The Control Process

Chapter 3
Control
• The process by which managers attempt to direct,
regulate and restrain the actions of people in
order to achieve desired goals
 The control process consists of four steps:

1. Establish standards and standards procedures for

operation
2. Train all individuals to follow established standards
and standards procedures
3. Monitor performance and compare actual
performances with established standards
4. Take appropriate action to correct deviation from
standards
CONTROL TECHNIQUES
¡The control techniques includes the following:
1. Establish standards
2. Establishing procedures
3. Training Personnel
4. Setting examples
5. Observing and correcting employee actions
6. Requiring records and reports
7. Disciplinary employees
8. Preparing and following budgets
What are the two principal causes
of excessive costs?
•INEFFICIENCY
•WASTE
Cost Control
• It is the process used by managers to regulate costs
and guard against excessive costs.
• It is an ongoing process and is involved every step
in the chain of purchasing, receiving, storing,
issuing and preparing food and beverage for sale
 Inventory Control

• “How much of each needed ingredient should I have

on hand at any given time?”
• With the knowledge of what is likely to be purchased
by our customers (Sales Forecast) and a firm idea of
the ingredients necessary to produce these items (
standardized recipes ) the food service operator must
take decisions about inventory levels.
 Inventory Management

• Inventory management seeks to provide appropriate

Working Stock, which is the amount we feel will be
used between deliveries and Minimal Safety stock,
which is the extra amount of a food product we will
keep on hand.
 Determining Inventory Levels

Inventory Levels are determined by variety of factors:

a. Storage Capacity
b. Item Perishability
c. Vendor delivery Schedules
d. Potential Savings from Increased Purchase Size
e. Operating Calendar
f. Relative importance of stock outages
g. Value of Inventory peso to the operator
Storage Capacity
What would happen if there is too much in stock?
A. Increased inventory of items generally leads to greater spoilage.
B. Loss of items due to theft.
C. Large quantities of goods on the shelf tend to send a message to employees that
there is “plenty “ of everything
D. Overstocking may result in the careless use of valuable and expensive products.
E. Too many stocks can result in difficulty in finding items.
Item Perishability

What would happen to inventory if all product have

the same shelf life? Or does not have a shelf life?
If all food products had the same shelf life, that is, if all items would retain their freshness, flavor
and quality for the same number of days, the food service operator would have less difficulty in
determining the quantity of each item he or she should keep on hand at any given time.
 Item Perishability

The need for a balanced inventory of perishable items are being considered
because of the following factors :

1. Serving items that are too old is a sure way to remember a customer complaint.
2. Over stocking of perishable items may lead to moldy, soft, overripe or rotten food items-
a clear indication that the managers does not have a feel for inventory levels that is based on the
need of the operations. It is a sign that sales forecasting methods either are not in place or have
broken down.
Vendor Delivery Schedules

How do we minimize the cost in delivery?

Vendor Delivery Schedules

It is the fortunate food service operator who lives in a large city with many
vendors some of whom may offer the same service and all of whom would like
to have the operators business. In some cases, however, the food service
operator does not have the luxury of daily delivery. In all situations it is important
to remember that the cost to the vendor for frequent deliveries will be reflected
in the cost of goods to the operator.
Vendors will readily let an operator know what their delivery schedule to a
certain area and it is up to the manager to use this information to make educated
decisions regarding the quantity of that vendor’s product he or she will require to
have both in working stock and safety stock.
 Potential Savings From Increased
Purchase Size
• Does purchasing in large quantity minimize your
expenses?
 Potential Savings From Increased
Purchase Size
• Some food service operators find that they can realize
substantial savings by purchasing large quantities and
thus receiving a lower price from the vendor.
• But as a general rule, operators should determine their
actual product inventory levels and then maintain their
stocks within the need range.
• Only when the advantages of placing an extraordinarily
large order are very clear should such a purchase be
attempted.
 Operating Calendar

• What is the difference in terms of delivery of an operation serving

seven days a week and an operation that is only open during
weekdays?
 Operating Calendar

