Food Management: Menu

UNIT 6 FOOD MANAGEMENT: PURCHASE Planning — Focal Point of

all Activities in Food
AND STORAGE Service Establishments

Structure
6.1 Introduction
6.2 Purchasing: A Food Management Activity
6.3 The Market and the Buyer
6.3.1 The Buyer
6.3.2 The Vendor or the Supplier
6.4 Mode of Purchasing
6.4.1 Centralized Purchasing
6.4.2 Group Purchasing
6.5 Methods of Purchasing
6.5.1 Informal or Open Market Buying
6.5.2 Formal or Competitive Bid Buying
6.5.3 Other Types of Purchasing Methods
6.6 Identifying Needs and Amounts to Buy
6.6.1 Minimum Stock Level
6.6.2 Maximum Stock Level
6.6.3 Quantity of Foods to be Bought
6.7 Receiving and Inspecting Deliveries
6.8 Storage Space
6.8.1 Dry Storage
6.8.2 Low Temperature Storage
6.9 Store Room Management
6.10 Let Us Sum Up
6.11 Glossary
6.12 Answers to Check Your Progress Exercises

6.1 INTRODUCTION
In the last unit we discussed the importance of menu planning, wherein we learnt that
menu is the “heart” of any food service organization upon which all activity is
centered. Once the menu has been planned, the next operation involved (in the
production of a finished product from its raw material) in the food management in
any food service organization is procurement.

You would realize that various types of products are available on the market shelf.
Now then which product to buy, how to purchase foods and supplies in bulk in
adequate amounts whenever needed and which is the best buying technique in order
to suit the needs for the smooth running of the organization? We will learn about these
aspects and about the procedures for selection of vendors, pin pointing food requirements
and writing specifications for the types of purchases required. Once the purchases
have been done, how are the food items to be received, stored and issued for supplies?
What are the receiving procedures to be formulated and storage conditions of the store
area, so that spoilage of foods once purchased is minimized. The quality of the
finished products cannot be high if inferior food is purchased. In order to have an
efficient and successful operation, there must also be a good system of control and
records of item purchased, stored and used. This is the second aspect covered in the
unit.

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Entrepreneurship and Food Objectives
Service Management
After studying this unit, you will be able to:
• discuss the need for purchasing,
• describe the various types of buying and modes of purchasing,
• explain as to how to receive and store food items purchased, and
• maintain store room records for issuing of supplies.

6.2 PURCHASING: A FOOD MANAGEMENT ACTIVITY

Purchasing is an activity which is directed towards securing materials, supplies and
equipment required for the operation of a food service organization. It represents the
act of buying at a price, which will be profitable for the organization. In the broader
sense the purchasing is a food management activity which involves planning, policy
making and conducting research and development activity, required for proper selection
of materials and source of purchase; following up to ensure proper delivery; and
inspection for quality. In addition, it covers the coordination of activities of the related
departments.

Purchasing for any food service establishment is the most primary step in the
production and service/delivery of quality food. There are many people in the food
service organization that take decisions as to what to buy and not to buy. These may
range from dietitians in hospitals to food and beverage managers of a food service
unit. However, the type of purchases in its quality should be utmost, for the quality
of the finished food product. The person in charge of purchasing should have an
understanding of the external market and how factors affect menu production and
selection. In order to understand the concept of seasonality, they must be able to
identify and evaluate a wide range of products. Food service purchasing requires
knowledge of terminology, specifications, processing requirements, and a thorough
objective and subjective assessment of quality. Because purchasing affects the entire
food service operation, it must be considered at every stage of systems planning.

Purchasing food for an establishment is not a single activity involving exchange of

money for food in a market, but a series of activities from knowing what to buy and
for what end use, to actually getting the food for food preparation. Refer to Figure
6.1 which illustrates the different activities involved in purchasing.

Demand from Requisition Selecting supplier

Prepare specification Prepare order
kitchen with end use &
for supplies according to quantity
specification
quality & method of
buying Order to
selected supplier

Check order Receive food &

Receipts & Inspect foods Expedite order
delivery note
invoice

Figure 6.1: A schematic representation of purchasing activity

Having reviewed the schematic presentation of the purchasing process, you would
realize that food purchasing is the function of ordering the food products. It involves
first determining the product to be ordered, preparing a requisition giving exact
specifications of the product required, selection of the supplier based on price, service
and quality, preparing and allocation of the purchase order to the selected supplier
followed by receiving the order and inspection of received goods and receipts to
134 ensure compliance.
While studying about the purchasing process you would have also noticed that Food Management:
purchasing as an activity involves the market and the buyer. Let us get to know these Purchase and Storage
two links in details next.

6.3 THE MARKET AND THE BUYER

Purchasing as an activity to a great extent involves the market and the buyer. The
market acts as medium through which goods are relocated and transported from the
producer (area of production) to the customer (the buyer). Once the food commodities
are on the market, it is there for the consumer for purchasing. As a consumer, an
individual can encounter various types of markets from where purchasing food items
can be done. A primary market, as the name suggests, is a basic market where
essential goods such as fruit and vegetables are sold near the growing areas itself. For
example, markets of Nagpur act as a primary market for oranges.

