CHAPTER 4

The Control Process

Control in the Food and beverage business is defined as the process by which
managers attempt to direct, regulate and restrain the actions of people in order to
achieve desired goals. The Control process consists of four steps:

1. Establish standards and standard procedures for operation.

2. Train all individuals to follow established standards and standards procedures.
3. Monitor performance and compare actual performances with established
standards.
4. Take appropriate action to correct deviations from standards.

Oftentimes, further checking and monitoring reveals that an established standard is

actually unrealistic or inappropriate and if this is the case, then business operator
should consider changing the standard or calibrating it.

CONTROL TECHNIQUES

The control techniques include the following:

1. Establishing standards
2. Establishing procedures
3. Training Personnel
4. Setting examples
5. Observing and correcting employee actions
6. Requiring records and reports
7. Disciplining Employees
8. Preparing and following budgets

COST CONTROL

Two of the principal causes of excessive costs are inefficiency and waste. For
example, storing vegetables in a room temperature may lead to wilt and dry resulting to
wastages. When these vegetables are thrown into the trash can, the cost of food will
increase but sales are not. Clearly, the management must take steps to guard against
such excessive costs, thereby, requires Cost Control. Cost Control is defined as the
process used by managers to regulate costs and guard against excessive costs. It is an
ongoing process and is involved every step in the chain of purchasing, receiving,
storing, issuing and preparing food and beverage for sale.

SELLING INVENTORY ORDERING/PURCHASING

FOOD PREPA STORING HANDLING RECEIVING DELIVERY

 With the knowledge of what is likely to be purchased by our customers (Sales
Forecast) and a firm idea of the ingredients necessary to produce these items
(standardized recipes), the food service operator must take decisions about inventory
levels. The desired inventory levels is simply the answer to the question "I low much of
each needed ingredient should I have on hand at any given time?"

Inventory management seeks to provide appropriate Working Stock, which is

the amount that will be used between deliveries and minimal Safety stock, which is the
extra amount of a food product we will keep on hand. The ability to effectively manage
the inventory process is one of the best skills a food service manager can acquire.

Taking physical inventory requires counting the actual number of units on hand of
each item in stock and recording that number in appropriate place. The purpose of this
process is to provide a list of goods on hand so that the value of the goods maybe
determined and recorded. Physical inventory may be recorded in an inventory logbook
or in some other type of permanent business record.

DETERMINING INVENTORY LEVELS

Inventory Levels are determined by variety of factors. Some of the important

ones are as follows:

1. Storage Capacity
2. Item Perishability
3. Vendor delivery Schedules
4. Potential Savings from Increased Purchase Size
5. Operating Calendar
6. Relative importance of stock outages
7. Value of Inventory peso to the operator

Storage Capacity

Operators must be careful in determining inventory levels in a that will overload

storage capacity. When storage is too great, the tendency of the manager is to fill the
space. It is important that this is not to be done for the following reasons:

a. Increased inventory of items generally leads to greater spoilage

b. Loss of items due to theft.
c. Large quantities of goods on the shelf tend to send a message to employees that
there is "plenty" of everything.
d. Overstocking may result in the careless use of valuable and expensive products.
e. Too many stocks can result in difficulty in finding items.
Item Perishability

If all food products had the same shelf life, that is, if all items would retain their
freshness, flavor and quality for the same number of days, the food service operator
would have less difficulty in determining the quantity of each item he or she should keep
on hand at any given time.

The need for a balanced inventory of perishable items is being considered

because of the following factors:

a. Serving items that are too old is a sure way to remember a customer complaint.
b. Over stocking of perishable items may lead to moldy, soft, overripe or rotten food
items- a clear indication that the managers do not have a feel for inventory levels
that is based on the need of the operations. It is a sign that sales forecasting
methods either are not in place or have broken down.

Vendor Delivery Schedule

It is the fortunate food service operator who lives in a large city with many
vendors some of whom may offer the same service and all of whom would like to have
the operator’s business. In some cases, however, the food service operator does not
have the luxury of daily delivery. In all situations, it is important to remember that the
cost to the vendor for frequent deliveries will be reflected in the cost of goods to the
operator.

Vendors will readily let an operator know what is their delivery schedule to a
certain area and it is up to the manager to use this
information to make educated decisions regarding the quantity of that vendor's product
he or she will require to have both in working stock and safety stock.

Potential Savings from Increased Purchased Size

Some food service operators find that they can realize substantial savings by
purchasing large quantities and thus receiving a lower price
actual product inventory levels and then maintain their stocks within the need range.
Only when the advantages of placing an extraordinarily large order are very clear,
should such a purchase be attempted.

Operating Calendar

When an operation is involved in serving meals seven days a week to a relatively

stable number or customers, the operating calendar makes little difference to inventory
level decision making. If however, the operation opens on Monday to Friday and closes
for Sat and Sun as in the case of many schools, the operating calendar plays a large
part in determining the desired inventory levels. This is especially true when it comes to
perishable items. Many operators actually plan menus to steer clear of highly perishable
items at week's end. They prefer to work highly perishable items such as fresh seafoods
and some meats into the early or mid part of their operating calendar.

Relative Importance of Stock Outages

In many food service operations, not having enough of a single food ingredient or
menu item is simply not that important. In other operations, the shortage of even one
menu item might spell disaster. A strong awareness of how critical an outage can be
help determine the appropriate inventory level. The food service operator who is
determined never to run out of anything must be careful not to set inventory levels so
high, as to actually end up costing the operation more than if realistic levels were
maintained.

Peso to the Value of Inventory Operator

In some cases, operators select to remove peso from their bank accounts and
convert them to product inventory. When this is done, the operator is making the
decision to value product more than peso.

