WELCOME

CHRM 2480

Inventory & Purchasing

Agenda

• Ground Rules

• Warm Up Activity

• Syllabus Review

• Purchasing Website

• NRAEF ManageFirst Program

• Chapter One – Introduction to Inventory & Purchasing

Ground Rules

• Be on time – start on time

• All cell phones, pagers and IPods should be turned off during class

• No Internet use during class, unless part of classroom activity

• Appreciate other points of view

• Respect others’ desire to learn

• End on time

Information Card

• Please fill out the following information on the index card– Side ONE

• Name

• Phone

• Email Address

– Side TWO• Business affiliation & current position

• Hospitality industry background

Warm Up Activity

• Break into pairs

• Interview each other – 2-3 minutes each person– Name, Occupation, Why are you taking

Purchasing Class, etc……

• Introduce each other to the group

Syllabus Review• Course Information

• Course Assessment

• Schedule of Assignments

• Projects (Individual & Group)

• Attendance Sheets

• Website• http://resource.mccneb.edu/ICA/CHRM2480

NRAEF ManageFirst Program Competency Guide

IS REQUIRED FOR THIS COURSE

How can this book help me?

Institute for the Culinary Arts – Metropolitan Community College

Part of a certificate program

Industry-driven

Resume builder

Institute for the Culinary Arts – Metropolitan Community College

Who is the NRAEF?

Educational arm of the National Restaurant Association

Bridge between academia and industry

Work with over 60,000 restaurant, hospitality and foodservice members companies

NRAEF ManageFirst Program Competency Guide

IS REQUIRED FOR THIS COURSE

Management-focused

Application-based, not just theory

Professional Profiles give you a “sneak peek” into the field

“Real world” activities help build job skills

Competency Guide Content

Institute for the Culinary Arts – Metropolitan Community College

NRAEF ManageFirst Program Competency Guide

IS REQUIRED FOR THIS COURSE

Validated by over 200 restaurant, foodservice and hospitality organizations

Resume builder

Tangible accomplishment

Can give you a hiring advantage over peers who didn’t use ManageFirst

How will this certificate help me?

Institute for the Culinary Arts – Metropolitan Community College

NRAEF ManageFirst Program Competency Guide

IS REQUIRED FOR THIS COURSE

ManageFirst ProfessionalTM (MFP®) Credential The MFP credential recognizes students as having the academic and practical knowledge they need to succeed in the restaurant, foodservice, and hospitality industry. To earn the MFP credential, students must:

•Pass four Core Credential exams and one Foundation/Elective exam •Provide documentation for 800 hours of industry work experience

MCC & ICA

NRAEF ManageFirst Core Credential TopicsCHRM 2475 Leadership: Hospitality & Restaurant ManagementCHRM 2460 Cost Management: Controlling Foodservice CostsCHRM 2470 Supervision: Human Resources Management & SupervisionCHRM 1020 Sanitation: ServSafe Food SafetyNRAEF ManageFirst Foundation TopicsCHRM 2480 Purchasing: Inventory and PurchasingCHRM 1140 Food Production: Food ProductionCHRM 2350 Nutrition: Nutition

Let’s Take a Break

Please be back in 10 minutes

OH 1-14

Introduction to Inventory and Purchasing

Inventory and Purchasing

1OH 1-14

OH 1-15

Chapter Learning Objectives

Define purchasing, procurement, and product selection.

Outline the objectives in the purchasing function.

Describe the importance of maintaining an operation’s competitive position.

List the types of goods and services that might be purchased by a foodservice organization.

OH 1-16

Purchasing vs. Procurement

Purchasing – to obtain products and services of a desired quality at a desired price.

Procurement – the entire process by which products and services are selected based on quality and cost, to include: what products and services are needed, the quality specifications, when the items will be needed, from which vendors you will purchase, managing the contracts, as well as establishing all the purchasing, receiving storing and issuing policies.

OH 1-17

Franchise vs. Independent

Franchise – a business purchased from a company along with the right to use that company’s name, logo and products. Provides for purchasing through franchisor’s central

commissary

Independent – stand alone operation Cooperative buying or co-op buying occurs when

independent operators combine their purchasing power to cooperatively purchase all goods and services as a collective group in order to get lower pricing

OH 1-18

Economies of Scale

Franchise owners may purchase either through their commissaries or through approved vendors

Independent owners may purchase through a co-op or independently

Profit is earned after all operating expenses have been paid by either operation

OH 1-19

Goals of the Purchasing Function

1. Maintain adequate supply.

2. Maintain quality standards.

3. Minimize investment.

4. Maintain an operation’s competitive position.

5. Obtain the lowest possible edible portion (EP) or as served (AS) price.

OH 1-20

Purchasing Impacts

The availability of items for sale:

Too few items means product outages

Too many items means spoilage, waste, and theft

OH 1-21

Maintain Adequate Supply

Utilize customer count histories.

Sources of data include: The point-of-sale (POS) system

Guest checks

Physical counts

Count customers by day part.

