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Typical Ordering Procedures - Purchase Procedures

Typically, a purchase requisition is used in the hospitality industry whenever a manager
or supervisor needs an item that the buyer does not order regularly. For instance, if
a chef wants to try a convenience item, such as a frozen beef stew, and if this type of
item is not regularly ordered, the chef must petition the buyer, and possibly other management
people, for permission to use this item in production.
If the hospitality operation’s buyer orders an item regularly, a purchase requisition
is unnecessary. If the item is kept in a separate storage facility, the employee
needs to complete a stock requisition and give it to the storeroom manager in
exchange for the item. (See following articles for a discussion of stock requisitions and
issuing procedures.) If no separate storage facility exists, such as in a typical small
restaurant unit, no formal stock requisition system may be in place. However, an
employee usually must obtain permission from a supervisor before he or she is
allowed to take products, especially expensive products, from the shelves for use in
production and service.
Potential problems are associated with the purchase requisition system. For example,
it tends to dilute the selection and procurement function, in that too many people may
be involved in deciding the types and qualities of products and services that the hospitality
operation should purchase and use. Another problem is that the procedure tends to
invite backdoor selling. Still another disadvantage is the time and effort required to implement
and operate a purchase requisition system.
Certain benefits are associated with the purchase requisition system. First, it can be
a useful training device for those department heads who aspire to become full-time buyers.
Second, it can relieve a buyer of responsibility for ordering mistakes, simply pointing
out that so-and-so improperly completed the purchase requisition. Third, this system
can relieve the buyer of a good deal of paperwork. Fourth, it is a way of controlling
the use of the products and services in the various departments.
This control can be easily accomplished by requiring additional information from
the department head via the “other information” section (see Figure 13.1). For example,
the buyer may want to know how much product the department has on hand, how
much was sold yesterday, how much waste was incurred during the past week, which
supplier to contact, and so on. Requiring all this information does little to endear a
buyer to the department heads, but this control mechanism is, nevertheless, one of the
strongest aspects of the purchase requisition systems.

Before placing an order, the buyer must determine the appropriate order size. The
most common way to do this is to use the par stock approach, for which the buyer or
user-buyer must note what is on hand in the main storeroom areas and in the department
areas (stock that departments hold is normally referred to as the “in-process
inventory”), subtract what is on hand from the par stock, and add products needed
for banquets or other special functions. The buyer must then prepare the appropriate
purchase orders (POs) and send them to the suppliers or call them in, keeping one or
more copies as records. The buyer may interact with department heads and buyers,
but the full-time buyer usually relieves the department head of the major responsibilities
associated with ordering.
In operations that have sophisticated computerized record-keeping and control systems,
there is a greater tendency to use the Levinson approach to ordering (or some variation
of it), as discussed in previous articles.

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