SETTING THE PURCHASE POINT

A purchase point, as it relates to inventory levels, is simply that point in time

when an item should be reordered. This point is typically designated by one of the two
methods:
1. As Needed
2. Par Level

AS NEEDED
When operators use the “As Needed" method of determining inventory level, they
basically are purchasing food based on their prediction of unit sales and on the sum
of the ingredients from standardized recipe necessary to produce sales.

Example: In a hotel foodservice operation, the demand for 500 servings of

raspberries and cream torte dessert, to be served to a group in the
hotel next week would cause the responsible person to check the
standardized recipe for this item and thus, determine the amount of
raspberries that should be ordered.

Par Level
Food service operators may set predetermined purchase points called par levels.
When demand for a product is relatively constant, we may set inventory level by
determining purchase points.

When determining par levels, both minimum and maximum amount required
must be established. Many food service managers established minimum par level
 by computing working stock, then by adding 25 to 50 percent more for safety stock.
Then, appropriate purchase point can be determined.

Reminder: As a rule, highly perishable items should be ordered on as needed

basis.

PURCHASING

Regardless of the method used to determine inventory levels, each food service
operator must tum his or her attention to the extremely important area of purchasing. If
we know the number of guests who will be coming from the sales forecast and what arc
likely to select from our menu, we must purchase the ingredients needed so that our
workers can prepare those items. Purchasing is essentially a manner of determining the
following:

1. What should be purchased?

2. What is the best price to pay?
3. How can a steady supply be assured?

WHAT SHOULD BE PURCHASED?

Just as it is not possible to determine inventory levels without standardized

recipes, it is not possible to manage costs where purchasing is concerned without the
use of product specifications, or specs. A product specs is simply a way for the food
service director to communicate specifically with a vendor so that the operator receives
the exact item requested, delivery after delivery. A food service specs generally lists the
following types of information:

1. Product Name or Specs Number

2. Packaging or unit on which a price is quoted
3. Standard or grade, if established
4. Weight range
5. Type of processing or packaging
6. Size of the basic container
7. Other information such as product yield

Other information maybe included if it helps the vendor understand exactly what the
operator has in mind when the order is placed.

PREPARING THE PURCHASE

Purchase order preparation can be simple or complex, but in all cases, the
written purchase order form should contain the following information:

a. Item Name
b. Spec Number, if appropriate
 c. Quantity Ordered
d. Quoted Price
e. Extension Price
f. Vendor Name
g. Date Ordered
h. Delivery Date
i. Ordered By
j. Received By
k. Delivery Instructions

THE RECEIVING AREA

Once the purchase has been prepared by the purchasing agent, it is time to
prepare for the acceptance or receiving of the goods. In a large operation, this function
is performed by the receiving clerk but in a smaller operation, it may be done by the
manager or his designee.

There is probably no area of the foodservice establishment more ignored than

the area in where receiving takes place. Receiving area is where we are ensure that the
products we ordered are in the best quality. Proper receiving includes all of the following
features:

1. Proper location
2. Proper Tools and Equipment
3. Proper Delivery Schedules
4. Proper Training

PROPER LOCATION

The "back door " which is usually reserved for receiving, is often no more than
that—just an entrance to the kitchen. Receiving area must be:

a. Large enough to receive and check the goods delivered against both the invoice
with the PO.
b. It should be kept clean do avoid contamination of incoming food.
c. It should be well lit and properly ventilated. Excessive heat can quickly damage
delivered goods especially if they are frozen products.

Proper Toot am Equipment

Standard items needed in receiving operation:

a. Scales
b. Equipment
c. Box cutter
d. Calculator
e. Records Area
PROPER DELIVERY SCHEDULE

Acceptance hours -- In an ideal world, the foodservice manager would accept

delivery of products during only designated hours. These times would be scheduled
during slow periods when there would be plenty of time for thorough checking of
products delivered.
Refusal hours - time wherein the operation may refuse to accept deliveries.

PROPER TRAINING

Receiving clerks should be properly trained to verify the following product

characteristics:

a. Weight - One of the most important items to verify when receiving food products
is of course their weight.
b. Quantity - The counting and weighing of products are equally important.
Suppliers make more mistakes in not delivering products than they do in
excessive delivery. The counting of boxes, cases, sacks, barrels and this must
be a routine for a receiving clerk.
c. Quality - Checking for quality means checking the entire shipment for
conformance to specifications. The effective receiving clerk should develop a
keen eye for quality
d. Price - In the area of training for price, the following two major concerns are to be
addressed:

1. Matching PO unit price to invoice unit price.

2. Verifying Price Extensions.

If the receiving clerk has a copy of the purchase order, it is a simple matter to
verify the quoted price and the delivery price. If this two do not match, suppliers should
be notified immediately.

Contract Price - Simply a price agreed by the suppliers and the operator. It
covers a certain product for a prescribed amount of time.

VERIFYING PRICE EXTENSION

Price extension is just as important as the ordered or unit price. Price extension
or extended price is simply the unit price multiplied by the number of units delivered.
 Unit Price x No. of Units/Quantity = Extended Price

Example:

Quantity / No. of Extended Price

Items Unit Price (Php)
Units (Php)

Tomatoes 18.50 3 55.50

Potatoes 12.90 6 77.40
Carrots 18.29 4 73.16

RECEIVING RECORD OR ORILY RECEIVING SHEET

Some large operations use a receiving record rather than a copy of the actual
purchase order when receiving food items. This method, while taking more
administrative time to both prepare and monitor have some advantages. A receiving
record generally contains the following information:

a. Name of supplier
b. Invoice Number
c. Item description
d. Unit Price
e. Number of Units delivered
f. Total Cost
g. Storage Area
h. Date of Activity