Product Receiving, Storing, and Issuing Chapter 4 Product Receiving, Storing, and Issuing

Learning Objectives After completing this chapter, you should be able to: • Explain each of the steps in an effective product receiving process. • State procedures for maintaining product quality, reducing the possibility of stock outs, and controlling costs during storage. • Describe procedures for controlling product costs when products are issued from storage to production areas. • Explain ways that technology can assist with receiving, storing, and issuing tasks.

Product Receiving Procedures Getting Ready for Receiving Receiving Staff Receiving Area Receiving Equipment

Steps in Product Receiving Compare Delivery Invoice and Purchase Order Confirm Product Quality Sign Delivery Invoice Complete Receiving Report

Special Receiving Concerns Ensuring Quality Ensuring Food Safety Implementing Security Concerns Managing Credit Memos

Resolving Receiving Challenges

Product Storage Procedures Storage Overview

Storage and Inventory Basics Quality Concerns Storage Locations Record-Keeping Requirements

Managers Math Answer the Questions: 1. 2.

Costs of Goods Sold

Security Concerns during Storage

Product Issuing Procedures Importance of Effective Issuing Steps in Product Issuing

Technology and Receiving, Storing, and Issuing

1. Explain each of the steps in an effective product receiving process. Effective receiving requires staff who are properly trained to perform receiving tasks. They must know how to recognize proper quality and complete required delivery documents. The receiving area must be well planned and located, if possible, close to where deliveries will be made. Adequate space is needed to check incoming products. Tools and equipment such as pocket thermometers, a platform scale, and transport equipment are also needed. Steps in product receiving include comparing the delivery invoice and purchase order, confirming product quality including checking temperature, signing the delivery invoice, and moving products to storage. A final step involves completion of the receiving report.

If products do not meet standards, a credit memo should be issued. 1. Explain each of the steps in an effective product receiving process continued… Receiving staff must use proper food safety practices and must carefully check all incoming products to confirm that the operation receives all of the products it is paying for. If products do not meet standards, a credit memo should be issued.

2. State procedures for maintaining product quality, reducing the possibility of stock outs, and controlling costs during storage. Dry, refrigerated, and frozen storage areas must be maintained at the proper temperatures. Cleanliness is important, and several food safety practices must be implemented to help maintain product quality during storage. Storage locations and capacities often relate to production volumes and are affected by the frequency of deliveries. Effective managers routinely calculate inventory turnover rates and determine the costs of products in inventory. Then they can calculate the monthly cost of goods sold (food or beverage cost) for comparison with the operating budget and completion of the income statement.

2. State procedures for maintaining product quality, reducing the possibility of stock outs, and controlling costs during storage continued… Managers should control products during storage as they would control money in a bank vault. Storage areas must be physically secure, and a perpetual inventory system that tracks the quantities of expensive and theft-prone items is important.

3. Describe procedures for controlling product costs when products are issued from storage to production areas. Effective issuing helps ensure that products removed from storage generate the expected amount of revenue. Most operations do not have full-time storeroom staff. Instead, they develop practical issuing systems that closely control the most expensive items. Issue requisitions are used to access perpetual inventory products that are kept under lock. Employees may then have access to other products without an issue requisition. Nonemployees should never have access.

4. Explain ways that technology can assist with receiving, storing, and issuing tasks. Technology eliminates much of the paperwork involved in processing information related to receiving, storing, and issuing. Incoming products can be checked against electronic purchase orders without the need to print copies. Bar code systems allow product quantity and cost information to be automatically issued into and removed from the property’s inventory management system. Electronic versions of purchase specifications, delivery schedules, and communication among employees involved with purchasing enable the process to flow smoothly. Technology may be increasingly helpful even to properties of relatively small production volumes.

Key Terms: Backorder An order that a vendor cannot fill or ship immediately. Broken case storage An area used to store opened purchase units of products that have been issued. Cost of goods sold (COGS) The cost to purchase the products that generate the food or beverage revenue. Credit memo A document used by accounting staff to adjust information about product quantities and A document used by accounting staff to adjust information about product quantities and costs included on a delivery invoice to ensure that the operation pays only for the actual products that are acceptable and have been received. First in, first out (FIFO) An inventory system in which products that have been in storage the longest are the first issued. Income statement A document that summarizes the operation’s profitability for an accounting period.

Key Terms continued: Inventory turnover rate The number of times in each accounting period (usually a month) that the quantity of food or beverages in inventory must be purchased to generate the food or beverage revenue for the accounting period. Issue requisition A document that authorizes an employee to remove products from storage areas. Marking (product) Writing the date of receipt and the purchase unit price on the incoming product. Operating budget A financial plan that estimates revenues and expenses for a specific time period. Package inspection program (employee) A policy that discourages employees from bringing backpacks, shopping bags, and other large packages to work and indicates that packages may be inspected when the employees leave work.

Key Terms continued: Receiving report A report used in operations that calculates food costs on a daily basis. The report separates delivery invoice information used for daily food costing. Reduced oxygen packaged (ROP) Food contained in a package in which oxygen (a) has been removed, (b) has been displaced with another gas or combination of gases, or (c) something else has been done to reduce the oxygen content to a level below that which is normally found in air. Slack-out seafood Seafood that was frozen and then thawed to appear fresh so it could be sold at a higher price. Transfer An adjustment to cost of goods sold that increases or decreases food or beverage expense to match product costs with the revenue generated by the product’s sale. Workflow The movement of products through work stations.

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