From the primary markets goods are delivered to the secondary markets after they
are processed and are prepared for the distribution to the secondary markets. Wholesalers
or purveyors (middlemen) purchase in large quantities from the basic primacy markets
and then distribute in smaller amounts to local buyers. Sometimes, food items are
also distributed through brokers. These act as a connecting link between the buyer
and the seller, without at any given time, assuming the ownership of the food item.
Apart from brokers, food items are also redistributed through commission agents, who
buy the commodities and with a guarantied source of supply, sell the products at price
decided by them. Another type of market a buyer can encounter is a local market.
Such markets are useful for small food service establishments who have money and
storage area to purchase only what is currently required for utilization. The market
is an extremely effervescent yet at the same time ever-changing. Buyers should thus
be aware of current trends in commodities, their pricing and try to evade as many
middlemen as possible in the process of purchasing. In order to do so a buyer has
a number of intelligent roles to play.

In the next sub-section we shall learn about the role of the buyer and identify who
a buyer is.

6.3.1 The Buyer

A buyer is an individual who spends money on behalf of the establishment, to
purchase merchandise for the food service unit. He thus has heavy responsibility for
the well being of the food service unit. Therefore, she/he needs to possess skills and
knowledge in order to be abreast with latest buying trends that would fetch maximum
profit to the organization. A buyer is responsible for all negotiations that are to be done
with market representatives and should also possess adequate legal knowledge in terms
of operating order and contracts. The buyer should be aware of the latest commodities
that are on the market and how they are handled. What food products are available
in which particular market and in what season? He should have sound knowledge
regarding the prevailing prices and fluctuations occurring from time to time in wholesale
and retail markets. Thus geared with all this knowledge, a buyer is provided a certain
degree of independence and authority by the food service organization according to
organizational policies within which the buyer is allowed to operate.

For buying well, the person responsible for placing the order for food on behalf of
the customer must have some basic knowledge. This knowledge will include:-
How Various Commodities are Marketed and Handled?
Food and food products available in market undergo a constant change. Newer
varieties of fresh fruits and vegetables are constantly researched to improve size,

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Entrepreneurship and Food colour, texture and flavour for example the appearance of newer varieties of citrus
Service Management fruits and mangoes, different sizes of chilies, cabbage, tomatoes, potatoes etc.

What Food and Food Products are Available in the Market in a Particular Season?
Fresh foods, which have to be transported long distance, reach the consumer after
a lapse of few days. It is therefore a good policy to use fresh produce especially meat,
fish, poultry and vegetable as soon as they are received in food service establishment.
Appearance should not be the only characteristic on which to base one’s decisions
regarding food purchasing. Quality characteristic of different foods must be kept in
mind.

Prevailing Prices and Fluctuations Occurring from Time to Time in Wholesale and
Retail Markets

Prices of food fluctuate from season to season, and also in response to external factors
like famines, drought, factory closures, customer demand etc. Knowledge of these
equips a food buyer to buy the cheapest and the best products, if he is vigilant of
market conditions.

Size and Types of Packs Available

Foods of the same quality come in many sizes and type of packs. For example rice
may be purchased in gunny bags of 25 kg or polybags of 10 kg or 5 kg, depending
on the requirement of individual food service organization.

Quantities to be Bought for each Commodity at a Time

The buying qualities will depend on number of factors, which are listed herewith:
i) Degree of perishability of food and its keeping qualities.
ii) Rate of its use.
iii) Frequency of deliveries possible.
iv) Amount of storage space available.
A buyer also needs to possess certain qualities to work effectively such as:
• High moral and ethical values, so that he is not influenced by or obligated to
suppliers in any way.
• Objectivity in his judgment of quality offered in term of price and service.
• Loyalty to customer in terms of being able to recognize good quality that is free
of adulteration and contamination.
• Possess skill in identifying markets and establishing good relations with suppliers
around.
• Accepting food brands that are marked by standardizing agencies like FPO, ISI,
Agmark etc. in India.
• Lastly, buying demands maturity, integrity and bargaining skills in order to profit
the food service establishment.
From the above discussion it is clear, that a buyer with high moral values and a sound
knowledge can go a long way in being an asset to the food service unit. However,
the buyer also has certain functions attributed by the food service unit, these include.
• Record keeping for each type of menu developed
• Ability to store food in a manner that enhances its quality
• Rotating use of packaged foods, and
• Formulating specification for food items.
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Therefore a buyer must be successful in making deal without any friction from the Food Management:
market representatives, and at the same time get a good deal for the organization. So Purchase and Storage
far we have focused on the role of the buyer. The vendor or the food supplier too
is an important link in the purchase process. Now, let us look at the role of the vendor
next.

