procurement2 Flashcards
methods of purchasing
informal/open market, formal competitive bid
what is informal/open market?
involves ordering needed food and supplies from selected list of vendors on daily, weekly, biweekly, or monthly price quotations
informal used when ___ is an important factor
time
informal is common in ___
smaller restaurants, private institutions, commercial ops
informal usually done under these circumstances:
amount of purchase small, an item only can be from a couple sources, need is urgent, stability of market uncertain, size of op too small
what is formal competitive bid buying?
buyer selects group of suppliers, written specs and estimated quantities needed are submitted to suppliers with invitation for them to quote prices, suppliers compete over price quotations on buyers specs, buyer decides, formal contract
formal need to consider ___
legal considerations
formal common in:
school sys, correctional institutions, hospitals (tax-supported places)
advantages of formal?
reduce misunderstanding due to quality, price, delivery; cost savings by buying bulk, good for standing orders (pay at regular intervals)
disadvantages of formal?
time consuming, not practical for perishable items cuz day to day fluctuation in market price, dishonesty when involve large amt money
what is line item bidding?
choose suppliers with lowest price item by item
what is all or nothing bidding?
whole line of items, choose supplier with lowest price on all
what are diff buying methods?
independent purchasing, group purchasing, centralized purchasing, warehouse club, JIT
what is independent purchasing?
done by unit or department of org that has been authorized to purchase
advantage of independent?
sole responsibility and authority for purchase without need for multi org lvls approval
what is centralized?
purchasing activity done by one person or department (head of dpt report directly to top mngmt, has responsibility make profit)
examples of centralized?
stores/procurement dpt in hospital; stores/supplies in uni
advantages centralized?
better control, development of personnel just responsible for purchasing, better performance in other dpt without additional need to procure, more economical/profit
what is grp purchasing?
2+ independent orgs combine to buy together, involving bring together foodservice managers from diff ops/schools, most often onsite foodservices, for joint purchase
example group purchase?
sakatoon health region long term care
advantages group?
increased leverage, buy at lower price, reduced contact with sales reps, time savings, update specifications
disadvantages group?
may require central warehouse unless grp large enough, must agree specs/bid schedule, food preferences differ
goals of JIT?
secure steady flow raw materials, reduce lead time required ordering product, reduce amt inventory in storage/production, reduce cost associated w/ storage
what are stages of supplier selection and evaluation?
survey–>inquiry–>supplier performance evaluation
what is survey stage?
explore all possible sources for product, examine records of experience with suppliers (consider incorrect orders, handles emergency)
what is inquiry stage?
compare suppliers for quality, quantity, price, time; narrow list from possible to acceptable
what is supplier performance evaluation?
meeting performance standards? New ones considered for future?
