CONTROL & ORDER STOCK

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CONTROL & ORDER STOCK
sriram.ramanathan@tafensw.edu.au
By the end of this task you should be able
to:
1. monitor stock performance and
identify fast and slow-selling items
2. understand centralised purchasing
3. obtain competitive prices from
suppliers
4. maintain the quality of the supplies
order stock for a variety of departments
Chef: Hi, I need a bottle of Orange Liqueur immediately.
Purchasing officer: OK, but you haven't sent me any paperwork.
What's happening?
Chef: I don't have time for the paperwork, I've got a special on Crepe
Suzettes this week and I've got a rush on.
Purchasing officer: I need to know why you didn't order it with the
stock yesterday.
Chef: I didn't know I'd need it then. But last night the crepes were very
popular and I used all my stock. I need another bottle now before these
customers start going elsewhere.
Purchasing officer: Is this special going to be a regular item on the
menu? Do we need to adjust the stock order in future to take account
of it?
Chef: Yes, it's been so popular, I'll probably run it on the menu regularly.
Can we meet and discuss this later?
Chef: Hi, I need a bottle of Orange Liqueur immediately.
Purchasing officer: OK, but you haven't sent me any paperwork.
What's happening?
Chef: I don't have time for the paperwork, I've got a special on Crepe
Suzettes this week and I've got a rush on.
Purchasing officer: I need to know why you didn't order it with the
stock yesterday.
Chef: I didn't know I'd need it then. But last night the crepes were very
popular and I used all my stock. I need another bottle now before these
customers start going elsewhere.
Purchasing officer: Is this special going to be a regular item on the
menu? Do we need to adjust the stock order in future to take account
of it?
Chef: Yes, it's been so popular, I'll probably run it on the menu regularly.
Can we meet and discuss this later?
Sources of supply
The availability of sources of supply will vary considerable from place to
place.
Major cities, for example, usually have a large number of suppliers offering a
wide range of goods. Isolated areas, on the other hand, would not have such
a variety of suppliers to choose from and might be restricted to what is
available.
Food service operators look to suppliers in the following general
categories:
wholesalers - someone who buys large quantities of goods and resells to
merchants/retailers rather than to the ultimate customers
local producers
manufacturers eg Kellogs
packers – eg Vizy Packaging,
local farmers
retailers – Woolworths, Coles etc
co-operative associations. Eg IGA, Dairy Farmers etc
Sources of supply
In most cases a restaurant operator will deal with several of these suppliers
to obtain the food necessary at the appropriate quality and the lowest
price.
For example, the restaurant might buy dairy and bakery products from local
producers, canned meats from a packer, fresh meats from a wholesaler,
canned fruit and vegetables from a different wholesaler and eggs from a
local farmer.
In recent years there has been a trend for wholesalers to diversify or
expand their product lines to better meet the needs of their restaurant
customers. Some wholesalers can now supply virtually all of the foodrelated needs of a restaurant.
How to obtain competitive prices while maintaining quality
To ensure that purchases are made at the lowest favourable price, the
purchasing officer must obtain quotes from several competing suppliers for
each commodity they intend to buy. The procedures differ for perishable
and non-perishable items.
The prices for perishables often fluctuate or change on a daily basis. The
purchasing officer should telephone several different suppliers of the same
item to find out current prices each time an order is to be placed. It's a
good idea to get prices from at least three separate suppliers.
How to obtain competitive prices while maintaining quality
Assuming that copies of the relevant purchase specification forms have
been sent to the supplier, the purchasing officer knows that each supplier is
quoting for items of the same quality. The quotations can be entered on a
Quotation list including the name of the supplier, the item and the price
they quote.
The purchasing officer will call the supplier to place the order (usually the
lowest bidder) and circle the relevant price quotation on the Quotation list.
In this way the purchasing officer has a complete record of the items
ordered, the prices, quantities and suppliers.
In reality, you might need to consider other factors beyond the purchase
price including:
different delivery times from supplier to supplier
the manager's possible preference for one supplier over another
the reliability of the supplier in sending food that meets the
specifications.
Inventory (stock) control
Inventory
Inventory describes the stock on hand to operate the business. Inventory
figures may vary according to the methods used in managing and controlling
stock. For example:
Are bulky items guesstimated or weighed? Examples
Does stock use depict averages used or accurate stock takes taken?
