PURCHASING

DEPARTMENT
 WHAT IS PURCHASING DEPARTMENT?

• PURCHASING DEPARTMENTS ARE AT THE CENTRE OF

SUCCESSFUL SUPPLY CHAIN MANAGEMENT. TYPICALLY,
THEY HELP OTHER DEPARTMENTS IDENTIFY THEIR NEEDS,
MANAGE THE REQUISITION PROCESS AND SOURCE
COMPETITIVE PRICES, AND GENERALLY ACT AS
CONTROLLERS TO ENSURE ADHERENCE TO BUDGETS.
 PURCHASE DEPARTMENT

• THE PURCHASING DEPARTMENT’S ROLE IS TO MAKE SURE THAT SUPPLIES,

EQUIPMENT AND SERVICES ARE AVAILABLE TO THE OPERATION IN QUANTITIES
APPROPRIATE TO PREDETERMINED STANDARDS, AT THE RIGHT PRICE AND AT A
MINIMUM COST TO MEET DESIRED STANDARDS.
 HISTORY

• PURCHASING DEPARTMENT WHILE ACTUALLY A BACK OF

HOUSE OPERATIONS IS INCLUDES IN THIS FRONT OF THE
HOUSE SECTION SINCE IT PERFORMS A LARGELY
MANAGERIAL FUNCTION. THE ACUMEN OF THE
PURCHASING MANAGER AND THE EFFICIENCY OF THE
PURCHASING DEPARTMENT CAN MAKE FOR THE
PROFITABLE OPERATION OF A HOTEL.
 PURCHASING OBJECTIVES

• OBTAINING GOODS & SERVICES OF REQUIRED QUALITY AND

QUANTITY .
• OBTAINING GOODS AND SERVICES AT LOWEST COST .
• ENSURING BEST POSSIBLE SERVICE AND PROMPT DELIVERY BY THE
SUPPLIER.
• DEVELOPING & MAINTAINING GOOD SUPPLIER RELATIONS &
DEVELOPING POTENTIAL SUPPLIERS.
 PURCHASING CYCLE

• RECEIVING & ANALYZING PURCHASE REQUIREMENTS

• SELECTING SUPPLIERS
• DETERMINING THE RIGHT PRICE
• ISSUING PURCHASE ORDERS
• FOLLOWING UP TO ASSURE DELIVERY DATES ARE MET
• RECEIVING AND ACCEPTING GOODS
• APPROVING SUPPLIER’S INVOICE FOR PAYMENT
TWO ROLES OF PURCHASING DEPARTMENT

• STRATEGIC PURCHASING
• IN THIS ROLE, THE PURCHASING DEPARTMENT PLAN HIGH LEVEL
PROCUREMENT ACTIVITIES BASED ON ORGANIZATIONS BUSINESS GOAL.
• OPERATIONAL PROCUREMENT
• THIS ROLE IS ALSO DEFINED AS “TACTICAL PURCHASING” WHERE ALL
THE PURCHASE DEPARTMENT RESPONSIBILITIES ARE FOCUSED ON
TAKING CARE OF BUSINESS OPERATION AND ADMINISTRATION.
 KEY FUNCTION OF PURCHASING
DEPARTMENT
• ALL PURCHASING DEPARTMENT FUNCTION ARE ALIGNED WITH
• THE BUSINESS OBJECTIVES OF AN ORGANIZATION. HERE ARE
• SOME BASIC PURCHASING DEPARTMENT FUNCTIONS:
• IDENTIFY BUSINESS REQUIREMENT FOR GOODS, MATERIALS AND SERVICES.
• FIND RELIABLE SUPPLIERS TO MEET THESE REQUIREMENTS.
• NEGOTIATE PRICES BUILD QUALITY AND DELIVERY TERM.
• SET UP THE ORDER QUANTITIES AND MAKING BID REQUEST ON-SUPPLY CONTACTS
• COORDINATE DELIVERY AND STORAGE OPERATIONS
3 MAIN PURCHASE DEPARTMENT FUNCTION

• 1. ACQUIRING GOODS AT THE BEST POSSIBLE PRICE

• - PURCHASING DEPARTMENT MUST CONTINUOUSLY EVALUATE MATERIALS BASED ON
QUALITY AND, MORE IMPORTANTLY ON PRICING TO MAXIMIZE PROFITABILITY ORGANIZATION.

