Purchasing Process

“Purchasing” is defined as “a function related to the research, selection, purchase, receipt, storage and final use of a product in accordance with the procurement policy of the business”. Based on this definition, it can be said that the person responsible for purchasing operations in hospitality service businesses is closely related not only to purchasing operations but also to the receipt, storage and distribution activities of the purchased material.

On the other hand, the purchasing function is the most important factor that will affect the realization of food production in accordance with the objectives. As can be seen, earning or losing money in hospitality service businesses depends on how the purchasing process works. For example, if low stock and the minimum amount of food materials are purchased, losses occur from sales and may also cause customer losses. If more stock is made than necessary, money will be wasted and unwanted stocking will cause inventory problems as well as protection problems of the goods. Therefore, an optimum purchasing program can be developed and economic problems can be turned in favor of the business.

Purchases will be monitored monthly, weekly and annually, and environmentally friendly products will be preferred.

The objectives of the purchasing program are:

1. The most suitable food item should be purchased according to the menu.
2. The most suitable quantities should be purchased.
3. The most suitable price should be paid.
4. It should be purchased from the most suitable vendor.''

Etkin bir satın alma fonksiyonu doğru ürünün istenilen kalitede uygun fiyata doğru yerden doğru zamanda tedarik edilmesi amaçlarını taşır. İyi yönetilmezse işletme açısından kar/maliyet düzeyi müşteri açısından hoşnutsuzluk gibi sorunlara yol açar. Satın alma faaliyeti işletmenin ihtiyaçlarını karşılamaya yönelik bir faaliyettir. Bu nedenle ihtiyaçların doğru ve mantıklı olarak saptanması satın almayı yönlendirecek uygun ve gerekli kalitede ve miktarda malzemenin alınmasını ve böylece nakit akışının kontrolüne ve işletmenin paralel hedeflerine Ulaşımına neden olmaktadır.

Policies

• We aim to increase local purchasing by 20%.
• We aim to purchase in line with sustainable tourism standards.
• We will increase the variety of greenhouse products and use our own products.
• It is decided which market segment is suitable for the purpose.
• The prices that can be paid for purchases are determined.
• Efficient, environmentally friendly and sustainable purchasing will be made.
• It is aimed to purchase reusable, recyclable products.

Menu

• Comparison of materials desired by customers. Quantity Estimation
• Determination of quantity to be purchased.

Request

• Ability to show demands from each unit.

Purchasing

• Selection of vendors, preparation of contracts, determination of quantities to be purchased and specifications for each material, ensuring continuity of vendors.
• Performing quality and quality controls.

Receiving

• Providing appropriate storage conditions for each material.
• Keeping stock records.

Storage

• Safety of materials.
• Appropriate stock level.
• Accuracy of warehouse exits.

Production

• Preparation of purchased materials.
• Determination of the most appropriate sales price and cost of the products obtained.

Sales

Measuring the performance of the results obtained from each sales unit. Control - Feedback of information to management.

Purchasing Function In order for the purchasing department to perform effective purchasing, they must provide good answers to the four ‘WHAT’ questions: What?, When?, Where?, Why?

 What? The purchasing department or manager should know how much and what kind of material the business needs. Knowing the menus and recipes applied in the business will make it easier to purchase the appropriate material.

1. When? Knowing when the ingredients are needed means knowing when to serve them and how long to store them. If foods are purchased too far in advance of the pre-preparation stage, they will spoil and cause a waste of money.
2. Where? Where to buy food, where to store it, and where to go after buying it are important questions to answer.
3. Why? The ingredients should be purchased with the awareness that they are necessary for the menu to be prepared. In addition, the question of why should be asked when determining the quality of the purchased food..