6.3.2 The Vendor or the Supplier

The basic consideration for any food service establishment is the selection of suppliers
who are reliable and have high quality in terms of food items being purchased. The
information about selection of vendors should include details about delivery date and
schedule, reliability, their ability to furnish the desired quantities of supplies and mode
of credit payment. It is also important to note the location and the size of a food
service unit before selecting a desirable vendor. Food service units located near a big
city may have several vendors to suit their needs. However, food organizations that
are small and located outside the city may purchase food items such as fresh
vegetables and fruits locally. For better shelf life, food service establishments may
prefer the use of canned items, for which the buyers may choose a wholesaler. Thus,
it is important to note that the vendors have the following qualities before a buyer
chooses to associate with him.
• Reliability for quality and quantity.
• Convenience vending at doorstep, and
• Adequate credit facility and reliable mode of money transaction.
After understanding the role of the vendor in purchasing, let us now get acquainted
with mode of purchasing that can be adopted by different food service establishments.

6.4 MODE OF PURCHASING

Food service establishments often have their mode of purchasing according to their
convenience. In order to obtain products reliably and with ease, different establishments
opt for mode of purchase that can be centralized or group buying. Let us see what
these terms are.

6.4.1 Centralized Purchasing

Centralized purchasing or buying is one where the purchasing department of the
organization owns the responsibility and authority of bringing in the food products,
equipments for all units in the organization. This type of purchasing holds good in
terms of large food service establishments such as restaurants, university canteens,
hospitals etc. where individual units are relieved from interacting and negotiating from
market and sales representatives, thus saving valuable time. It is a good way for
purchasing, where a food service organization has a one big central storage area from
where supplies are redistributed. However, in case of daily purchases of fresh perishable
items the authority is delegated to multi units of the food establishment.

The disadvantage of such a mode of purchase includes excessive paperwork, delays

in requisition being passed which in turn have an effect on the incoming supplies being
late. Also, friction or arguments may develop between food service unit and the
purchasing department if clear-cut specifications are not mentioned for quality of
supplies. Therefore, this kind of purchasing is generally suitable for large food service
units involved in buying food commodities in large amounts.

6.4.2 Group Purchasing

Group purchasing is different from centralized purchasing where in the members
responsible for buying are independent of each other and do not fall under the same
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Entrepreneurship and Food management. Here, two or more small service set-ups may combine together for
Service Management buying merchandise at lower rates. This is done with an effort to increase the amount
of purchases; lower prices on merchandise and at the same time consolidate buying.

We can understand this concept with the help of an example. Raja is running his own
school canteen. Raja in order to purchase food items can associate with different
canteens, in his vicinity, to purchase large volumes of goods (in bulk) at prices that
can be negotiated on by bargaining.

As we can see the advantage of group purchasing is definitely the price advantage
of merchandise. However, association of different organizations together may initially
require some time. Another point that needs to be remembered is that here the buyer
is employed by the group or member organizations and the cost of employing is borne
by the member organization itself. With this information on hand, let us now study
the various methods of purchasing prevalent in the market today. But first let us
recapitulate what we have learnt so far. Answer the questions given in check your
progress exercise 1 and tally your answers with the answers given at the end of the
unit under the heading answers to check your progress exercises.

Check Your Progress Exercise 1

1) What are the various types of markets that a buyer can encounter while
purchasing?
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2) Discuss the qualities a buyer should posses for efficient purchasing for food
service unit.
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3) Differentiate between centralized and group purchasing.
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6.5 METHODS OF PURCHASING

Every establishment sets it own purchasing policies according to its specific
needs for different types of food. Whatever may be the policies laid down; the method
of buying depends largely on the quantities of the various items to be purchased at
a time. The different methods possible are discussed herewith and highlighted in
Figure 6.2.

6.5.1 Informal or Open Market Buying

Most food service establishments use the informal methods for buying food items.
The buyer invites quotations from suppliers for items according to required
specifications. The suppliers are then selected on the basis of the sample, prices,
delivery schedule and other services offered. Open market buying is an informal
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method and can easily be adapted to individual establishments. It is generally used Food Management:
for purchasing of perishable foods like fruits, vegetables, meat etc. Purchase and Storage

Purchasing Methods

Direct Formal Negotiated One-stop Wholesale Auction

Delivery or Buying Purchasing Buying Buying
Informal
Competitive Blanket
or
Bid Buying Purchasing
Open Market
Buying

Figure 6.2: Purchasing methods

This method of buying helps to appreciate and be aware of the change in market
situations and make the best use of prices and commodities by using instant discretion
in purchases. For example, on a visit to the market with an idea of buying brinjal
among other vegetables, if the buyer finds that the brinjals are mostly of poor quality,
he can instantly decide to replace the items with the vegetables of good quality.