Is the first-in-first-out method used – What is this?
Inventory (stock) control
Inventory is an expensive asset which you can control with accurate
reporting. When the information generated is timely, accurate, reliable and
consistent, you can:
1. work out how much your stock is worth for accounting
purposes
2. carry less inventory and reduce your costs
3. show food and beverage usage
4. track slow-moving items
5. know how much stock is on hand at any time so that you can
maintain the correct par levels
6. decide when to order stock and how much to order
7. exercise greater control over theft and other undesirable
fluctuations in stock
8. establish an efficient stock control system.
There are two basic inventory record keeping systems - physical and
perpetual.
Physical inventory
A physical inventory system periodically assesses the value of the stock in
hand. This is usually done on a monthly basis as part of developing the
business accounts. It can be done more regularly if any problems are
identified.
Perpetual inventory
A perpetual inventory system keeps a running balance of the quantities of
each individual item in stock. It operates like a bank account - when more
items are received in stores the balance is increased, when items are
removed the balance is decreased. This means that, at any time, the amount
of individual items in stock is known.
As a general rule, most establishments use a combination of both physical
and perpetual inventory. When the physical count of any product is different
from the perpetual record (book balance), the variations can be investigated
and controlled.
Minimising stock losses
Security concerns during the purchase phase
There are three main areas where financial loss can occur during
purchasing.
Collusion is where the employee placing the order works with an
employee of the supplier to defraud or cheat the purchasing company.
Products are purchased at a higher price than normal and the two
employees pocket the difference. The abnormally high food/beverage cost
usually gives it away that collusion is happening.
Non-existent companies when the employee placing the order pretends
to buy goods from a fictitious company. Cheques being sent to a post office
box can give this away.
Processing theft where a supplier may request payment for an invoice
more than once. The purchasing officer may not pick this up and approve
the additional payment.
Minimising stock losses
Ethics in the purchasing phase
An organisation should establish, and monitor, policies to ensure that all
purchasing staff know what is/is not acceptable practice when purchasing
stock.
Policies might cover:
the acceptance of gifts from suppliers
favouritism towards specific suppliers
reciprocal purchases
personal shopping
Minimising stock losses
How to combat supplier theft
You can avoid excessive food costs and prevent unethical behaviour by:
1. ensuring that different people carry out the purchasing and receiving
functions
2. training the receiving personnel in correct procedures
3. scheduling deliveries in slow times so that receiving procedures aren't
rushed
4. having deliveries made in only one area, and having the appropriate
equipment at hand
5. moving items directly to their correct storage areas as soon as they've
been delivered
6. not allowing unauthorised personnel in the storage or receiving areas
7. installing security cameras to monitor specific areas of concern (if
possible).
Ordering equipment
Equipment includes everything (that is not food, beverage or linen) that
allows the hospitality industry to operate.
You may be surprised at some of the consumables which have to be
maintained at par stock levels based on past losses.
Teaspoons, for example, can be very difficult to locate and count in a hotel
situation. They might be found in a guest's room, the coffee shop, the staff
lunch room, administration offices, restaurants, bars, kitchens, even a
customer's handbag, the maintenance man's toolbag and the
rubbish bin.
In fact, up to 40% of a hotel's teaspoons can disappear within a stocktake
period. Other consumables can include glassware, cutlery and crockery.
Some equipment lends itself nicely to the Just In Time (JIT) system - the
only conditions being that equipment must be available when needed and in
sufficient quantity to meet maximum anticipated usage.
Ordering equipment
This equipment can include:
chairs
tables
uniforms
audio visual equipment
stoves
pots and pans
cots and rollaways.
All this equipment can be stored wherever there is space available
Ordering quality stock for a restaurant
If a restaurant is to produce products of consistent quality,
it must use raw materials that are of consistent quality.
It is important that purchasing , in co-operation with other members of the
management team:
1. draws up a list of all food items to be purchased
2. lists in appropriate detail the specific and distinctive characteristics that
best describe the desired quality of each food item.
These carefully written descriptions are known as standard purchase
specifications. The specifications are often based on grading standards
established.
Many knowledgeable individuals write specifications that are far more
precise and, consequently, more useful when telling suppliers the exact
quality desired.
Once standard purchase specifications have been written and agreed upon
by the management team, they are often duplicated and distributed to
potential suppliers to make sure that each supplier understands the exact
requirements of the restaurant.
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