INCLUDES Buying goods and services, preparation and processing of product demand as well as the end receipt and approval of payment. It often involves: 1) purchase planning 2) standards determination 3) specifications development 4) supplier research and selection 5) value analysis 6) financing 7) price negotiation 8) making the purchase, 9) supply contract administration, 10) inventory control and stores, and 11) disposals and other related functions COMPANY STRATEGY  Part of a company’s strategy because the ability to purchase certain materials will determine if operations will continue.  A business will not be able to survive if it's price of procurement is more than the profit it makes on selling the actual product.

 Familiarize & review the procurement terminology glossary  Fill out the crossword puzzle filling in the terms found on the sheet that match. Across: 9 JIT 11 Channel of Distribution 12 Credit Memo Down: 1 Purchase Order 2 Over Production 3 Form Value 4 Par Stock 5 Physical Inventory 6 Sales Mix Records 7 Perpetual Inventory 8 Transportation Value 10 Stockouts

5 BASIC STEPS 1. Determine what an operation wants & needs to buy 2. Identify quality standards 3. Order products and services 4. Receive deliveries 5. Store and issue products.

4 PURPOSES  Maintain the right supply of products and services  Maintain the quality standards of the operation  Minimize the amount of money the operation spends  Stay competitive with similar operations.

3 LAYERS 1. Primary sources 2. Intermediary sources 3. Retailers  Primary = producers: farmers, manufacturers,& distillers.  Intermediary = wholesalers, distributors, & suppliers.  Retailers sell their products directly to the public. Note: All restaurants are considered retailers.

9 MAIN CATEGORIES 1. Food and beverage 2. Nonfood items 3. Small wares & equipment 4. Technology 5. Furniture, fixtures and equipment 6. Business supplies and services 7. Support services 8. Maintenance services 9. Utilities.  Restaurant and foodservice operations need to carefully negotiate what they spend money on in each of these categories, looking closely at both the short-term and long-term costs for each purchase.

Compare Delivery Invoice and Purchase Order Product Quantity (weight or count) Purchase Unit Price Confirm Product Quality Sign Delivery Invoice Issue Credit Memo (if necessary) Move Product to Storage Complete Receiving Report Step 1: Step 2: Step 3: Step 4:

 Perishable products are products sold/distributed in a form that will spoil or decay w/i a limited period of time.  Can be damaged by bacteria, light, or air.  Include meat, fish, poultry, dairy, eggs, produce, and alcoholic beverages.  Purchased more often than nonperishable items.  Should be purchased in a JIT (just in time) format whenever possible.  Nonperishable products are items that, generally due to packaging or processing, do not readily support the growth of pathogens.  Include processed and canned or bottled products and dried goods.  Generally purchased in large quantities and less often than perishable food. Look at Perishable Food Inventory Fruit: vities/TakingInventory.htm vities/TakingInventory.htm Vegetables: vities/TakingInventory.htm

WHAT THEY ACCOMPLISH  Help an operation to create consistency.  Select the best products early on by making a list of quality standards for every product purchased and used at the operation.  Managers and buyers usually work together to create them, along with input from vendors and other employees QUALITY FACTORS  Item's intended use  Operation concept & goals  The menu  Employee skill level  Budgetary constraints  Customers' wants & needs  Seasonal availability  Storage capacity

 Test your knowledge and review what you already know.  Review the storage tip sheet and answer the following questions Pre-Quiz Answers: 1. B 2. D 3. C 4. B 5. A

 A record of all products an operation has in storage and in the kitchen.  Ideally, a foodservice operation will have only the needed amounts of food and nonfood items it needs to meet customer demand.  Having too little inventory means customers don't get what they want. Having too much inventory means food spoils and storage costs go up.  Physical inventory method: the entire stock is physically reviewed on a regular basis. From this review, the operation determines the reorder point for each inventory item.  Perpetual inventory method: is the recording of items when received and again when issued.

#10 Can 1. $ SubTotal: $ Dry bulk goods 1. $ SubTotal: $ Inventory Total: $414.43

Item:Strip Steaks (6 oz.) DateNo. of Purchase UnitsBalance InOut 37 9/10/xx /11/xx352027

 Tracks all good entering & leaving the store room.  Allows you to see the inventory at any given point or time.  The beginning inventory each day is the ending inventory of the previous day.

General = 1) Total on hand – total used = ending inventory Know Exactly = 2) (Beginning Inventory + Purchased) – (Sold + Comped) = Ending Inventory Steaks: Know Exactly Follow Monday: (14+45) – (34+6) = (59) – (40) =19 Thursday: ( )-( 69+5) = (124) –(74) = 50 Friday: ( ) – (85+3) = (160) – (88) = 72

Know Exactly = 2) (Beginning Inventory + Purchased) – (Sold + Comped) = Ending Inventory Saturday: ( ) – (93 + 2) = (187) –(95) = 92 Sunday: ( ) – (36 +5) = (137) – ( 41) =96