Methods of Purchasing

Methods of Purchasing

By: Kheesa Marie B. SonabaBSND 3-1N

Two principal Methods of Buying:

•Informal or open-market buying

•Formal competitive bid buying

Purchasing is a management function, and, as such, the foodservice

administrator will have policies and procedures to guide him or her in

setting up a course of action.

The selected methods of buying depends on:•Institutional policies•On the size of the organization•The amount of money available•Location of the vendors•And the frequency of deliveries

1.) Informal or Open-Market Buying

Informal purchasing is a commonly used method of buying, especially in smaller foodservice operations.

Example: karinderya

Characteristics of Informal or Open-Market buying the system involves:

Ordering needed food and supplies from the list of vendors based n daily, weekly, or monthly price quotations. (Quotation- an amount stated in current price for a desired product or service.

• Prices are based on a set specifications furnished to interested vendors.

• The buyer may request daily prices for fresh fruits and vegetables but may use a monthly quotation list for grocery items.

• The order is placed after consideration of price in relation to quality, delivery, and other services offered.

• Contact between the buyer and vendor is made by fax, computer, telephone, or through sales representatives who call on the buyer.

•The buyer and vendor must agree on quantities and prices before delivery.

•Only vendors who give reliable service and competitive prices should be considered for open-market buying.

Purchasing order form

Purchase order form

The use of Price Quotation and order forms on which to record the prices submitted by each vendor is an ais to the buyer.

2.) Formal competitive Bid buying

In formal competitive bid buying, written specifications and estimated quantities needed are submitted to vendors with an invitation for them to

quote prices, within a stated time, for the items listed.

Bids are opened on a designated date, and the contract generally is awarded to the vendor with the best price and quality.

Advantages and disavantages

•Bid buying is often required by government procurement systems, such as those found in correction facilities, and is found to be advantageous by large foodservice or multiple-unit organizations.

•The bid sytem is satisfactory for canned goods, frozen products, staples, and other non-perishable foods.

•the system is time consuming, and the planning and requests for bids must be made well in advance so that the buyer has time to distribute the bid forms and the suppliers have time to check availability of supplies and determine a fair price.

•It lend itself to manipulationwhen lage amount of money is involved.

Advantages and disavantages

Example: ketchup in McDonalds

Example: Ice cream in Vikings “Big scoop”

Example: softdrinks in PUP- “pepsi”

Variations on methods of Purchasing 

Cost-plus Purchasing

•A buyer agrees to buy certain items from a purveyor for an agreed-on period of time based on fixed mark up over the vendor’s cost.

Prime Vending

•Is a method of purchasing that has gained popularity and acceptance among restaurant and non-commercial buyers during the past several years. The method involes formal agreement with a single vendor to supply the majority of product needs.

Blanket purchase agreement

•Is sometimes used when wide variety of items are purchased from local suppliers, but the exact items, quantities, and delivery requirements are not known in advance and may vary.

Just-in-time Purchasing

•It is in fact an inventory and production planning strategy where the product is purchased in the exact quantities required for the specific productionrun and delivered “just-in-time” to meet the production demand.

Thank you ! ;)

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