• 2. PROCURING RAW MATERIALS FOR SUSTAINING OPERATIONS

• - WHILE PROCURING GOODS AT THE BEST PRICE, THE PURCHASING DEPARTMENT MUST ALSO
MAINTAIN THE PURCHASES NECESSARY FOR SUSTAINING DAILY OPERATIONS. FROM RAW
MATERIALS SUCH AS IRON AND PLASTIC TO MACHINERY PRODUCTION TOOLS AND EVEN
OFFICE SUPPLIES THEY ALL NEED TO PROCEED TO KEEP THE BUSINESS RUNNING SMOOTHLY
• 3. COMPLIANCE WITH INDUSTRY PROTOCOLS
• AN ADDITION TO SUSTAINING OPERATIONS, ALL GOODS AND SERVICES
PRODUCED BY THE PURCHASING DEPARTMENT MUST ALSO BE COMPLIANT WITH
INDUSTRY STANDARDS AND COMPANY POLICIES. VENDORS SHOULD ALSO
ESTABLISHED A SPECIFIC PURCHASING POLICY THAT CHECKS QUALITY
COMPLIANCE AT EVERY LEVEL OF THE PURCHASE.
 PURCHASING DEPARTMENT DUTIES AND
RESPONSIBILITIES
• THE COMPETITIVE DUTIES AND RESPONSIBILITIES OF PURCHASE
DEPARTMENT INCLUDE:
1. FOLLOWING THE STATE, LOCAL AND FEDERAL PROCUREMENT LAWS
2. WORKING WITH GOVERNMENT AGENCIES FOR SUBSIDES AND OTHER BENEFITS
3. ACQUIRING GOODS AT COMPETITIVE RATES
4. MAINTAINING LONG TERM EXCLUSIVE PARTNERSHIP WITH TOP VENDORS
5. PLACING BEST BIDS AND ACQUIRING ORDERS BEFORE BUSINESS COMPETITORS
6. SENDING LUCRATIVE PROPOSALS TO ACQUIRE VENDORS IN ADVANCE.
PERSONNEL ORGANIZATIONAL CHART
 PURCHASING MANAGER

THE HEAD OF THIS DEPARTMENT IS THE PURCHASING AGENT OR

MANAGER. THIS PERSON SUPERVISES THE FUNCTIONS AND INTERVIEWS,
INSTRUCTS, DISCIPLINES, AND DISCHARGES EMPLOYEES IN THE
PURCHASING DEPARTMENT. PROMOTION TO THIS POSITION IS USUALLY
FROM STAFF POSITIONS IN THE PURCHASING DEPARTMENT. OCCASIONALLY,
A HOTEL MAY EMPLOY AS PURCHASING AGENT SOMEONE WHO HAS HAD
CONSIDERABLE PURCHASING EXPERIENCE IN OTHER HOTELS OR OTHER
BUSINESSES.
PURCHASING OFFICERS , PURCHASING AGENTS AND BUYERS ALL
WORK UNDER THE SUPERVISION OF THE PURCHASING MANAGER.
THEIR DUTIES AND RESPONSIBILITIES MAY VARY DEPENDING ON
AN ORGANIZATION’S SIZE AND PRIORITIES. A PURCHASING AGENT
FOR A MORTGAGE BROKER MAY HANDLE FOR CURING GOODS AND
SERVICES THAT RANGE FROM NECESSARY OFFICE SUPPLIERS TO
VEHICLES RETAILS.
 TYPES OF FOOD PURCHASES

