purchasing Flashcards
what is purchasing?
purchasing or procurement
the process of securing
- the right product into a facility
- at the right time
- in a form that meets pre-established sandards for quantity, quality, and price
what is purchasing?
purchasing or procurement
the process of securing
- the right product into a facility
- at the right time
- in a form that meets pre-established sandards for quantity, quality, and price
the process of purchasing varies among…
operations, depending on whether a formal, informal or combination of approaches is used.
8 steps in food purchasing
- identify needs
- determine quality standards and write specifications (what grade, quality, how much)
- estimate quanitities needed
- calculate inventory levels (what we have on hand)
- indentify amount to purchase (subtract existing stock levels)
- develop purchase orders
- research potential vendors and product availability
- select and negotiate with vendors
define the market
the medium through which a range of ownership occurs
define commodities
raw agricultural products used to produce food
wheat instead of the cost of bread and pasta and cereal
what is the primary market?
the basic source of food supply including growing regions and processing plants
define the food system
growing
harvesting
processing
producing
manufacturing
packaging
marketing
distributing
selling
serving
consuming
define the marketing channel
the food processing and distribtution system, beginning with the grower of raw food products and ending at the final consumption
what are brokers in food service
sales representative for a manufactureer or group of manufacturers
ex. ADL may have sales rep who goes to institutions or loblaws or hospital to negotiate to get their products into stores
what is a manufactureers representative?
sales rep for a single manufacturer
market regulation
- important for consumer protection (food, safety, wholesomeness, quality)
- evaluation of food production systems for…
(disease, microbes, chemical/physical hazards, allergens, filth)
what is the role of health canada?
to develop food safety and nutrition standards and policies,
- assess food safety risks
- food and drug act and regulations
health canada establishes our standards with the candian food inspection agency who enforces regulations
what is the role of the canadian food inspection agency
verify that industry is meeting federal food safety and regulatory requirements, and sets standards to detect and prevent risks to canadas food supply
what is the role of public health agency of canada?
conduct food-related illness surveillance and outbreak investiagtions, and provide advice on how to protect themselves during an outbreak
market regulation - food safety
who inspects?
provincial department of health and wellness:
- public health inspectors
- inspection of food service facilities
- inspection of processors not falling under CFIA
market regulation - quality
packaging and lebelling regulations
dairy product regulation
processed products regulations
what is the buyer responsible for?
purchasing food, supplies and equipment
- communicate and negotiate with market representatives
- need extensive knowledge and understanding of legal requirements especially as they relate to orders and contracts
good buyers evaluate products and make decisions based on:
objective assessment of the product price and quality and services provided by the supplier
define negotiation
what it is and what there needs to be a clear understanding of
the communication skills used by individuals to confer with each other to reach an agreement
- professional working relationship with vendor
clear understanding of:
- product needed (quality, quantity, operational context)
- where and how its used
products should be evaluated objectively, and buying decisions made on the basis of __,__ & __
quality, price and service
ethics in purchasing
deal successfully with sales reps, brokers and marketers
competitive bidding
avoid compromising a professional relationship
hoping for a long term relationship with vendors
what is collusion?
secret management of products or services for fraud like purposes
centralized purchasing
pros and cons
One department within the organization assumes main responsibility for purchasing.
Pros:
- relieves responsibility for interviewing reps, negotiating & placing orders
- saves time and money
Cons:
- friction can develop between purchasing department and food service unit if there is not a clear understanding of decision making authority.
group or cooperative buying
pros and cons
An organization that represents member organizations and oversees their purchasing function
Pros:
- cost saving for organization rather than the individual units
- may attract more vendors
Cons:
- not much negotiating leverage
what is a vendor
a seller, a source of supply
broadline vs specialty vendors
broadline vendor: large inventory
specialty vendor: limited product line
what are the 2 methods of purchasing
Informal or open market buying:
- common in smaller food service operations
involves ordering needed food and supplies from a selected list of vendors based on daily, weekly, or monthly price quotation.
formal competitive bid buying:
- written specifications and estimated quantities needed are submitted to vendors with an invitiation for them to quote prices.
formal competitive buying pros and cons
Pros:
- good for large food services or multiple unit organizations
- minimizes possibility of misunderstandings
- used mainly for non-perishables (less price fluctuation)
Cons:
- time consuming
- open to manipulation
- planning requests must be made well in advance
methods of purchasing - variations
Cost-plus purchasing, prime vending, blanket purchase agreement (bpa)
- bids for periods of time with flexible market pricing
- firm fixed price (FFP)
- purchase bulk and draw down on contracted amount over time
- cost-plus purchasing (vendors cost pluss)
- prime vending (formal agreement with single vendor)
- blanket purchase agreement (BPA) (charge account; use for multiple vendors
- just in time (purchase for production run, delivered JIT)
a contract should be awarded to:
the bidder offering good price, quality and service
major factors to consider in purchasing market forms of food
cost involved in purchase of and use of fresh or natural forms vs ready to eat foods
quality
equipment
labour
time
inventory
total cost
level of quality purchase should match the _ _
intended use
what are the canada grade standards for beef, eggs and poultry?
beef: 13 grades; based on animal age and marbling
eggs: A,B,C cleanliness, freshness
poultry: canada grade A, Canada utility grade, Canada C grade
how to identify purchasing needs
food need identified from MENU and recipes
-request to purchase requisition triggers the purchasing process
inventory stock levels:
- complete detailed list of goods in stock (computerized)
- set levels (minimum and maximum) set
- is order quantity feasible in the budget?
mini-max and PAR stock
inventory management
mini: the point below which the inventory should not fall
Max: min plus estimated usage and typical ordering frequency
PAR stock: stock brough up to a specified level each time an order is made, regardless of inventory
quantity to buy and frequency of ordering depends on:
money, storage space, method of buying and frequency of deliveries
perishability of the food
what is product specification and would does it include?
a detailed description of a product stated in terms clearly understood by the vendor and buyer and should always include:
- name of the product
- federal grade or brand
- unit on which price was quoted
- name and size of the container
- count per container or approximate number per pound
award contract: conditions
- services to be rendered
- dates and method of deliveries
- inspection requests
- grade certificates required
- procedures for payment
- procedures for substitution
terms of the sale free on board (FOB)
specifies buyer or seller as paying or bearing freight charges, ownership during transit and filing claims for damage
FOB origin - freight collect
buyer at all stages
FOB origin - freight prepaid
seller bares freight charges, buyer owns during transhit and files claims
FOB destination
seller at all stages
what is a purchase order (P.O.) and what are its key elements
written request to a vendor to sell goods to the facility
quantity of each item needed for the period
quality specifications
required date of delivery
evaluating bids
public purchasing laws
bids stay sealed until end date
late bids returned unopened
supervised opening of bid
laws specify that the award be made to the lowest responsible bidder
- factors of integrity, reputation, capacity to fulfill contract, previous experiences with bidder, sample evaluation
inventory file
data base
info on all food items on the menu and other items
coded with category, storage location, special use or other info
census file
info on how much each item is used
(menu items, frequency of use)
- enables forecasting
recipe file
all standardized recipes; computer adjust recipes for amounts and convert into purchasing units
