Purchasing is a management function focused on

securing resources needed to operate a foodservice.

Good purchasing procedures include the use of
appropriate buying methods, establishment of ordering
schedules, and a system of communicating needs from
production and service areas to buyer.
The basic flow of purchasing activities
Identify needs by planning new or reviewing existing menus for each business unit of
the foodservice organization

Determine standards of quality for each

food item and write specifications

Estimate quantities needed

 Calculate desired inventory or stock levels for each
item

Identify amounts to purchase by subtracting stock levels from

desired quantities

Develop purchase orders

Conduct market research on potential vendors’

product availability

Select and negotiate with vendors

• Buying decisions are based on the basis of
quality, price and service.
• Foodservice operations differ in terms of
purchasing arrangements and is dependent on
factors such as organizational size, ownership
and geographic locations.
• Types of purchasing: Centralized and group
• Methods of purchasing: formal competitive-bid
buying and informal or open-market buying
Market Forms of Foods
• Physical shape-

• Temperature-

dried
• Food Quality- the quality of the foods most appropriate to the foodservice
operation and their use on the menu must be decided before
food can be purchased.

Latundan

saba
Canned or fresh

cavendish
lacatan
• Quality standards- refers to wholesomeness, cleanliness or freedom from
undesirable substances. – degree of perfection in shape, uniformity of size or
freedom from blemishes, may also be qualified as to the extent of desirable
characteristics such as color, flavor, aroma, texture, tenderness and maturity.
Quality may be denoted as to assessment in terms of grade, brand and condition
• Quality may be denoted as to assessment in terms of grade, brand and condition
 Make –or- buy decisions
FACTOR CONSIDERATIONS
Quality Evaluate whether quality standard, as defined by and for the
organization, can be achieved.
Equipment Assess availability, capacity and batch turnover time to ensure that
the product demand can be met.
Labor Evaluate availability, current skills and training needs.
Time Evaluate product set-up, production and service tiome based on
forecasted demand for the product.
Inventory Gauge needed storage and holding space.
Total cost Conduct complete cost analysis of all resources expended to make or
buy product. Use cost as decision basis after the other factors have
been carefully analyzed.
 Market channels and transfer ownership

Agricultural
Distribution- Foodservice-
production-fields Processing-slaughter Manufacturing-food
national, Hospital, School,
stockyards,orchards, houses, mills processing plants
Regional, local Prison
lakes/streams
 No.1 picnic No.300
No.211 cylinder No 2 1/2
8 oz.
 Purchasing Process

Identify Needs

Write Specifications

Develop purchase order

Formal Method Informal Method

Receive and inspect deliveries

Store in proper area

Evaluate and follow up

Procedures used to purchase products vary depending on the formality of the
purchasing function.
Par stock system-stock is brought up to this level
each time an order is placed regardless of the
amount on hand at the time of order.
(e.g. par is 10 units)
Mini-Max system- stock is allowed to deplete to
safety level before new order is submitted to bring
level up to maximum
(e.g. max- 10 units, largest amount allowed on
hand)
Safety stock factor: 2 units
(minimum required amount on hand-reorder point)
The point at which an organization takes legal ownership
and physical possession of items ordered
A well-designed receiving process is important to cost and quality control and therefore
warrants careful planning and monitoring. A good receiving program should include
clearly written policies and procedures on each of the following:
• Coordination with other departments(e.g. accounting and production)
• Training for receiving personnel
• Parameters of authority and supervision
• Scheduled receiving hours
• Security measures
• Documentation process
Potential consequences of poorly planned receiving program include the ff;
• Short weights
• Substandard quality
• Double billing
• Inflated prices
• Mislabeled merchandise
• Inappropriate substitution
• Spoiled or damaged merchandise
• Pilferage or theft

Poorly planned and executed receiving program

results in in financial loss for the operation.
 Receiving Process
1. Physically inspect the delivery and check against the purchase order.
2. Inspect the delivery against the invoice
3. Accept an order only if all quantities and quality specifications are met.
4. Complete receiving records
5. Transfer goods to appropriate storage.
Receiving report

Inventory Form
 Physical inventory an actual count of items in stock.
Physical inventory form
Item Purchase Unit No. of Units in Purchase Price Total Cost
Inventory

Evaporated 24-370ml 3 cases 768.00/case 2304.00

filled milk can/case
Rice 50kg/cavan 5 canvans 2000.00/cavan 10.000

Perpetual inventory a running record

of the balance of product in stock.
Dry storage

freezer

refrigerator
Reference:
Palacio, June P and Monica Theis. (13th ed.)
2015. Singapore: Pearson Education South Asia
Pte Ltd.