Whoever is responsible for the purchasing process must first and foremost be an honest and characterful person who looks after the interests of the business. Because purchasing is always a job that is suitable for gossip. For this reason, in our country, in accommodation and food and beverage businesses, the relatives of the bosses or people they can trust are generally responsible for purchasing. However, such an approach should not always remain valid. Because, if consistent behaviors in the purchasing procedure, the meticulousness of the implementation of purchasing specifications and the purchasing methods applied by the upper management in purchasing are followed and supervised by the upper levels, the result will always be positive.

First of all, the people responsible for the purchasing process should have knowledge of the kitchen, market accounting and should know the quality of the goods well.

The purchasing manager should know what the kitchen is and how it conflicts, which preparation stages the food goes through and which cooking methods it is cooked in which part of the kitchen after which preparation stages it goes through. On the other hand, in order to increase the kitchen knowledge about meat, the chef or butcher should conduct kitchen meat experiments and know the meats well.

In order to ensure effectiveness in purchasing food, there is also a need for cooperation between the chef and the sellers in addition to the purchasing officer. Thus, the chef will ensure that the food is brought on time and the products are controlled in the meetings he has with the sellers, while he will also learn what the new products are, the market situation and seasonal opportunities.

The purchasing officer should be able to follow the domestic and foreign market conditions very well in the supply of food and other required materials. For this, he should follow the economic conjuncture by knowing the laws of economy. In this way, he will be able to ensure that the business is profitable in the current conditions and in the future.

If the purchasing officer knows the accounting structure of the business, he will make the work of the accountants easier by not making mistakes in how to fill out the delivery note, invoice and order slips.

The purchasing officer should know the characteristics and quality of all kinds of food products and should be able to see the differences. However, considering that the purchasing officer will be in difficult situations in this regard, he should especially seek the suggestion and approval of the chef in food.

What are the duties and responsibilities of the purchasing officer?

1. The purchasing manager executes, supervises and coordinates all work in her department in accordance with the business policy.
2. The purchasing manager works in close cooperation with other department managers of the business and evaluates the orders coming from them within the framework of determined rules. He collects prices and samples by conducting market research.
3. Researches and checks the suitability of the materials to be purchased for the budget in terms of quantity, type and price.
4. He/she submits the prepared market order to the accounting manager or general manager for approval.

5. Submits approved purchase orders to the accounting manager or general manager for approval.

6. Distributes all materials to relevant departments when requested.
7. Trains his/her own staff and explains new rules and methods to them. Distributes and supervises daily work.
8. By establishing a good filing system, it stores offer letters, brochures and catalogs from companies.
9. He/she accepts sellers, talks to them and collects all information about the goods to be purchased.

10. It ensures standardization in the materials to be purchased by establishing good relationships with other departments and protects the business from unnecessary material functions.

11. He/she must have all the necessary information about the goods he/she purchases and must be well aware of the problems that may be encountered with that goods and the methods of solving these problems.
12. It prevents excessive and insufficient stocking by determining the most appropriate stock level through healthy relationships with the kitchen department. Similarly, it acts according to the existing storage facilities and knows the storage characteristics of foods.

13. Evaluates new products based on seasonality of products in the market as well as the foods on the menu.

Purchasing Procedures:

Purchasing transactions regarding food materials are carried out by the purchasing manager and a sufficient number of purchasing officers in large hotel establishments and by the purchasing officer in hotel establishments.

Purchasing transactions can be carried out differently depending on the type, year of establishment and size of the hotel establishment. However, purchasing transactions should be carried out in an orderly manner. In hotel establishments operated by public institutions, in purchases over a certain amount, commissions may decide to purchase the food material offered under the most suitable conditions by receiving offers from the market. In hotel establishments owned by private enterprises, the purchasing officer visits the market or collects price offers by phone for the food materials decided to be purchased and places the order with the place that has made the most suitable offer. For this purpose, the purchasing officer makes an inventory of each necessary item and reviews the estimated number of customers that day. Thus, he determines the type and quantity of food items to be purchased and lists them on the market purchase price list. If the order is to be placed by phone, he arranges a telephone order.

