TOPIC

The Concepts of Purchasing

SHAMSUL KHAIRUL
ANNUAR
HOSPITALITY LECTURER
FTMS GLOBAL COLLEGE
We will learn the following from todays class:
The Concepts of Selection & Procurement
Types of Hospitality Operations
Technology Applications in Purchasing
THE CONCEPTS OF
SELECTION & PROCUREMENT
 THE CONCEPTS OF SELECTION & PROCUREMENT

Purchasing
o Paying for an item or service
Selection
o Choosing from among various alternatives on various levels
e.g. A buyer can select from among several competing brands of beef,
a specific quality of beef, a particular beef supplier, and a fresh or
processed beef product
Procurement
o An orderly, systematic exchange between a seller and a buyer
o It is the process of obtaining goods and services, including all of the
activities associated with determining the types of products needed,
making purchases, receiving and storing shipments, and administering
purchase contracts
TYPES OF HOSPITALITY
OPERATIONS
 TYPES OF HOSPITALITY OPERATIONS

There are TWO major

types of hospitality
segment
oCommercial
oNon-commercial
 TYPES OF HOSPITALITY OPERATIONS

o Commercial
There are 22 types
Hotels
Motels
Casinos
Resort
Lodges
Spas
Quick-service (limited-service) restaurants
Table-service (full-service) restaurants
Snack bars
Food courts
Taverns, lounges, and bars
Cafeterias
Buffets
On-premises caterers
Off-premises caterers
Vending-machine companies
Ice cream parlors and stands
In-transit food services (e.g., cruise ships and airlines)
Contract foodservice companies, which typically operate in plants, office buildings, day
care facilities, assisted care facilities, senior care facilities, schools, recreation centers,
hospitals, and sports centers
Convenience stores with food services
Supermarkets with food services
Department stores and discount stores with food services
 TYPES OF HOSPITALITY OPERATIONS

o Non-commercial
There are 15 types:
Employee-feeding operations
Public and parochial elementary- and secondary-school food services
College and university dormitories and food services
Transportation food services, such as the Meals on Wheels program
Hospitals
Extended-care facilities
Clubs
Self-operated community centers, such as senior centers and day
care centers
Military installations
Camps
Public institutions, such as the food services in some government
facilities
Adult communities
Correctional facilities
Religious facilities
Shelters
TECHNOLOGY APPLICATIONS
IN PURCHASING
 TECHNOLOGY APPLICATIONS IN PURCHASING

There are TWO main

players:
oDistributor
oBuyers (Owner of the
business @ retailer)
 TECHNOLOGY APPLICATIONS IN PURCHASING

o Distributor
There are FOUR main technologies used by
them
Customer databases system
Help to predict customers product needs
and behaviour so the right product will
always be available
Provide information to the marketing
department for the development of
special promotions
To estimate the number and types of
hospitality operations that might open in a
particular area
 TECHNOLOGY APPLICATIONS IN PURCHASING

Ordering system
To facilitate the sales process
To manage and price the product quickly and
easily
To obtain product status on availability or
current price
Can easily communicate between distributor
and buyer
Permits the buyer to order product directly and
receive instant feedback on pricing and
availability
To minimize ordering functions and the paper
trail
 TECHNOLOGY APPLICATIONS IN PURCHASING

Global positioning system (GPS)

To outline routing sequence of the delivery
driver must follow
Can enter the location of the driver need to
visit by typing the address
To determine the most efficient route to take
and determining the optimal number of delivery
truck to use
Estimate both driver downtime and the amount
of product that should be delivered per hour
To track delivery errors, discrepancies and
complaint by customer, receiving agent or
company
 TECHNOLOGY APPLICATIONS IN PURCHASING

Radio frequency identification tags

(RFID)
To track everything from car, to basic
inventory and also people
 TECHNOLOGY APPLICATIONS IN PURCHASING

o Buyers (Owner of the business @ retailer)

There are SEVEN technologies used by them
Fax machine
Permitted buyers to check off on a piece
of paper those items they wanted to
purchase and then to submit this
information instantaneously over the
telephone lines
Reduced the confusion and mistakes
sometimes associated with verbal orders
Printed output could be stored for
historical records, it was used to verify
orders, prove they were sent, and
 TECHNOLOGY APPLICATIONS IN PURCHASING

Personal computers
To analyse huge amounts of data and to manage inventories more
effectively
Minimizing the need to estimate such items as current food costs and
menu item popularity
Computerized point-of-sale systems
Can tabulate and organize tremendous amounts of sales data very
quickly
Permit users to delete menu items, track employee activity, analyse
worker productivity, and force order modifiers (e.g., when a food server
enters a steak order, the computer asks, What temperature? or when
the food server enters a baked potato order, the computer asks, Butter
and sour cream with that?).
Allow a server to carry a wireless ordering system to the table; orders
entered this way are automatically sent to the display screen in the bar
and/or kitchen
 TECHNOLOGY APPLICATIONS IN PURCHASING

Bar code reader

To streamline the inventory-control process
To provide a bar code reader with an identification
code (ID) to look up the product on a database
No need to spend large amounts of time locating a
product on a lengthy printed inventory list and
recording, by hand, the total number of units in
inventory at the end of the month
Data are gathered quickly with the portable bar code
reader and downloaded to the computer for instant
analysis
Provide wireless communication to a computer and
can instantaneously download and upload information
over radio frequencies (RFs)
Used to count in-process inventories
 TECHNOLOGY APPLICATIONS IN PURCHASING

Product identification and specifications

Enable users to search database indexes listing
thousands of product categories and to locate
information about the distributors who sell them
Product ordering
Permit buyers to order products online
Could streamline the order-taking process at the
distributors end
The inefficiencies of the multiple-ordering process are
eliminated
To enters the order on an e-marketplace and sends it
directly to the distributor
Reduces labour costs and time on both the buyers and
the distributors end
To negotiate contractual pricing agreements on
selected products prior to ordering
 TECHNOLOGY APPLICATIONS IN PURCHASING

Product orderingCONT

Purchasing Manager

RFQs
Authorization Supplier A
Approved
Housekeeping
Manager Supplier B
Submit Purchase E-
order Marketplace
F&B Manager Supplier C

Send Product Local Supplier Order

Information
 TECHNOLOGY APPLICATIONS IN PURCHASING

Inventory-tracking and storage management

Use some type of computer application to increase
their inventory and cost-control efforts
Use off-the-shelf software packages and services that
are specifically designed to manage inventory in a
hospitality environment
These packages can:
Cost recipes calculation
Analyse a recipes nutritional information
Calculate food and beverage costs
Evaluate a food items sales history
Forecast sales
Develop audit trails
Allow instant stock level information
Enhance menu planning efforts