• When an operation is involved in serving meals seven days a week to a relatively

stable number or customers, the operating calendar makes little difference to
inventory level decision making.
• If however, the operation opens on Monday to Friday and closes for Sat and Sun
as in the case of many schools, the operating calendar plays a large part in
determining the desired inventory levels. This is especially true when it comes to
perishable items.
• Many operators actually plan menus to steer clear of highly perishable items at
week’s end. They prefer to work highly perishable items such as fresh seafoods
and some meats into the early or mid part of their operating calendar.
Relative Importance of
Stock Outages
• What would happen to the operation if you run out of
stock?
Relative Importance of
Stock Outages
• In many food service operations, not having enough of a single food ingredient
or menu item is simply not that important.
• In other operations, the shortage of even one menu item might spell disaster.
• A strong awareness of how critical an outage can be helps determine the
appropriate inventory level.
• The food service operator who is determined never to run out of anything
must be careful not to set inventory levels so high as to actually end up costing
the operation more than if realistic levels were maintained.
Peso To The Value of
Inventory Operator
• In some cases, operators select to remove peso
from their bank accounts and convert them to
product inventory. When this is done, the operator
is making he decision to value product more than
peso.
Setting The Purchase Point

A purchase point, as it relate to inventory levels, is

simply that point in time when an item should be
reordered. This point is typically designated by one of
the two methods :
1. As Needed
2. Par Level
As Needed
When operators use the :as Needed” method of
determining inventory level they basically are
purchasing food based on their prediction of unit
sales and on the sum of the ingredients from
standardized recipe necessary to produce sales.
Par Level
Food service operators may set predetermined
purchase points called par levels. When demand for a
product is relatively constant, we may set inventory
level by determining purchase points
Purchasing

Regardless of the method used to determine inventory levels, each

food service operator must turn his or her attention to the extremely important
area of purchasing. If we know the number of guests who will be coming from the
sales forecast and what items are likely to select from our menu, we must
purchase the ingredients needed so that our workers can prepare those items.
Purchasing is essentially a manner of determining the following :

1.What should be purchased ?

2.What is the best price to pay?
3.How can a steady supply be assured ?
 What Should Be Purchased ?

• Just as it is not possible to determine inventory levels

without standardized recipes, it is not possible to
manage costs where purchasing is concerned without
the use of product specifications, or specs.
• A product specs is simply a way for the food service
director to communicate specifically with a vendor so
that the operator receives the exact item requested ,
delivery after delivery.
 What Should Be Purchased ?

A food service specs generally lists the following types of information :

1. Product Name or Specs Number
2. Packaging or unit on which a price is quoted
3. Standard or grade, if established
4. Weight range
5. Type of processing or packaging
6. Size of the basic container
7. Other information such as product yield
 Preparing The Purchase

Purchase order preparation can be simple or complex, but in all cases the written purchase order
form should contain for the following information :
1. Item Name
2. Spec Number, if appropriate
3. Quantity Ordered
4. Quoted Price
5. Extension Price
6. Date Ordered
7. Delivery Date
8. Vendor Name
9. Ordered By _______
10.Received By______
11.Delivery Instructions
The Receiving Area
Once the purchase has been prepared by the purchasing agent, it is
time to prepare for the acceptance or receiving of the goods. In a large
operation, this function is performed by the receiving clerk but in a smaller
operation, it maybe done by the manager or his designee.
There is probably no area of the foodservice establishment more ignored
than the area in which receiving takes place. Receiving area is where we
ensure that the products we ordered are in the
best quality. Proper receiving includes all of the following features :
1. Proper location
2. Proper Tools and Equipment
3. Proper Delivery Schedules
4. Proper Training
 Proper Location

The “back door “ which is

usually reserved for
receiving, is often no
more than that- just
an entrance to the
kitchen.
 Proper Location

a. Large enough to
receive and check the
goods delivered
against both the
invoice with the PO.
 Proper Location

b. It should be kept clean

to avoid contamination of
incoming food
 Proper Location

c. It should be well lit

and properly ventilated.
Excessive heat can
quickly damage delivered
goods especially if they
are frozen products.
Proper Tools And Equipment

Standard items needed in receiving operation :

a.Scales
b.Wheeled Equipment
c.Box cutter
d.Calculator
e.Records Area
 Proper Delivery Schedules

Acceptance hours - In an ideal world, the foodservice

manager would accept delivery of products during
only designated hours. These times would be
scheduled during slow periods when there would be
plenty of time for thorough checking of products
delivered.
• Refusal hours - time wherein the operation may refuse
to accept deliveries.
 Proper Training

Receiving clerks should be properly trained to verify the

following product characteristics :
A. Weight – One of the most important items to verify
when receiving food products is of course their
weight.
 Proper Training

