Purchasing Notes

Purchasing Department

• Part of back-of-house operations but performs a managerial function.

• Efficient purchasing can lead to profitable operations in hospitality.

Purchasing Process

• Receive Request for Quotation (RFQ).

• Request quotations from sellers.

• Compare price, quality, and payment terms.

• Place orders.

• Receive and check merchandise quality and quantity.

• Check receipts and shipping invoices.

• Maintain purchase records.

• Suggest improvements or new products.

Procurement

• Orderly exchange between buyer and seller.

• Includes determining needs, purchasing, receiving, storing, and contract administration.

• Involves purchase planning, standards determination, supplier selection, value analysis, financing, price negotiation, and inventory control.

• A company's ability to purchase materials affects operations and survival.

Purchasing vs. Procurement

• Purchasing: focuses on receiving purchase requisitions, evaluating RFQs, creating supplier lists and purchase orders, performing quality checks, negotiating contracts, processing payments, and ensuring product/service receipt.

• Procurement: Includes identifying a need, researching and sourcing suppliers, building supplier relationships, and analyzing KPIs and margins, evaluate supplier quotes and QA of product / service.

Purchasing Terminology

• Purchasing: Obtaining goods or services for money.

• Merchant Buyers: Purchase for resale.

• Industrial Buyers: Purchase for conversion or supplies.

• Selection: Choosing between alternatives.

• e-Commerce: Online transactions.

• B2B e-Commerce: Online interaction between businesses.

• e-Procurement: Ordering online.

Purchasing Function in Hospitality

• Small Independent: Owner-manager handles purchasing.

• Medium Independent: Multiple people involved, coordinated by one person.

• Large Independent: Employs a full-time buyer (e.g., executive steward, food and beverage buyer).

Multi-Units and Franchises

• Commissary: Processes raw foods into finished products.

• Central Distribution Warehouse: Orders, stocks, and delivers merchandise to affiliated units.

Technology Applications in Puchasing

• Distributor Technologies:

  • Customer databases (CRM).

  • Ordering systems: tracks inventory, prices, and order status.

  • Global positioning systems (GPS).

  • Radio frequency identification (RFID):
    Tag \or
    $Transponder$
    $Antenna$
    $Reader \ or$
    $Interrogator$
    $Computer$

• Buyer Technologies:

  • Fax machine

  • Personal computers.

  • Point-of-sale systems (POS): tracks employee activity, revenue, and menu items.

  • Bar code reader.

  • Product identification and specification tools.

  • Product ordering & Inventory-tracking & storage management