Open market buying, therefore, is the most commonly used method of purchasing.
This type of buying involves purchasing food commodities on daily, weekly or
monthly basis. Order is generally placed after consideration of price in relation to
quality and delivery offered. Most food service establishments use these methods for
buying food items. Here the buyer invites quotations from suppliers for items according
to specifications. The suppliers are then selected on the basis of sample, prices,
delivery schedule etc. as illustrated in Figure 6.1 earlier. This type of purchasing can
be done by visit to markets or via telephone after monthly quotation list for grocery
items have been given. In this type of buying a buyer can choose from a list of
vendors for various items that are required. In this way, comparison of prices between
various vendors can be made.
The advantage of such a method is:
• It requires less lead time compared to formal method of buying
• Is appropriate for small service units such as school canteen etc.
• This method is useful when immediate delivery is required.
However, the method has its own disadvantages. Occasionally, the prices of the
vendors should be compared with other vendors in the market to avoid ‘price
creeping’. Also introduction of a new supplier every now and then can check the
practice of price creeping.

Having seen what informal method of buying is let us next learn about the formal
method of buying.

6.5.2 Formal or Competitive Bid Buying

In the competitive bid buying, the formal quotations are invited from the sellers against
the written specification of each category of foods. Refer to Figure 6.3 which
illustrates a fruit and vegetable quotation and order. This request for bids material is
widely distributed or posted to the interest of the sellers. Along with the specification
the buyers also include their request, conditions like last date of quotation, general time
between orders and delivery, willingness to accept whole or part of the bid, discount,
and so on framed within the purchasing policy of each establishment.
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Entrepreneurship and Food The quotations received remains sealed till the date of opening (also indicated by the
Service Management buyer’s request). The purchasing officer then opens them in presence of the bidders
and representatives from the users department, accounts and administrative staff, who
witness the quotation accepted. The practice is to accept the quotations of the lowest
bidder, unless products clearly fail to meet the specifications. Government establishments
generally adopt formal methods of buying for which central purchasing is done such
as, hospitals or government schools, colleges, universities.

Fruit and Vegetable Quotation and Order

Name of Food Service:

Fruit and Vegetable Order Form
For use on: Delivery date:

Item Specifications Amt. Current Amount Price Quotes

Needed Amount to Order Vendors
1 2 3 4 5
Date Date Date Date Date

Figure 6.3: Fruit and vegetable quotation and order

After knowing the procedure for formal method of buying, let us understand some
terms commonly associated with the formal buying. These are defined herewith.

A) Writing a Specification of a Product

Refer to Figure 6.3. Do you notice the specifications column? A specification is a
detailed description of a product, stated in terms clearly understandable to both the
buyer and the seller. It should be brief and concise and carry sufficient information
about the food item being ordered for purchase to avoid misunderstanding and
confusion. Thus, a specification should include the following details of a product:
• Name of product
• Brand (if applicable) e.g. Brand of Ketchup
• Unit on which price is quoted
• Name and size of container (whether order is done for a basket purchase or in
cartons).
• Count per container
• Specific weight (e.g. for fruits and vegetables)
• Degree of maturity i.e. ripe or unripe fruits/vegetables
• In case of canned products: Drained weight or specific gravity should be specified
• Temperature at delivery
• For meat and poultry: various cuts of meat be specified, fat percentage and aging
in meat.
Thus, the above-mentioned points should be included as specification before placing
an order.
Next, let us get to know the meaning of bid request.
B) Bid Request
A bid request form originates in the office of a personnel authorized to purchase the
140 food items. It should include the following:
• Required quantities Food Management:
Purchase and Storage
• Purchase specification of each item i.e. quality
• Date on which bid request is submitted
• Date of delivery
• Mode of delivery
• Terms of payment
• Willingness to accept all or parts of bid
• Discounts offered
• Periods for which supplies are require
• Terms of negotiations
• Samples to be tested.
A bid should always be kept sealed and confidential till the due date of its opening.
Bids should always be opened in front of an office of authority. Bids should always
be stamped to indicate date and time of receipt and all bid requests received after due
dates should be duly returned unopened. Although major food service
establishments use this method for purchasing merchandise, nevertheless it has its own
advantages and disadvantages. This is particularly advantageous for procurement of
goods at a large scale or in a multiple unit organization, where a formal bid clearly
minimizes all confusions regarding quantity, quality, price and delivery. It is also
suitable for purchasing of frozen products and non-perishable food items. However,
this method is not suited for buying perishable items like fruits and vegetables due to
daily fluctuations in prices in the market.

The main disadvantages of this type of buying are that it requires careful planning in
advance for filling in bid requests, which is time consuming. Secondly, manipulation
in terms of monetary resources occurs due to political pressures in major food
establishments.

Now that we have reviewed the formal method of buying and the terms associated
with it, we move on to the study of the types of competitive bid buying.

Types of Competitive Bid Buying

Depending on the type of food service unit and its financial resources, need to buy
and storage a number of variations in formal method of purchasing has come up. Let
us now see what these variations are:

A) Firm Fixed Price (FFP)

In this type of contract, the prices are not subject to change or adjusted during the
period of contract. Here, the vendor is at maximum risk and this is used when there
is a definite specification and fair prices are quoted from the very beginning.