In general, the above process is carried out two or three times for dry foods or durable foods. In practice, the purchase transaction is initiated when the minimum stock level is reached. Daily foods such as fish and milk are purchased on the day they are served.

Purchasing Methods:

In hospitality service transactions, purchasing methods can be examined and grouped in two main sections. The selection of any of the purchasing methods is affected by the location of the business, the type and size of the business, purchasing capacity and the type of goods to be purchased.

Determining the vendors is one of the first things businesses need to do. The goods to be purchased can be purchased directly from the manufacturer, wholesaler, retailer, cooperatives and brokers.

It is important to consider five main factors in determining where the goods will be purchased. These factors are; quality, service, potential, price and value. Evaluating each factor on its own will not be sufficient in selecting vendors. Undoubtedly, the price criterion is very important in determining vendors. However, the importance given to price is meaningless unless it is related to the value given to a wide range of food.

The value factor is very important in prices. However, an inexpensive product can be valuable.

Although the purchasing characteristics and quality of food are determined, quality is a criterion that is difficult to measure. Quality is completely related to price and value. For example, the best does not always mean the best value. In other words, quality or first quality does not always mean the best in relation to a food.

Service is a very important criterion. A good seller should be able to deliver the product immediately when a request comes from the business. At the same time, he should be able to find and bring even the hard-to-find goods by conducting market research and informing the buyers about the market situation.

The potential criterion refers to both the consumption capacity of the business and the seller's ability to respond to this request in the purchased goods. Based on these five important factors, the knowledge and experience of the person responsible for purchasing also performs effective purchasing.

Purchasing Methods

1. Sealed Envelope Method

This method is mostly adopted by institutions and organizations that apply mass feeding. These are especially hospitals, factories, universities, institutions, colleges and public institution cafeterias.

Such institutions and organizations call for sellers by giving newspaper advertisements about the materials they want to buy. Sellers' offers reach the organizations by sealed envelope method. Incoming offers are evaluated by the organizations' commissions. Thus, the offer that best suits the conditions of the business is evaluated. The sealed envelope purchasing process is based on a contract.

In contract-based purchasing, the contract consists of two important parts. The first one includes the general terms of the contract. The second one includes special conditions and requests.

The contract-based purchasing method is basically based on two purposes. The first one is a contract that includes a specific period, and the second one is a contract for a certain amount.

In the first method, the prices of the materials considered to be purchased and the ability of the sellers to provide them can be limited to 3-6-12 months.

The second method aims to ensure continuity of the specified amount of material in specified periods without being affected by the rise and fall of market prices by the seller. Regardless of the form, contract-based purchasing transactions have advantages and disadvantages.

Advantages:

• The requested material is continuously delivered to the business at the determined price.
• Daily negotiations between buyers and sellers regarding material type, quantity and price are eliminated.
• Reduces large amount of storage problems.
• Prevents over-ordering.
• Regular ordering and distribution is ensured

Disadvantages:

• Not giving the business much initiative in selecting vendors.
• Prices can be reduced and special benefits can be eliminated.
• Difficulty in reflecting customer demand assessments on materials.
• Interruptions in services caused by the difficulty of changing vendors.

2. Procurement Method in the Market

The person or persons responsible for purchasing procure the materials they need from the market using the methods specified below.

• Purchase Based on Daily Market Order List

This method is especially used in daily purchases of perishable goods. In addition, a comparison of some of the vendors is provided. In this type of purchase, the business usually makes a telephone call with the vendors based on the specifications previously prepared and places orders in accordance with the prices it receives. The market order list is written in the column regarding the order quantities to be given by the kitchen chef for the next day and the vendors are researched. While these lists are being prepared, the chef and the purchasing officer work together. Although the purchasing officer can receive many offers from large places, this number decreases in small places.