1. PURCHASING BY CONTRACT
THIS IS BASICALLY OF TWO TYPES-THE SPECIFIC PERIOD CONTRACT: THIS AIMS AT
DETERMINING THE SOURCE OF SUPPLY AND THE PRICE OF GOODS FOR A STATED PERIOD
OFTEN OF THREE OR SIX MONTHS. THIS REDUCES THE TIME AND LABOR OF NEGOTIATING
AND ORDERING TO A MINIMUM, PLUS IT HAS THE ADDED ADVANTAGE OF ASSISTING WITH
BUDGETING AND PRICING, WHEN THE PRICES OF ITEMS ARE FIXED FOR A PERIOD OF TIME.
2. PURCHASING BY DAILY MARKET LIST
THIS METHOD IS USED WHEN PURCHASING PERISHABLE FOOD ON A DAILY BASIS AND
WHEN IT IS POSSIBLE TO HAVE TWO OR MORE APPROVED SUPPLIERS.
3. PURCHASE BY WEEKLY/ FORTNIGHTLY QUOTATION LIST
THIS METHOD IS USED TO PURCHASE GROCERY ITEMS WHERE DELIVERY OF ONCE
OR FORTNIGHT IS ADEQUATE. THE METHOD IS SIMILAR TO THAT DESCRIBED WHEN
PURCHASING PERISHABLE FOOD BY DAILY MARKET LIST.
4. PURCHASING BY CASH AND CARRY
THIS METHOD IS OF PARTICULAR INTEREST TO THE MEDIUM AND SMALL
ESTABLISHMENTS WHOSE ORDERS ARE OFTEN NOT LARGE ENOUGH TO BE ABLE TO
GET REGULAR DELIVERIES FROM WHOLESALERS AND FOOD MANUFACTURERS. CASH
AND CARRY FOOD WAREHOUSES ARE SITUATED IN ALL TOWNS AND RESEMBLE IN
LAYOUT AND OPERATION THAT OF VERY LARGE FOOD SUPERMARKETS.
5. PURCHASING BY PAID RESERVE
THIS METHOD IS USED WHEN IT IS NECESSARY TO ENSURE THE CONTINUITY OF
SUPPLY OF AN ITEM FOR THE MENU WHICH IS OF PARTICULAR IMPORTANCE TO A
RESTAURANT. CATERERS ARE BUYING IN ADVANCE A LARGE QUANTITY OF A
COMMODITY TO COVER NEEDS FOR SEVERAL MONTHS AHEAD, AND REQUISITIONING
THEIR WEEKLY REQUIREMENTS FROM SUPPLIERS, WHO HOLDS THE STOCK.
6. TOTAL SUPPLY
THIS METHOD IS RELATIVELY NEW. IT IS A METHOD OFFERED ONLY BY A FEW
MAJOR SUPPLIERS WHO ARE ABLE TO OFFER A FULL SUPPLY SERVICE OF ALL
COMMODITIES TO CATERERS.
7. COST PLUS
THIS IS METHOD USED FREQUENTLY IN THE WELFARE SECTOR OF THE
INDUSTRY. THE ESTABLISHMENT AGREES TO PAY AN APPROVED SUPPLIER
EXACTLY THE SAME PRICE THAT THE SUPPLIER PAID FOR THE COMMODITIES PLUS
AN AGREED PERCENTAGE, OFTEN 10-12 PERCENT.
8. QUALITY PURCHASING
JUST AS IT IS NOT POSSIBLE TO DETERMINE INVENTORY LEVELS OR ITEMS TO
BE PURCHASED WITHOUT STANDARDIZED RECIPES, IT IS NOT POSSIBLE TO
MANAGE COSTS WHERE PURCHASING IS CONCERNED WITHOUT THE USE OF
PRODUCT SPECIFICATIONS, OR “SPECS.”
 A FOODSERVICE SPECIFICATION GENERALLY
CONSISTS OF THE FOLLOWING INFORMATION:
• PRODUCT NAME OR SPECIFICATION NUMBER
• PRICING UNIT
• STANDARD OR GRADE
• WEIGHT RANGE/SIZE
• PROCESSING AND/OR PACKAGING
• CONTAINER SIZE
• INTENDED USE
• OTHER INFORMATION SUCH AS PRODUCT YIELD
 REFERENCE:

• NANONETS.COM
• INDEED.COM
• SLIDEPLAYER.COM
• HTTPS://HOSPITALITYNU.BLOGSPOT.COM/2012/08/PURCHASE-CONTROL-IN-HOTEL
S.HTML?M=1
• HTTPS://WWW.HOSPITALITYCROSSING.COM/ARTICLE/900019191/PURCHASING-DEP
ARTMENT-OF-THE-HOTEL-INDUSTRY/
• HTTPS://WWW.HOSPITALITYCROSSING.COM/ARTICLE/900019191/PURCHASING-DEP
ARTMENT-OF-THE-HOTEL-INDUSTRY/
• HTTPS://WWW.HOTELMINDER.COM/HOTEL-MANAGEMENT-STRUCTURE-AND-ORG
 MEMBERS:

• MAYVEL BALAGUER
• ROSE ANN MARQUEZ
• JOANNA MARIE DACPANO
• ERICA BAUSA
THANK YOU!