OH 1-22

Maintain Adequate Supply continued

Monitor popularity index of items sold.

The popularity index measures the popularity of a specific menu item in relation to other items in its category.

The popularity index also measures the popularity of one menu category relative to other categories.

OH 1-23

Maintain Adequate Supply continued

Additional areas of concern include:

Vendor delivery schedules

Availability of items from vendors

External factors that can influence item sales

OH 1-24

Maintain Quality Standards

Foodservice managers maintain quality by:

Following the operation’s specifications (specs) on each menu item or ingredient purchased

Clearly communicating these standards to current and potential vendors

OH 1-25

Maintain Quality Standards continued

Customers expect the same quality product each time they visit their favorite foodservice operations.

OH 1-26

Minimize Investment

Tying up excessive dollars in inventory can damage a foodservice operation by restricting the amount of cash available for bill payment.

Ideal inventory levels are directly related to cash availability and to storage capability.

OH 1-27

Minimize Investment continued

In most cases, prices increase rather than decrease. As a result, effective foodservice managers: Minimize investment by purchasing the maximum

amount of quality product available at the minimum price possible.

Negotiate reduced prices for large quantity purchases.

OH 1-28

Maintain an Operation’s Competitive Advantage

Shop around for best pricing

Choose vendors who: Deliver frequently

Deliver at convenient hours

Can deliver in an emergency outage situation

Provide flexible payment options

Deliver consistent quality

OH 1-29

Obtain the Lowest Possible EP or AS Price

EP = Edible portion price

AS = As served price EP and AS refer to the price of an item after all trim

and waste has been taken into account. Example: peeled, cubed potatoes

AP= As purchased price AP refers to the price of an item before any trim or

waste are considered. Example: unpeeled, whole potatoes

OH 1-30

Comparison of AP and EP (AS) Methods

OH 1-31

Mismanaging the Purchase Function

Leads to product outages

Results in lost sales

Alienates customers

Ties up excessive amounts of cash

Increases operating (food and beverage) costs

OH 1-32

What to Buy

Food items

Alcoholic beverages

Nonalcoholic beverages

Nonfood items

Furniture, fixtures, and equipment (FF&E)

Business supplies and services

Support services

Maintenance services

Utilities

Foodservice managers buy many items including:

OH 1-33

Buying Food Items

Meat

Poultry

Eggs

Processed foods

Fish

Dairy

Produce

Dry and canned goods

OH 1-34

Buying Alcoholic Beverages

Spirits

Beer

Wine

OH 1-35

Buying Nonalcoholic Beverages

Soda

Coffee

Tea

Juice

Bottled water

OH 1-36

Buying Nonfood Items

Linens and uniforms

China and glassware

Bar supplies

Paper goods

Cleaning supplies

Menus and beverage lists

Candles

Flowers

Music and entertainment

Kitchen utensils and supplies

OH 1-37

Buying Furniture, Fixtures, and Equipment

Tables, chairs, and barstools

Lighting fixtures

Bars

Cooking equipment

Refrigeration equipment

Plumbing fixtures

Heating, ventilation, air conditioning (HVAC)

Entertainment pieces

OH 1-38

Buying Business Supplies and Services

Office equipment and supplies

Cash registers

POS systems

Computers

Credit card processors

Financial and legal services

Insurance

Marketing and advertising

OH 1-39

Buying Support Services

Linen and uniform rental

Waste removal

Flower services

Music services

Pest control

Parking and valet services

OH 1-40

Buying Maintenance Services

Cleaning services

Plumbing repair

HVAC repair

Groundskeeping

Painting

Carpentry

Equipment maintenance

Equipment repair

Equipment replacement

OH 1-41

Buying Utilities

Gas

Oil heating

Electricity

Water

Sewage services

Telephones

Internet access

OH 1-42

How Would You Answer the Following Questions?

1. A (popularity/frequency) index can be used to help estimate how many of a specific menu item are likely to be sold.

2. Which of the following is not a goal of the purchasing function:

A. Obtain the lowest possible EP price.B. Maintain adequate supply.C. Maximize investment.D. Maintain quality standards

3. A goal of a quality purchasing program is that of maintaining an operation’s __________ advantage.

4. The cost of most AP food products is higher than their AS cost. (True/False)

OH 1-43

Chapter Learning Objectives— What Did You Learn?

Define purchasing, procurement, and product selection.

Outline the objectives in the purchasing function.

Describe the importance of maintaining an operation’s competitive position.

List the types of goods and services that might be purchased by a foodservice organization.

OH 1-44

Key Term Review

As purchased (AP) price

As served (AS) price

Cash position

Competitive advantage

Cooperative or co-op buying

Covers

Customer count history

Economies of scale

OH 1-45

Key Term Review continued

Edible portion (EP) price

Franchise

Popularity index

Procurement

Product selection

Profit

Purchasing

Vendor

OH 1-46

Next Week

Read Chapter Two

Recipes Due 5 total recipes

Units of Measure Worksheet

Group Presentation work