The advantages of this system can be summarized as the ability to choose vendors on price, bargaining with vendors, being able to order as much as desired and so on. The disadvantages are; it causes loss of time, it is not very practical for small businesses in small-scale purchases, and we can determine an area where price competition cannot be used when it comes to vendors providing good service.

3. Cash Purchase Transaction

This is usually the method used by medium and small-scale businesses. Because such businesses have to make few and continuous purchases. They usually buy their materials from wholesalers or retailers.

The person responsible for the purchase visits wholesaler or retailer sellers and makes his/her decision instantly and carries out the purchase. In this method, the buyer instantly determines the goods, prices and payment methods.

The advantages of this method; the proximity of the sellers to the businesses saves time in the purchase process, provides bargaining power in small or large purchases, and provides the buyers with the advantage of seeing and choosing product varieties.

It allows the purchasing officer to make purchases easily based on the stock level and also provides the ease of providing sudden material requests.

The disadvantages of this method; can be summarized in two points. First, the buyer can undertake the purchase process and the transportation of the materials to the business himself/herself. Second, the buyer must pay the price of the goods in advance.    

4. Prepaid Purchase Method;

It is the method of purchasing any main ingredient, which is the most important input of restaurant businesses, by paying in advance. Thus, the weekly orders of the restaurant will be provided uninterruptedly by the vendor company and the business will also be free from storage costs.

5. Cost-Based Purchase Method;

This method is mostly successfully applied in restaurant businesses. It is the method applied by vendors with stronger individual relationships. Food standards can be kept high in the cost-based purchase method. The vendor organizes the orders from the buyer and the sales transaction is completed by adding a profit margin according to the agreement reached by the parties on the cost of the goods.

The buyer does not change the goods and the vendor that they have agreed on in the cost-based purchase method. This method is very valid in quality food purchases with specified characteristics. The vendor company spends more time, energy and attention to satisfy the buyer.

6. Purchasing Method from Sales Carts

Considering the fact that the vast majority of hospitality service businesses are established in places far from city centers, the benefits of this method will be seen. Small or large businesses may resort to this method from time to time. Some regional sellers and national business sellers have the chance to visit and show all kinds of their products without receiving a call from businesses with this method. Thus, the purchasing manager or officer can choose what they want and buy it immediately and make the payment in advance or monthly. Apart from durable goods, perishable goods can also be brought to businesses with vehicles designed for the purpose.

Advantages of this method:

• The buyer has the opportunity to see the product range.
• If there are special requests, they can be met immediately.
• The seller's business capacity and commercial approach can be determined immediately.
• The stock status is easily checked.

Disadvantages of this method:

• The product considered to be purchased may not be available.
• There may be differences in prices according to free market research.
• The buyer's choice is limited.

7. Central Purchasing Method:

This method is preferred by chain accommodation and food and beverage businesses. The central purchasing department established according to this method collects the requests from the businesses, evaluates them and carries out the transaction. In this method, the purchased requests are either sent to the relevant businesses by the central purchasing department or the sellers are ensured to deliver the requested materials to the relevant businesses.

Advantages

• Since bulk purchases are involved, there is bargaining power in prices.
• There is a chance to scan a wide market due to large amounts of purchases.
• They have the right of priority in purchasing features
• Significant savings can be achieved in purchasing activities and expenses.
• Superiority is achieved in the distribution and transportation of purchased products.
• Before distributing purchased products, different products can be tried by performing quality tests.
• In large purchases, both the central purchasing organization and sellers can be inspected with inspections on a business basis.

Disadvantages:

• Since chain-affiliated businesses do not have stocking freedom, they may be in a difficult situation due to their special needs.
• Chain-affiliated units have limited freedom in developing and changing their menu production and standards.
• Regional price advantages cannot be used.
• Central distribution problems may arise.

Purchasing Control:

Food cost control starts with purchasing. Before entering into purchasing transactions, the type and location of the hotel business, purchasing and sales policy, menu types, storage facilities, sales location and time should be known very well. Points to consider;

-The types of needed items, where they grow, their quality should be known, and it should be known what can be purchased instead of the unavailable goods.

