procurement Flashcards
procurement vs purchasing
procurement- a systemic exchange between a seller and a buyer
evaluative
cost
enough dough space labour cost if choose to make them yourself frozen: can't modify taste quality\quantaty acceptibility nutrient profile appearance storage capacity preparation time service
cost: food cost, labor cost, yields and comparison of cost/pizza from scratch, frozen dough ball, pre-made frozen
cost of all the dough and ingredients- leftover ingredients
Informal or open-market buying
Involves ordering needed food & supplies from a selected list of vendors on daily, weekly, or monthly price quotations.
Orders made by telephone, fax(would not use this if you need the product for the next day- would use the phone), computer or personally with a salesperson
Often used when time is an important factor
Common in smaller restaurants, private institutions, commercial operations.
price quotations: not fixed price
no contract
Usually done under the following circumstances:
Amount of purchase is so small that time required for formal purchasing practices cannot be justified.
An item can be obtained only from one or two sources of supply.
Need is urgent and immediate delivery is required.
Stability of market (and prices) is uncertain.
Size of operation may be too small to justify more formal procedures.
Formal competitive bid buying
advantages
disadvantages
Buyer select a group of suppliers
Written specifications & estimated quantities needed are submitted to suppliers with an invitation for them to quote prices.
Suppliers compete over price quotations on buyers specifications
Buyer decides which supplier will be chosen for the order based on bids submitted
Competitive bidding usually culminates in a formal contract between buyer & supplier.
Understanding of legal considerations is necessary
Common in school systems, correctional institutions, hospitals (most tax-supported institutions )
Advantages
reduces misunderstandings with regard to quality, price and delivery.
cost savings (buy in bulk)
good for standing orders
Disadvantages
Time consuming- planning and request for bids must be made in advance so buyer has time to check availability of supplies and determine a fair price
May not be practical for perishable items because the day to day fluctuation in market prices
Lends itself to dishonesty when large amts of money are involved
line buying
can have many suppliers - choose the chaepest item idividually from all the options
all or nothing
suppliers bid on the whole total- only will have one supplier at your door
Independent Purchasing
Done by a unit or department of an organization that has been authorized to purchase.
E.g.
Nutrition Department
Advantage
Sole responsibility and authority for purchasing without need for multi organizational levels of approval.
Centralized Purchasing
Purchasing activity is done by one person or department.
Head of the department usually reports directly to top management, which has the overall responsibility for making a profit.
E.g.
Stores/Procurement Department in a hospital
Stores/Supplies in a University
Advantages
Better control;
Development of personnel responsible for (only) purchasing;
Better performance in other departments without additional responsibility of procurement;
More economical and profitable.
Group Purchasing
Two or more independent organizations combine to buy together
involves bringing together foodservice managers from different operations and schools, most often onsite foodservices, for joint purchasing.
E.g. Saskatoon health region long term care
Advantages
increased leverage
buy at lower prices
reduced contact with sales reps
time savings
update specifications
Disadvantages
may require central warehouse unless group is large enough
must agree on specs and bid schedule
food preferences may differ
goals of JIT purchasing
secure a steady flow of raw materials
reduce the lead time required for ordering a product
reduce the amopunt of inventory in the storage and production areas
reduce the cost associated with storage
Stages of Supplier Selection & Evaluation
Explore all possible sources for product
Examine records of experience with all suppliers
Incorrect orders/handles emergency
Compare suppliers for quality, quantity, price & time
Narrow list from possible to acceptable
Are current suppliers meeting performance standards?
Should new ones be considered in the future
Recognition of Need
Occurs in several places within the foodservice operation.
production unit- the menu & recipes
the storage area
in the computerized inventory record.
Inventory stock level
A minimum and maximum stock level must be established
structure of the menu (you need to consider)
(storage space-100 cans of tomatoes vs 10- can’t buy in bulk)
Purchase Requisition
Requisition Number Delivery Date Budget Account Number Quantity Needed Description of the Item
Negotiation with potential suppliers
Involves…….
Establishing the qualifications of a particular supplier
Determining fair & reasonable prices
Setting delivery dates
Renegotiating contract terms when conditions change
Purchase Order
FOB origin (free on boards- once it has left the place of origine the buyer is responsible for any problems)
FOB destination
(where its going- unless the reach destination the supplier has responsibility
