CHRM 2480

1
WELCOME

• CHRM 2480
• Inventory Purchasing

2
Agenda

• Ground Rules
• Warm Up Activity
• Syllabus Review
• Purchasing Website
• NRAEF ManageFirst Program
• Chapter One Introduction to Inventory
  Purchasing

3
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

4
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

5
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

6
Syllabus Review

• Course Information
• Course Assessment
• Schedule of Assignments
• Projects (Individual Group)
• Attendance Sheets
• Website
• http//resource.mccneb.edu/ICA/CHRM2480

7
NRAEF ManageFirst Program Competency GuideIS
REQUIRED FOR THIS COURSE
How can this book help me?

• Part of a certificate program
• Industry-driven
• Resume builder

Institute for the Culinary Arts Metropolitan
Community College
8
NRAEF ManageFirst Program Competency GuideIS
REQUIRED FOR THIS COURSE
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

Institute for the Culinary Arts Metropolitan
Community College
9
NRAEF ManageFirst Program Competency GuideIS
REQUIRED FOR THIS COURSE
Competency Guide Content

• Management-focused
• Application-based, not just theory
• Professional Profiles give you a sneak peek
  into the field
• Real world activities help build job skills

Institute for the Culinary Arts Metropolitan
Community College
10
NRAEF ManageFirst Program Competency GuideIS
REQUIRED FOR THIS COURSE
How will this certificate help me?

• Validated by over 200 restaurant, foodservice
  and hospitality organizations
• Resume builder
• Tangible accomplishment
• Can give you a hiring advantage over peers who
  didnt use ManageFirst

Institute for the Culinary Arts Metropolitan
Community College
11

• 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

12

• MCC ICA
• NRAEF ManageFirst Core Credential Topics
• CHRM 2475 Leadership Hospitality Restaurant
  Management
• CHRM 2460 Cost Management Controlling
  Foodservice Costs
• CHRM 2470 Supervision Human Resources Management
  Supervision
• CHRM 1020 Sanitation ServSafe Food Safety
• NRAEF ManageFirst Foundation Topics
• CHRM 2480 Purchasing Inventory and Purchasing
• CHRM 1140 Food Production Food Production
• CHRM 2350 Nutrition Nutition

13
Lets Take a Break

• Please be back in 10 minutes

14
Introduction to Inventory and Purchasing
1

• Inventory and Purchasing

OH 1-14
15
Chapter Learning Objectives

• Define purchasing, procurement, and product
  selection.
• Outline the objectives in the purchasing
  function.
• Describe the importance of maintaining an
  operations competitive position.
• List the types of goods and services that might
  be purchased by a foodservice organization.

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.

17
Franchise vs. Independent

• Franchise a business purchased from a company
  along with the right to use that companys name,
  logo and products.
• Provides for purchasing through franchisors
  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

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

19
Goals of the Purchasing Function
Maintain adequate supply.
Maintain quality standards.
Minimize investment.
Maintain an operations competitive position.
Obtain the lowest possible edible portion (EP) or as served (AS) price.
20
Purchasing Impacts

• The availability of items for sale
• Too few items means product outages
• Too many items means spoilage, waste, and theft

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.

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.

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

24
Maintain Quality Standards

• Foodservice managers maintain quality by
• Following the operations specifications (specs)
  on each menu item or ingredient purchased
• Clearly communicating these standards to current
  and potential vendors

25
Maintain Quality Standards continued

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

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.

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.

28
Maintain an Operations 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

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

30
Comparison of AP and EP (AS) Methods
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

32
What to Buy
Foodservice managers buy many items including

• Food items
• Alcoholic beverages
• Nonalcoholic beverages
• Nonfood items

• Furniture, fixtures, and equipment (FFE)
• Business supplies and services
• Support services
• Maintenance services
• Utilities

33
Buying Food Items

• Meat
• Poultry
• Eggs
• Processed foods

• Fish
• Dairy
• Produce
• Dry and canned goods

34
Buying Alcoholic Beverages

• Spirits
• Beer
• Wine

35
Buying Nonalcoholic Beverages

• Soda
• Coffee
• Tea
• Juice
• Bottled water

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

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

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

39
Buying Support Services

• Linen and uniform rental
• Waste removal
• Flower services

• Music services
• Pest control
• Parking and valet services

40
Buying Maintenance Services

• Cleaning services
• Plumbing repair
• HVAC repair
• Groundskeeping
• Painting

• Carpentry
• Equipment maintenance
• Equipment repair
• Equipment replacement

41
Buying Utilities

• Gas
• Oil heating
• Electricity
• Water

• Sewage services
• Telephones
• Internet access

42
How Would You Answer the Following Questions?

• A (popularity/frequency) index can be used to
  help estimate how many of a specific menu item
  are likely to be sold.
• Which of the following is not a goal of the
  purchasing function
• Obtain the lowest possible EP price.
• Maintain adequate supply.
• Maximize investment.
• Maintain quality standards
• A goal of a quality purchasing program is that of
  maintaining an operations __________ advantage.
• The cost of most AP food products is higher than
  their AS cost. (True/False)

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

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

45
Key Term Review continued

• Edible portion (EP) price
• Franchise
• Popularity index
• Procurement

• Product selection
• Profit
• Purchasing
• Vendor

46
Next Week

• Read Chapter Two
• Recipes Due
• 5 total recipes
• Units of Measure Worksheet
• Group Presentation work