required for prep and equipment needs
- High ethics and no conflicts of interest. - Lost time due to work-related injuries
- Value added: when you purchase preprepped products, you get 100% of what you
buy; consistency and better inventory controls
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3.4. Vendor Selection 3.4. Vendor Selection

Considerations Before Awarding Considerations Before Awarding

Business to a Vendor: Business to a Vendor:
- Consistency: the products purchased remain the same at - Reliability: to maintain a steady inventory and timely
all times - quality and pack size/weight. delivery.
- The starting point is at the receiving dock.
- reliability goes both ways – the vendor should be able to
- Deviations should be documented and communicated.
trust that your company: pay invoices on time and review
- Discrepancies: adjusting the invoice or writing a credit their product fairly against other competitors.
memo; send the product back; accepting the lower quality
- To measure reliability: vendor selection criteria
- Consistency will also vary with the seasons.
- Different supplier sources also affect consistency.
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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.4. Vendor Selection 3.4. Vendor Selection

Considerations Before Awarding Business to a Considerations Before Awarding Business to a Vendor:

Vendor: - Supplier Services: Good vendor services can add value to your
- Availability: depends on the season, on demand, and on purchases.
supply. - Supplier Services:
- assess the vendor’s history regarding product availability - Handling of complaints
- Quantity - Prompt notification
- Prompt delivery at all costs
- Rate of usage
- Correcting misunderstandings
- Lead time
- Technical support
- Long-term commitment
- Reports of purchases
- Transportation
- Customer service
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3.4. Vendor Selection 3.5. Purchasing and Receiving

Considerations Before Awarding Business to a Purchase orders

Vendor: - A purchase order (PO): detailed listing of products
- Safety: Vendors should have knowledge and attention to requested by a buyer.
the industry and its requirements - using a prenumbered purchase order
- triplicate (three copies)

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3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving - Proper Location

- receiving area must be large enough
- count and weigh
- accessibility to equipment
- near refrigerated storage areas
- free of trash and clutter
- has a clear view of delivery personnel and their vehicles
- kept extremely clean
- should be well lit and properly ventilated
- should be light in color and of a type that is easily cleaned
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3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving - Proper Tools And Equipment Receiving - Proper Tools And Equipment
- Scales - Scales
- Wheeled equipment - Wheeled equipment
- Box cutters - Box cutters
- Thermometers - Thermometers
- Calculator - Calculator

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3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving - Proper Delivery Schedules Receiving – Checking Weight

- be during your slow periods, when there would be - All goods purchased by weight must be weighed.
plenty of time for a thorough checking of the products - unopened sealed packages containing items such as hot
delivered dogs, bacon ->
- tare weight: the weight of various empty containers used
to determine the net weight of perishables in these
containers.
- meat deliveries consist of several items, all of which are
packaged together ->
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3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving – Checking Weight Receiving – Checking Weight

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving – Checking Weight Receiving – Checking Quantity

- Excess packaging, ice, or water in the case of produce - quantity delivered compared to the quantity ordered
can all serve to increase the delivered weight. (weight, volume, and/or unit count)
- Products bought by count and by containers should be
counted individually
- Goods that are purchased in cases should be examined
- Shorting: If the item is listed on the delivery invoice, a
credit memo indicates an adjustment to a delivery
invoice must be made - triplicate (three copies).
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3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving – Checking Quality

Receiving – Checking Price
- checking the entire shipment for conformance to established product
specifications. - 1. Matching PO unit price to delivery invoice unit price
- Beverage:
- Correct brand - 2. Verifying price extensions and total
- Correct bottle size - Unit prices
- No broken bottles or bottle seals
- Pull dates (beer) - Number of units delivered
- Correct vintage or year produced (wine) - Extended price computations (Unit price × Number of
- Correct unit price
- Correct price extension units delivered)
- Correct invoice total - Invoice totals

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving – Discrepancies found

- inspect all items for quality, uniformity, and adherence
to specifications
- Credit memo: Used to record a credit due from a
supplier when theo merchandise received does not
conform to what was ordered. The discrepancy could be
in terms of quality, quantity, specification, and/ or price.
- Notifying

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3.5. Purchasing and Receiving 3.5. Purchasing and Receiving

Receiving – Receiving Record Or Daily Receiving Sheet

Receiving – Finishing
- Delivery documents/Invoices: marked with a receiving
stamp that includes when and by whom the order was
received
- Perishable goods are to be stored promptly and properly
using appropriate rotation procedures; dated on the
container, or tagged or labeled
- Accountant’s checking for recording and payment

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Chapter 3 ‐ Purchasing Control Chapter 3 ‐ Purchasing Control

3.5. Purchasing and Receiving 3.6. Storeroom Functions

Receiving – Auditing the Receiving Function - The protection of the assets is a key to successful cost control.
- to verify that proper receiving procedures are in effect - controlling how and when merchandise is issued and preventing
loss from theft and spoilage.
- randomly and frequently
- ensuring that storeroom operation hours comply with management
standards
- maintaining strict control of storeroom keys
- inspecting sanitation in all storage areas
- food products are stored in the proper refrigeration units and proper
temperatures, and properly wrapped.
- reporting any slow-moving items monthly
- perishables have been dated and stamped with the vendors’ origin.
- FIFO should always be used for product rotation in the storeroom
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