B) Negotiated Buying
As the name suggests this involves negotiations between buyer and the sellers regarding
the price and quantities. This method is used generally for seasonal items, which are
limited in supply, where both buyer and the seller are keen that the product is lifted
quickly from the market. Negotiated buying, therefore, involves taking quick decisions
in fluctuating market. The buyer contacts the seller directly, negotiates the price and
the quantity and request bids are submitted as soon as possible. This method is thus
quick and more flexible and less formal.

Negotiated buying may be adopted when purchasing food items directly from farmers
or manufacturers, but this is generally possible only for very large establishments 141
Entrepreneurship and Food because the contracts with manufacturers would be feasible for large quantities. The
Service Management advantage is of course in terms of quality, as well as, price, but storage cost increases.

In this two types of contracts may be signed between the buyer and the seller. This
include:

1) A Firm at Opening Price Contract (FAOP)

In this type of contract, the buyer agrees to take the supplies at a price established
in the future when yield is known, rather than at pre-season prices when the contract
is made. Such an agreement is therefore firm but not signed till the seasonal yield is
known.

2) A Subject to Approval of Prices (SAP) Contract

In this case the buyer has the option of rejecting the orders if the fixed price in the
future is not acceptable to him.

With this we end our study of competitive bid buying method or the formal method
of food purchase. There are other methods of purchase which can be adopted by food
service organizations. These are described next.

6.5.3 Other Types of Purchasing Methods

Apart from the ones described above, there are also other methods of purchases that
are used by food service establishments for purchasing merchandise. These include
the wholesale buying, blanket purchasing, one-stop purchasing and the cost-plan
purchasing. Let us get to know about these methods.

A) Blanket Purchasing
This type of purchasing is used when wide variety of items are bought from local
suppliers but the exact items, the amount and delivery specifications are unknown
in advance or prior to purchase. Here, vendors agree to supply on ‘charge- account
basis’. All food items are ordered during specified period, and such a kind of
purchasing should be established with more than one vendor in order to avail best
price and for checking price creeping.

B) Cost-Plan Purchasing
This type of purchasing is also called as specialty buying, where the buyer purchases
only one kind of item such as meat and poultry etc. Here, a buyer decides to purchase
certain merchandise from a wholesaler for a specific time period based on a fixed
markup over the dealer’s cost. The dealer’s cost here includes the cost of material,
cost incurred in packaging, shrinkage and fabrication of a product. The markup also
includes the overhead expenses, cost of deliveries and other such expenses borne by
the vendor. While negotiating such a deal a clear specification of what to include in
the cost and dealer’s markup should be done.

C) Prime Vendor/One-stop Purchasing

This type of purchasing which is gaining popularity amongst food service establishments,
involves purchasing of all kinds of merchandise from only one vendor (prime vendor)
at an agreed upon price. This type of agreement is only for a specific stated time
period and involves only certain number of specified quantity of food items.

One-step purchasing not only saves time for the buyer but also saves overhead and
delivery cost as compared to dealing with several vendors. The disadvantage of such
type of purchasing is that in case of a loss of back up vendor, one may have to solely
depend on one particular vendor without any price competition.

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D) Wholesale Buying Food Management:
Purchase and Storage
In this method a contract is signed with the wholeseller for purchase of goods at a
specific price for a future period. The agreement specifies the interval between the
deliveries for the contract period, along with the quantities required and when. This
method is also suitable for larger organization or central purchase departments.

Whatever method is used for purchasing food, it is advisable to make the procedure
simple with minimum paper work. Some factors, which need to be considered while
purchasing food are enlisted herewith:
— Price: This enables cost comparison with different brands with similar products
to be made instantly, and buying decision arrived at without undue delay.
— Labeling: Labels which indicates quality symbols like ISI, FPO, AGMARK, date
of manufacture, expiry date, maximum retail price/kg or pack, nutritional
information, all enables the food buyer to select food properly as per his/her own
requirements.
Thus, we have now read about the various methods of food purchasing a food service
establishment can choose from based on its needs and requirement. Now let us see
how an organization identifies its needs for placing an order of purchase.

6.6 IDENTIFYING NEEDS AND AMOUNTS TO BUY

A major factor in ordering food is maintaining the right level of inventory or stock.
A food service establishment should identify the quantities needed for preparing a
planned menu and supply ingredients to churn out the correct recipes. All food items,
later used as ingredients, are required to be stocked prior to the production of dishes
in a food service unit. Hence a food service unit must have a certain stock in order
to keep the unit running. There are a number of factors which need to be considered
to arrive at the proper size order and timing to control inventory levels. The factors
need to be considered include:
• What is the daily usage rate?
• What is the lead time once an item has been ordered for delivery of the product?
• What is the minimum safety level for the inventory item in question?
• What level of inventory balance should be considered the reorder point for
ordering?
• What is the maximum stock/inventory level that should be allowed?
A brief review of the stock level is presented herewith.