-When making a purchasing decision, the lowest price should be purchased. A standard material specification card should be prepared for each material and the appropriate one should be purchased. In addition, no matter how cheap it is, it should not be purchased if there is no profit to be made from its sale.

-Daily estimates should be made for perishable materials and these materials should be purchased directly to the kitchen. Durable food materials should be purchased and stored when they are at least below the stock level.

-An order should be placed on a certain day of the week for any food item and more than necessary should not be purchased.

-Coordination should be established between the purchasing, kitchen and receiving departments.

-The accounting department should compare the order slips with the invoices and investigate whether the purchase is made in a realistic manner.

Purchase Specifications

In order to successfully implement the explained purchase methods, the purchase specification form developed on a product basis should be used. Standard purchase transactions are carried out with the help of this form.

The purchase specification form shows details about the quality, weight, size, origin and packaging of the goods to be purchased.

The purchase specification form prepared for each good varies from business to business, but they are basically the same.

The purchase specification form should be prepared by a team formed by these people who have authority and responsibility in this regard in the business. Factors such as business policy planning, menu and price changes are taken into consideration in team work. In such cases, it is useful to look at the suggestions of the vendors in preparing the purchase specification form.

Benefits of the purchase specification form;

a. It facilitates the purchase manager or officer in selecting and purchasing standard goods

b. It eliminates possible disagreements between vendors and the purchaser.

c. The purchasing specifications form is distributed to different sellers and allows the buyer to compare prices.

d. The delivery officer and the warehouse officer obtain detailed information about the goods and make their jobs easier.

e. It makes it easier for the kitchen staff to reach quality and quantity in production.

Standardization studies have developed considerably in European countries regarding the characteristics of goods. Since the characteristics of most vegetables and fruits in the markets are completely standardized, other countries are affected in this regard.

Purchasing Procedure

While the direct boss - managers are responsible for the purchasing process in small businesses, the purchasing department is directly responsible for the purchase of food in large businesses. Because, as a general rule, businesses are faced with either profit or loss in the purchasing process. When the issue is considered with this logic, while the purchasing process maintains its importance in terms of minimizing the food cost of the business, an effective purchasing procedure and team will affect the net profit.

In order for the purchasing department to be successful, the purchasing system (procedure) must be established and its healthy operation must be ensured. When setting up the system, the purchasing process should take into account the relationships between the receiving, storage and kitchen.

The purchasing procedure can be a five-stage process.

a). Material requests from the relevant departments are collected by the purchasing manager. For example: head chef, restaurant manager or warehouse clerk

b. Sellers are selected

c. Based on the agreement reached with the sellers before, the market order code is filled in at the end of the phone call. During this meeting, issues such as the agreed price, the time the materials will be delivered are agreed upon.

d. The quality and quantity of the ordered materials are checked and any deviations are corrected.

e. The distribution of the materials arriving at the business to the departments where the order is placed is ensured.

The purchasing request form is filled in accordance with the requests of the departments and signed by the authorized person of that department. The department manager transfers his/her authority to his/her assistant when he/she is at the business for any reason.

Purchasing request forms are numbered. However, they can be sent from the departments with mixed serial numbers. The purchasing request form is filled out separately for food groups. Purchase request form may vary from business to business. However, the information is generally the same.

The form is in three copies.

The first copy (white); is filed in the purchasing department after the signatures are completed.

The second copy (yellow); is sent to the delivery officer after the signatures are completed.

The third copy (green); is signed and returned as soon as the request comes from the department. Thus, the department that makes the order follows up on its goods. The purchasing request from the departments is evaluated in the purchasing department. Prices are received from the company or companies for the goods on the purchasing form.

Prices are processed upon the purchasing request and approved by the deputy general manager or the business manager.

