BUS606: Operations and Supply Chain Management

Food products, in particular, fluctuate in price over the year, due to many factors:

• Seasonality: When food is in season, there is more of it available in the local food supply, bringing prices down. Additionally, foods in season are usually of higher quality and have a longer shelf life than those that are out of season and need to be transported long distances to market.
• Weather: Severe weather can have a huge impact on the cost of food. Drought, flooding, and unseasonable frost have all affected major produce-supplying areas of the world in recent years, causing a rise in prices for many items.
• Cost of transportation: If the cost of fuel or transportation rises so does the cost of food that needs to travel to the market.
• Commodity prices: A number of foods are traded on the commodity market, such as meats and grains. These prices fluctuate as buyers who trade in these products in large volumes buy and sell, much like the stock market.

Before purchasing any food items, ask the following questions.

• When is the item to be used?
• Which supplier has the best price and the best quality? Where an item is purchased should be determined by the price and the quality of the available supplies. When ordering supplies, it is advisable to get prices from at least three sources, then purchase from the supplier who quotes the best price for a comparable quality.
• When will the item be delivered? Depending on the distance of the food service establishment from the supplier, the delivery may take hours or days. Remember, it is extremely difficult to maintain food quality and consistency if you do not know when your order will be delivered. For this reason, menu planning and a running inventory are two of the most important aspects of purchasing procedures.