6.6.1 Minimum Stock Level

Minimum stock level can be defined as the point established for each level below
which the inventory should not fall. An inventory being a system of communication
between area of production and store room, where needs are expressed for production
of items. Establishing minimum levels of stock provides a medium through which
buyer can be alerted for quick replenishment of used goods.

Minimum stock levels can then also be referred to as a safety factor for replenishment
of finished food items as mentioned above.

6.6.2 Maximum Stock Level

Maximum stock level can be defined as the stock equal to minimum stock level plus
the estimated usage determined through prior utilization of goods. Maximum stock
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Entrepreneurship and Food level is the means of alerting the buyer from overspending and also from the
Service Management fact that a particular item requires no requisition till the time it has been used or asked
for.

Based on these levels order forms for purchasing of items are formulated, as we have
seen before. Next, let us get to know how to decide on the quantity of food to be
bought.

6.6.3 Quantity of Foods to be Bought

The quantity of foods bought at one given time, the frequency of use of one food
item and the monetary resources on hand all determine the amounts to be purchased.
Apart from these storage space, portion size and dishes on the menu, number of
servings needed, and cooking losses also mount to the amount of purchases to be
done. For instances milk and bread are items that are consumed on a daily basis and
hence its delivery is seen several times a week and the orders for these items are also
such that the inventory is maintained at a desired level.

Now, once the foods items are purchased its inspection and proper receiving is
necessary. So, next, let us see the correct procedure for receiving of items purchase
on order. But first let us recapitulate what we have learnt so far by answering the
check your progress exercise questions given herewith.

Check Your Progress Exercise 2

1) Explain the reason for ‘price creeping’ in open market buying?
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2) Briefly discuss the disadvantages of competitive bid buying.
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3) Briefly explain
a) Firm Fixed Price
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b) Firm at opening price contract (FOAP)
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c) Minimum stock level and its significance
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 Food Management:
6.7 RECEIVING AND INSPECTING DELIVERIES Purchase and Storage

As mentioned earlier in this unit, an important part of the purchasing process is the
receiving, storage and issuing of food and supplies. Once the food material has been
ordered for the supply their handling at time of delivery represents the process of
receiving. Once the merchandise has been ordered, all items needs to be thoroughly
inspected for specifications mentioned at the time of order and checked against the
invoice or delivery slip. Perishable food items are checked for any spoilage. Items
required to be counted, measured and weighed should be properly done. Food items
such as canned products should be checked for damage and exposure to high
temperatures if any. Also, all inspection related to quality and invoice prepared by
the vendor should be in accordance with the purchase order. Sometimes absence of
adequate inspection can be a major pitfall in receiving of foods. A number of
precaution are necessary at this stage to ensure that the food is not damaged or
discarded because of careless handling, spillage, cross contamination and incorrect
weights or volume.

Let us review the major steps involved in receiving of purchases. The process involves
the following:
1) the delivery note is checked with copy for order placed.
2) count, weights or volume are checked to tally with the amounts of various items
on the delivery note.
3) the quality of all ingredients is checked with the specifications given to the
supplier. Any unacceptable items should be returned with the person bringing the
delivery.
4) any discrepancies noticed should be indicated on the copy of the delivery note
signed to be notified to the supplier. When the delivery note is signed the material
that is delivered has been accepted. In this case any damaged item is noticed
after the delivery the suppliers are informed.
Often receiving is done in an area located near the delivery door of the food service
unit. It is usually an area exclusively reserved for receiving of deliveries and is
generally located at the rear side of the establishment. The receiving area should at
least consist of a platform for loading food items, weighing balance/counter scales,
table for inspections of goods and carts for moving goods to storage area.

Care should be taken to maintain the receiving area in a clean way, devoid of any
pest, open drains etc. The area should also have space for water supply for scrubbing
purposes. Cares should be taken that the vendor does the delivery of goods with
proper invoice. Therefore, the major check list of things to be remembered during the
delivery procedures include:
1) The suppliers get an order in writing stating the date on which supplies are
required.
2) He passes it to this store department or purchasing officers. The order is than
kept ready to delivery on the specified date.
3) It is transported to the buyer’s store for receiving.
4) The goods are delivered along with two copies of the delivery chalan, one signed
by the buyer and returned to the suppliers in conformation of having received the
goods; and second is returned by the buyer for counter checking the bill.
5) Receiving material is generally done close to the storage or just outside them so
that it is easier to store them after receipt. In larger establishments the receiving
area may be well designed space provided with weighing, washing and packing
facilities for storing food in cold or other storage.
145
Entrepreneurship and Food Once the purchases have been delivered and received the next logical step involved
Service Management is its proper storage as soon as possible, with correct store room management. Next,
we shall get to know how food items are stored in a food service establishment.

6.8 STORAGE SPACE

The proper storage of food after it has been received and checked is an important
factor in the prevention and control of loss of waste.

Depending upon the speed with which the food spoils, they are classified as perishable,
semi-perishable and non-perishable, each type requiring different types of storage
conditions. There are basically two types of storage, dry storage and low temperature
storage. These are further subdivided according to the temperature required as shown
in Figure 6.4.