Receiving clerks should be properly trained to verify the

following product characteristics :
B. Quantity – The counting and weighing of products
are equally important. Suppliers make more mistakes
in not delivering products than they do in excessive
delivery. The counting of boxes, cases sacks, barrels
and this must be a routine for a receiving clerk.
 Proper Training

Receiving clerks should be properly trained to verify the

following product characteristics :
C. Quality – Checking for quality means checking the
entire shipment for conformance to specifications.
The effective receiving clerk should develop a keen
eye for quality
Proper Training

D. Price - In the area of training for price, the following two major
concerns are to be addressed :
1. Matching PO unit price to invoice unit price
2. Verifying Price Extensions
If the receiving clerk has a copy of the purchase
order, it is a simple matter to verify the quoted price
and the delivery price. If this two do not match,
suppliers should be notified immediately.
Contract Price – Simply a price agreed by the suppliers
and the operator. It covers a certain product for a
prescribed amount of time.
 Verifying Price Extensions

Price extension is just as important as the ordered or unit price. Price extension or
extended price is simply the unit price multiplied by the number of units delivered.
unit price X no. of units/quantity = Extended Price
Example :

ITEMS UNIT PRICE QUANTITY / NO. EXTENDED PRICE

(PHP) OF UNITS (PHP)

Tomatoes 18.50 3
Potatoes 12.90 6
Carrots 18.29 4
 Verifying Price Extensions

Price extension is just as important as the ordered or unit price. Price extension or
extended price is simply the unit price multiplied by the number of units delivered.
unit price X no. of units/quantity = Extended Price
Example :

ITEMS UNIT PRICE QUANTITY / NO. EXTENDED PRICE

(PHP) OF UNITS (PHP)

Tomatoes 18.50 3 55.50

Potatoes 12.90 6
Carrots 18.29 4
 Verifying Price Extensions

Price extension is just as important as the ordered or unit price. Price extension or
extended price is simply the unit price multiplied by the number of units delivered.
unit price X no. of units/quantity = Extended Price
Example :

ITEMS UNIT PRICE QUANTITY / NO. EXTENDED PRICE

(PHP) OF UNITS (PHP)

Tomatoes 18.50 3 55.50

Potatoes 12.90 6 77.40
Carrots 18.29 4
 Verifying Price Extensions

Price extension is just as important as the ordered or unit price. Price extension or
extended price is simply the unit price multiplied by the number of units delivered.
unit price X no. of units/quantity = Extended Price
Example :

ITEMS UNIT PRICE QUANTITY / NO. EXTENDED PRICE

(PHP) OF UNITS (PHP)

Tomatoes 18.50 3 55.50

Potatoes 12.90 6 77.40
Carrots 18.29 4 73.16
Receiving Record or Daily Receiving Sheet
Some large operations use a receiving record rather than a copy of the
actual purchase order when receiving food items. This method, while taking more
administrative time to both prepare and monitor have some advantages.
A receiving record generally contains the following information :

a. Name of supplier
b. Invoice Number
c. Item description
d. Unit Price
e. Number of Units delivered
f. Total Cost
g. Storage Area
h. Date of activity
 Extension Price & Par Value

a. Delivery schedule is every 3 days.

b. Buffer for Non Food is 50%, and 30% for Food Items.
ITEM PAR LEVEL BUFFER TOTAL ENDING ACTUAL UNIT PRICE EXTENSION
ITEMS INVENTORY ORDER PRICE
NEEDED

MILK 48 tins 8 tins P 46/tin

 Extension Price & Par Value

a. Delivery schedule is every 3 days.

b. Buffer for Non Food is 50%, and 30% for Food Items.
ITEM PAR LEVEL BUFFER TOTAL ENDING ACTUAL UNIT PRICE EXTENSION
ITEMS INVENTORY ORDER PRICE
NEEDED

MILK 48 tins 14.4 62.4 8 tins 164 P 46/tin P 7,544

 SAFETY STOCKS
& WORKING STOCKS
Items Jul July July July July July July Working
20 21 22 23 24 25 26 Stock

Tissue Rolls 125 167 153 134 145 176 157 151

Sausages (kg) 15 18 16 12 14 20 16 15.86

Buffer Safety Stocks Total Stocks for

ordering
Tissue Rolls 85% 151 X .85 = 128.35+151=
128.35 279.35 / 280
Sausages (kg) 75% 15.86 X .75 = 15.86 + 11.90 =
11.90 27.76 / 28