Chapter 10 – Managing Inventory Control and Procurement
Chapter 10 – Managing Inventory Control and Procurement
This chapter is remixed from Basic Kitchen and Food Service Management by The BC Cook Articulation Committee.
Chapter Outline:
- Basic inventory procedures
- Systems to track and record inventory
- Receiving inventory and invoices
- Requisition systems
- Inventory record keeping
- Computerized inventory control
- Pricing and costing for physical inventory
- Factors affecting inventory levels
- Inventory turnover
- Days of inventory on hand
- Procurement Process
- Purchasing defined – buying versus ordering
- Three ways to increase your value (as a buyer/customer)
- Market sourcing
- Choosing suppliers
- Factors that Impact Prices
- Product Specifications
- Contract Buying
- Purchasing Procedures
- Production Control Chart
Learning Objectives:
Inventory and Inventory Control
- Describe inventory systems and procedures used in foodservice operations
- Calculate and explain the importance of inventory valuation
- Calculate and explain the meaning of inventory turnover ratio
- List factors in determining amount of inventory to carry
- List “best practices” related to managing inventory (Eg. Frequency of performing physical inventory, etc.)
Receiving
- List critical steps in receiving process
- Explain relationship between purchasing, food specifications and receiving function
- Describe how things can go wrong…where money can be lost in the process?
- Explain purpose and importance of the supplier invoice in the receiving process
Storage and Issuing
- Define FIFO
- List best practices for issuing procedures to control costs in a foodservice operation
Procurement/Purchasing
- Describe the key “players” in the procurement process
- Explain how inventory and purchasing functions are related
- Explain the steps in the purchasing process
- Describe characteristics of a valued “customer” buyer
- List factors to consider in choosing suppliers
- Explain concept of “good service” from a supplier/vendor.
- List factors impacting food and supply prices
- Describe importance and key components of product specifications
- Explain steps in the ordering process.
- Determine amount to order given inventory (par level and on hand amount)
- List information typically included on a purchase order
- Recognize ethical issues related to purchasing
Key Terms:
- Inventory
- Receiving
- Invoice
- Requisition
- Perpetual inventory
- Physical inventory
- Par stock
- Inventory price extension
- Point-of-Sale (POS) system
- Holding cost
- Ordering cost
- Shortage cost
- Inventory turnover
- Procurement
- Purchasing
- Buying
- Ordering
- Cherry-picking
- Vendor
- Distributor
- Broker
- Manufacturer
- Specifications
- Contract Buying
- Par levels
- Amount on hand
- Line item bid award
- Market basket bid award
- Purchase order
Preface
This chapter has a sort of circular nature to it. It begins by discussing inventory and inventory control, but of course, there is no inventory if the procurement process has not been completed.