BUS606: Operations and Supply Chain Management

Sources of supply vary considerably from location to location. Large cities have a greater number and variety of suppliers than do small towns and isolated communities. Purchasers should establish contact with available suppliers/vendors such as wholesalers, distributors, local producers and packers, retailers, cooperative associations, as well as brokers, and food importers. In most instances, the person in charge of buying will contact several suppliers to obtain the necessary foods. Some wholesalers diversify their product lines in order to meet all food-related kitchen needs. Food products are obtained from various sources of supply. For example, a packing house supplies meat and meat products, while a food wholesaler supplies dry goods. Once the business is established with a supplier, all transactions should be well documented and kept readily available on file. There are two major food categories: perishables and non-perishables

Perishables

Perishable items include fruits, vegetables, fresh fish and shellfish, fresh meats, poultry, and dairy products. As a rule, perishables are bought frequently to ensure freshness. Frozen foods, such as vegetables, fish and meat products, have a longer lifespan and can be ordered less frequently and stored in a freezer.

Non-perishables

Non-perishable items include dry goods, flour, cereals, and miscellaneous items such as olives, pickles, and other condiments. These can be ordered on a weekly or monthly basis.

Keep in mind that just because something does not go bad isn't a reason to buy it in quantities larger than you need. Every item in your inventory is equal to a dollar amount that you could be saving or spending on something else. Consider that a case of 1000 sheets of parchment paper may cost $250. If you have a case and a half sitting in your inventory, but only use a few sheets a day, that is a lot of money sitting in your storeroom.

Choosing Suppliers

When selecting a supplier, it is not enough to consider only the prices, since these, after all, do not necessarily reflect the quality and reliability of goods and services offered by the supplier.

In the very competitive business of foodservice, the quality of one's product is always of paramount importance. From the buyer's standpoint, however, quality does not necessarily always mean "the best". In terms of purchasing, quality means getting the best quality commensurate with the intended use of the product. If, for example, the menu includes soup, the buyer would purchase less expensive, skinless tomatoes rather than the higher quality, more expensive whole tomatoes with skins, which are much too expensive to be used in soup. Similarly, meat that is to be served as an expensive steak should be the best meat available, whereas meat for Swiss steak can be obtained from a variety of inexpensive cuts – and the choice may well depend on their relative cost.

In addition to the criterion of intended use, buyers must consider the product's own characteristics rather than just the recognition of the supplier's brand name. Some packers spend a great deal of money on their brand-name promotions, but a buyer should never let the brand name alone influence his or her purchasing decisions unless (s)he, in turn, intends to advertise the product to customers by the brand name. (S)he must study the products carefully to determine which provides the best quality for the money. In any market, it takes time to learn which suppliers and labels yield the best results, but in the long run, it is time well spent.

Although most buyers are aware of the importance of considering the price of the product they are buying, they often fail to put a price into a proper perspective with other factors that affect the suitability of particular products. Consequently, they put too much emphasis on buying the cheapest product and may, as a result, actually end up paying more in terms of cost-per-portion and preparation time. For example, in one particular market area, there were three suppliers of a roast round of beef. Two of them consistently offered an inside round at a lower price than the third, but careful yield-testing of the product – that is, determining how many portions were obtained for the total dollar cost – indicated that the company with the highest price was really offering the best buy. Their roasts had the excess fat and bones trimmed more closely than those of the other suppliers.

Canned products should also be evaluated according to the price-yield ratio. One brand may have prices considerably lower than its competitors' but may contain substantially less fruit or vegetables, with more juice or water making up the weight. Or the quality itself may be inferior. This is not to say, of course, that lower-priced commodities are always inferior, but rather that buyers should conduct tests to determine quality and yield for themselves.

The only way to judge canned products effectively is by opening a can and inspecting the contents. If the buyer finds, for example, that a can of peaches contains fruit with several bruises, (s)he will know that those peaches are not suitable for use in a salad, where appearance is an important factor. Consequently, (s)he will reject that particular product as unsatisfactory for its intended use. To measure the yield of a canned product, the buyer should determine the net drained weight of that product – the weight of the fruit or vegetable after the liquid has been drained off. The cost-per-can divided by the net drained weight in ounces gives the cost per usable ounce. Therefore, when a buyer considers the price of a product, (s)he must consider the price in relation to the amount of the actual product, not just price per weight or volume.

Furthermore, shopping for price alone can cause a loss of trust between the salesperson and the buyer. Salespeople may bypass "price shoppers" on the really good buys because they are not considered to be good customers.

The food buyers' objective should be to purchase food and supplies from reputable suppliers who meet the following essential criteria:

• They must offer a competitive price structure for a specified quality.
• They must be able to provide good delivery service
• products must arrive in good condition;
• drivers must be courteous
• food and supplies must be delivered on schedule
• They must have specified items in stock, thus avoiding shorts.
• They must be able to provide new product information; nutritional information related to food purchased; and information on market conditions affecting you.
• Rather than favors, the concept of "good service" refers to a positive attitude on the part of the supplier and the ways in which this attitude benefits the entire foodservice operation–not just the individual employee. The supplier who gives good service is the one who will deliver as frequently as the foodservice operation needs deliveries and at conveniently scheduled times (not during meal service periods).
• has courteous delivery agents who are willing to transport deliveries to the receiving area and check the accuracy of the order.
• consistently provides the quality that the buyer has asked for, or informs the buyer when the quality of the product falls below his or her normal standards and provides the option of canceling the order or accepting the best deal possible.
• keeps prices in line with the market, even without being checked on.
• provides new product information and nutritional information relating to food purchased.
• keeps the buyer informed of market conditions so (s)he can stock up on a required item or alter his or her menu.
• is concerned about the reputation of his or her firm and strives to maintain high standards and quality service.

Service, then, is the kind of consideration the buyer can expect from one who is conducting a business, values clients, and works hard to keep them satisfied. Friendship is a wonderful thing, but service is what you are paying for.

You should keep in mind, however, that this is a two-way street. You expect good service, but you should also show consideration to the supplier. In the case of an emergency such as a strike, bad weather conditions, or a move to a new warehouse, the supplier may ask you to modify your schedule somewhat. Try to be understanding and cooperative since you will also expect equal consideration.