Storage Dry Low Temperature Storage

20° to 25°C 60° to 65° 3 to 11°C 0 to 3°C –18

to –20°C
(Store room) (RH) (Refrigerator) (Cold Storage) (Deep freezer)
Figure 6.4: Storage temperature for food items

Let us get to know more about these storage conditions.

6.8.1 Dry Storage

As the name suggests, dry storage is a place for the storage of dry ingredients (usually
stored at room temperature of 20 - 25°C). The storage should be dry, cool, well
ventilated and free from infestation of any kind in order to maintain the food in good
condition.

The space for dry storage must be large enough to hold stocks for commodity for
one to three months according to its frequency of use. The average temperature of
a dry storage varies depending on the range and nature of commodities stocked, and
weather conditions. If the outside temperature is too high as is the case of tropical
countries, then the temperature of the storage may have to be brought down by air
cooling the store, or the length of storage time of commodities are reduced. For
example, firm green tomatoes, under ripe bananas, lemons and other citrus fruits
require temperature of 18°C to 24°C while the potatoes and onions can be stored at
higher temperatures for few days, the latter must however be put into storage at
10°C for 3 weeks before use, to allow sugars to be converted into starch. Foods,
which need to be held only for 2 - 3 days, require a temperature of 10 - 15.5°C,
like breads and bakery products. Where space allows fats and oil should be stored
away from the rest of the food.

Dry store rooms should be well lighted so that every item placed in them is easily
visible and identifiable. Good ventilation helps to prevent spoilage and maintain the
temperature required.
Next, we shall learn about the cold temperature storage.

6.8.2 Low Temperature Storage

The principle underlying the designing of low temperature storage is to maintain
temperature at levels, which will inhibit the growth of microorganism, there by
146 preserving the food. At high temperature, microbial activity gets accelerated because
perishable food have relatively high portion of moisture providing suitable humidity for Food Management:
spoilage to occur. There are three distinct types of low temperature storage based Purchase and Storage
on different temperature range, as you may have noticed in Figure 6.3, maintained
for the storage of semi perishable and perishable food. These include:
a) Refrigerated storage
b) Cold storage
c) Freezer storage
Let us get to know more about these low temperature storage.

A) Refrigerated Storage
Refrigerated storage is a storage space planned and maintained at a temperature
3°C to 10°C. Such storage is necessary for maintaining the quality of perishable food
for 2 - 3 days only after which certain changes start taking place in food due to
enzymatic or microbial activity.

It is a good practice to keep food covered in refrigerator to prevent them from drying.
This also prevents odour from one food being picked up by others.

B) Cold Storage
Cold storage is generally one which the temperature is maintained between 0° and 3°C,
thereby reducing the enzyme activity to a minimum. Such storage are also called “chill
room” and can hold perishables for over a week, and in the case of fruits and
vegetables, even up to a month depending on the stage of ripeness and variety.

C) Freezer Storage
In the freezer, storage temperature ranges from –18°C to –20°C. For successful
freezing, it is necessary to blanch foods, cool quickly to freezing temperature and pack
in air tight containers or bags in quantities which can be utilized immediately
on thawing. A food removed from the freezer storage for use must never be
partly or wholly kept back or refrozen, as there is a serious risk of microbial
contamination.

Now that we have learnt about the storage temperature appropriate for different foods.
Next we shall focus on another important aspect i.e. store room management.

6.9 STORE ROOM MANAGEMENT

Maintaining stores efficiently require a good communication system between the
storekeeper and the user department, to know their needs specifically. In order to
allow smooth functioning of a store room, the organization of storage should be
efficiently done. Let us get to know how.

Organization of Store
The arrangement of food items in storage spaces affects the efficiency with which
foods can be stocked, issued and reordered. Hence the organization of store may need
to consider the following:
• Arrange the food according to type of commodities.
• Place stock items in alphabetical order of food categories.
• Stamp the date of delivery on every stock received before shelving to ensure that
old stocks are used first.
• Place the item on the shelf according to the stamped date, with earlier one in front
row and late one at the back. The placement of commodities should follow first-
147
Entrepreneurship and Food in-first-out policy (FIFO). That is the older commodity should be placed in front
Service Management of the shelf so that they are used earlier.
• Mark prices on the stock as well. The information can be made readily available
to the users department and help the catering manager.
• Arrange products to give an organized appearance. Efforts should be made to
ensure that commodities do not lie around the floor at any time. The items that
come in paper packet or sachets once opened should be transferred to airtight
containers to ensure the retention of its quality. Proper label of each container
should be ensured.
• The store room should be well ventilated to allow air circulation and reduce
humidity.
• Infestation of cereal and pulses by weevils, presence of white ants in the store,
or rodents and other pests can damage the flavour, and quality of food making
them unfit for the consumption. The store should be kept clean and free from
rodents, insects and pests.
• The store room should be preferably kept locked and opened only for issue, to
safeguard the commodities from pilferage.
With all these factors in mind, efforts should be aimed at increasing shelf life of food
through care in receiving and storage, while at the same time maintaining the quality.