In the order work that varies according to business policies, requests below a certain amount are immediately ordered by phone to the sellers and the arrival of the goods to the business is followed. If the purchasing requests are above this amount, the purchasing department prepares the order order form. The order order is recorded in the record book.

The order order can be prepared in four copies or six copies in large businesses. When we follow the path in the purchasing procedure diagram, the first copy is given to the sellers.

Second copy to accounting. Third copy to the delivery officer and fourth copy is kept in the purchasing service file.

FOOD AND BEVERAGE MANAGEMENT

Sellers bring the ordered materials to the delivery area and deliver them to the delivery officer with a delivery note or invoice or both.

After the purchased materials pass the quantity, price and quality control, they are transferred to the appropriate warehouses by the delivery officers and the delivery note or invoice is sent to accounting. The accounting department checks the invoice as stated in the procedure above and pays the price to the sellers.

DELIVERY CONTROL

The delivery job is very important in the food cost control process. It is seen that the delivery job is not given the necessary importance in most businesses. Even in most large businesses, the delivery job is assigned to the warehouse officer in terms of personnel savings.

The delivery process is very important and difficult. The food comes to the business after being purchased according to the previously determined specifications. In order for the delivery officer to be successful, he/she must know the characteristics of the food. If the specifications have not been developed in purchasing, the delivery officer must be experienced in the characteristics of the goods. Otherwise, he/she cannot do his/her job successfully.

The delivery officer performs the weight, size and numerical controls of the purchased goods, as well as quality, freshness and cleanliness controls.

The delivery officer must be a well-trained person who can handle sampling methods in the delivery of goods and who can perform serial tasks considering that the time of the sellers is valuable. In order for the delivery officer to do his/her job well, it is important to develop standard delivery specifications in the business. Thus, the delivery officer ensures that the goods are received in accordance with the specified specifications instead of working based on estimates. It is mandatory that the diagrams covering the specifications of the food items are kept in the delivery officer's office.

The delivery officer can make decisions more quickly by being in close contact with the kitchen chef, knowing what kind of goods need to be in the kitchen and in what periods.

What are the necessary conditions for the delivery process to be carried out easily and effectively?

a. The delivery area should be between the door where the goods are brought and the warehouses or somewhere nearby. For example, in a restaurant business, the food purchased should come to the business from the back door and be on the same platform as seen in the figure, which is the best arrangement form.

Distribution Receiving Warehouses

Kitchen area Customer entrance

………………………………………………………….. Floor Floor

Today, in most businesses, delivery and storage facilities are organized at the back door of the business, especially below ground level. This type of arrangement provides businesses with more usable space, but also provides compensation and costs in the flow of materials.

b. Sufficient space should be allocated for the receiving area.

c. When purchased goods are brought to the business, accumulation should not be allowed in the receiving area. Otherwise, healthy delivery cannot be made, most sellers may aim to give the business goods of undesirable quality and size with such behaviors.

d. The receiving area should be equipped with tools and equipment that facilitate delivery: precision scales and weighbridges, two and four-wheeled cars. In addition to these, a conveyor belt system is used in businesses with dense entrances, on the other hand, the receiving areas of some businesses may be above ground and located in a higher place than the warehouses. In this case, materials that are not considered harmful to slide can be carried with slides.

e. The receiving area should have a work desk and stationery to be used in delivery.

OBJECTIVES OF THE RECEIPT PROCESS

The meticulousness shown in the receiving process will increase the effectiveness of purchasing efforts. In addition to these general objectives, we can list the objectives of the receiving process as follows.

a. Ensures that the goods received are in the quantity specified in the purchase order.

b. Ensures the quality control of the goods received as specified in the purchasing specifications.

c. Price comparison and equivalence of the purchased goods are ensured.

d. When deviations are found in the quality and quantity comparisons of the purchased goods, the purchasing office or manager is informed. And when the goods are returned, other sellers are involved.

e. All goods received are recorded daily in the material receipt book.