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Nutrition and Food
FNS 200
Donna Barnes

PROCUREMENT (Week 10) Procurement process -Procurement is defined as systematic exchange b/w a seller & buyer to obtain goods & services which incl determining the types of products needed, making purchases, receiving & storing shipments & administering purchase contracts; those responsible for it is called Director of Procurement/Purchasing director. -Purchasing is the activity concerned w/ the acquisition of products; the right product, in right amt of time & at the right price. If the person doesn’t understand food, it can become a problem when there is a need for substitutions. The central purchasing dep is the person who identifies product needs & have other dep they are purchasing for. -The buyer is the one who listens to the desires of customers, who determines what is grown & packaged & who understands how items are processed/manufactured, shipped, sold & consumed. Buyers need to be skilled in interpersonal comm., customer focus, making decisions, negotiation & analytical ability, managing change, conflict resolution, problem solving, influence & persuasion & comp literacy. -Purchasing can be viewed as: the profit center (generates revenues greater than expenses & creates profit for the org.) & the cost center (has expenses but do not generate profits to cover expenses). In a hosp-based environment, the profit center is the cafeteria, kiosk vs. the cost center is the patients; there’s a budget for each patient that doesn’t depend on revenue. Marketing Channel -the market is the medium through which a change in ownership moves commodities from producer to consumer. -The producer is someone who produces raw food to sell. The processors/manufacturers are org that takes raw food items & transforms them into packaged products for sale to customer in foodservice ops. The distributor is the wholesaler responsible for transferring products from processorsupplier; classified as the wholesalers (purchases from various manufacturers/processors & provides storage, sells & deliver products to supplier), brokers (independent sales & marketing rep who contracts w/ manufacturers/processors/ prime-source producers to sell local marketing programs w/ wholesalers, suppliers/ foodservice ops) & manufacturer’s rep (represents a manufacturing company & informs suppliers of products by this manufacturer). The supplier is the org that offers products for sale. The customer is anyone who is affected by a product/service. Sustainability in purchasing -involves the origin of product, type of packaging, composition of product & waste generated. -What are the benefits of buying locally? Aiding the local economy, maintaining good public relations, buying food in smaller quantities & having fresher food, reduces use of fossil fuel for transpo & gas emissions, dec dist food needs to travel & provides food w/ face, high recycled content & less packaging, healthier & safer for employees & customers, less toxic, minimally polluting, more energy efficient & fragrance-free. -What are the obstacles of buying locally? Ability to purchase these foods the entire year, having access to sufficient quantity to meet the op’s needs & often having to work w/ multiple growers to obtain quantities needed. -Hospitals don’t necessarily buy local b/c of seasonal availability of most foods, they need to have a year round purchasing contract b/c of seasonality & the ability to supply food routinely (even if you can buy potatoes locally all year, can they handle vol of 300 patients; it’s only an item out of many so it’s possible but need a diff perspective. Value-added -The inc in value caused by both processing/manufacturing & marketing/distribution, exclusive of the cost of materials, packaging or overhead. The objective of value added is to inc the marketing value of raw & semiprocessed product. Eg. you can buy already peeled potatoes esp if you need that for some dishes but wouldn’t it be easier to buy unpeeled ones & just keep the skin on?—depends on the dish or may compromise appealing quality. Eg. AP flour—value added cost for this incl miller, research scientist, necessary production facilities & distribution Market Regulation -Government: enacts federal legislation that protects consumer. Promotes competition among industries. -Industry: satisfies consumer while making profit. Responsible for complying w/ legislation. -Consumer: alerts gov’t about food safety, nutrition & environment concerns. Expects industry to produce appropriate products. Value Analysis -A methodical investigation of all components of an existing product or service with the goal of discovering & eliminating unnecessary costs w/o interfering w/ the effectiveness of the product or service. Ie. Used for cost reduction; important in enhancing eff & profitability. -In foodservice, the essence of quality is suitability. Eg. A supplier gives the buyer the quality of product identified in the specification but part of the price is due to packaging, storage, production & financial management features that are not suitable for the product used in foodservice, a simpler package would’ve been adeq & likely to be less expensive. -How is a value analysis conducted? Value is the result of the relationship b/w the price paid for the item & its use in the function it fulfills. 1 product is evaluated, problem is stated, products evaluated, methodology, results (cost evaluation) & recommendation. -Product selection: what is involved in the knowledge of purchasing? Buyers must know not only the products to be procured but also the market, buying procedures & market trends; how the materials are produced, processed & move to market; must be able to forecast, plan, organize, control & perform other management-level functions. The primary function of the buyer is to procure req products for desired use at minimal cost. Make-or-buy decisions -The manager has 3 basic choices for the production of a menu item: produce item completely from raw foods, purchase some ingredients & assemble & purchase item in final form from the wholesaler. The 4 factors whether a menu item will be purchased is quantity (right size, not too big/small), quality (tastes good), service (reliable delivery & predictable service) & cost (comparing cost from supplier w/ estimated cost of making the product) -Sometimes depends on the price (Jello made from scratch/ready-made), availability (kosher, pureed foods) or type of equip (potato peeler) Types of Specifications: statement readily understood by buyers & suppliers of the req quality of products incl allowable limits of tolerance, ie. A list of detailed characteristics in a product for a specific use. -Technical=indicates quality by objective & impartial test results, eg. size, weight, parts & metals in equipment like aluminum/stainless steel, detergents/cleaning compounds used; particularly applicable to graded food items. -Approved brand=indicates quality by specifying brand name/label, branded products captures customer’s attention, eg. Heinz ketchup, Pepsi, Coca-cola -Performance=indicates quality by functioning characteristics of product, eg. effectiveness/efficiency of equipment, pH levels of detergent, # dishes to be washed/min. Writing Criteria for specifications -Good specifications are: -clear, simple & suff specific -consistent w/ products/grades on the market -verifiable by label statements, grades, weight determination, etc. -fair to supplier & protective to buyer (eg. if supplier ships you the wrong product & you clearly specified what you wanted, you could be granted a refund) -realistic quality stds -capable of being met by several bidders to enable competition Specific info -Specifications for food products should incl: name of product (trade or brand)/std; federal grade, brand or other quality designation; capacity of container (weight, can size); count per container or approx # of lbs (# of pcs if applicable) & unit on which price will be based. Methods of purchasing -Informal: price quotations are given & orders are made by telephone or personally w/ a salesperson, often used when time is critical. Done if the amt of purchase is so small that time req for formal purchasing can’t be justified; an item can be obtained only from ½ sources of supply; need is urgent & immediate delivery is req; stability of market & prices is uncertain; & size of op may to small to justify formal procedures. Have little legal force. -Formal: tax supported institutions usually are req to use competitive bidding which is optional for private institutions & c
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