Maintaining stores efficiently require a good communication system between the

storekeeper and the user department, to know their needs specifically. Let us now see
what is this communication in the form of records that operate in a store room.

Store Room Records

A number of records need to be maintained as food move very fast in and out of
the stores, and it is necessary to be able to account for them at any time. These
include:

Requisition Slip
This is a request form submitted by the user’s department to the store in charge for
the issue of required items. It is customary to put in the requisition slip to the store
at least one day in advance, so that the food items required for the next day are
collected and issued in time for food preparation.

Order Forms
The person authorized to do so must sign an order. The catering manager authorizes
purchase in small establishments, and a purchasing manager in establishment, which
has purchasing department.
Stock Book Maintenance
In this records of all items received and issued are maintained along with stocks in
hand and there monetary values.
Invoice
This is the bill, which follows a delivery, to be paid for the buyer.
Here a brief review is presented of the store room record. A detail review of the
inventory records and control is presented in Unit 9 later in this course. Do read the
unit carefully.

148
 Food Management:
Check Your Progress Exercise 3 Purchase and Storage

1) Discuss the major steps involved in receiving.

.................................................................................................................
.................................................................................................................
.................................................................................................................
2) What are the pitfalls in receiving and delivery of goods? Discuss.
.................................................................................................................
.................................................................................................................
.................................................................................................................
3) Briefly explain
a) Perpetual Inventory
..........................................................................................................
..........................................................................................................
b) Invoice
..........................................................................................................
..........................................................................................................
c) Receiving area
..........................................................................................................
..........................................................................................................

6.10 LET US SUM UP

In this unit we learnt that purchasing is an extremely essential component of all food
service establishments and is important to keep the kitchen fuel running. Purchasing
can be carried out in a number of ways the two broad categories being formal and
informal method of buying.
All food organization adopts method of purchasing suited to their needs and requirements
and means of communication between the kitchen → store room → buyer is maintained.
Once purchases are bought they are inspected and received inventory made and
properly stored according to perish ability. All demands of items are met through the
store room via requisition slips and simultaneous entries into the store room record.
All records are kept up to date to prevent any confusions and misunderstandings.

6.11 GLOSSARY
Requisition Slip Form : is a request form submitted by the user’s department
to the store in charge for the issue of required items.
It is customary to put in the requisition slip to the store
at least one day in advance, so that the food items
required for the next day are collected and issued in
time for food preparation.
Invoice : is a bill, which follows a delivery to be paid for the
buyer.
149
Entrepreneurship and Food Receiving area : a place located near the rear of the food service unit
Service Management where purchases are downloaded and bought in for
inspection.
Inventory : a system of communication between area of production
and store room.

6.12 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress Exercise 1
1) The various types of markets are primary, secondary and local. Primary market
is one where goods grown are sold there itself. The goods after basic processing
is sent to secondary market. Local market is a market located near the food
service establishment.
2) The buyer should be personnel of high morality and ethical values. He should
possess a good knowledge about latest trends in market, various types of vendors
and know about mode of payments. He should possess good bargaining skills.
3) Centralized purchasing is one where the purchasing department owns authority
for purchasing all kinds of merchandise for all food service units in an organization.
Where a group purchasing involves association of two or more small service set-
ups for buying merchandise at lower rates.
Check Your Progress Exercise 2
1) Many times in informal method of buying, buyers generally stick to one particular
vendor, thus resulting in prices of one vendor not being compared with other
slowly resulting in price creeping to set-in.
2) The major disadvantage of competitive bid buying is that it is time consuming
and requires careful planning. Moreover manipulation in terms of monetary
resources occurs often due to political pressures.
3) a) Firm fixed price is a variation of formal method of purchasing where prices
of commodities are not subject to change or adjusted during the period of
contract; thus putting the vendor at maximum risk.
b) FAOP is a type of contract where the buyer agrees to take the supplies at
a price quoted in the future when yield is determined rather than at a
pre-season contract.
c) Minimum stock level is a point established for each level below which the
inventory should not fall.
Check Your Progress Exercise 3
1) The major steps involved in receiving are firstly checking of the invoice followed
by counting, weighing of items as per delivery note, quality check as per order
and return of damaged goods if any.
2) The pitfalls in receiving and delivery are first linked to quality. Often the quality
of a good delivered are not according to specifications, Volume and weight control
of goods should also be checked for which at times results in misunderstanding
and confusing.
3) a) Perpetual inventory is also called as the running record of balance on hand
and provides a continuum to what products are purchased are in storage and
are being used at any given times.
b) Invoice or delivery slip is the bill which follows a delivery to be paid by the
buyer it accounts for name, specifications, mode of payment and unit and
actual cost of items ordered, at least.
c) Receiving area is the place generally located at the rear of food service
establishment where goods ordered or purchased are loaded down,
checked and inspected with counter scales on platforms before storing into
150 store room.