Transcript Purchasing
Purchasing: Outline The Players » The market » The government – agencies – laws » The buyer The Process » Types of purchasing » Methods of purchasing The Procedure » Steps to take » Records to keep The Product » Specifications » Determining yield » Make vs. Buy decisions Purchasing is getting the right ____________ to the right __________ at the right __________ in the right __________ at the best __________ Purchasing: The Players The market = ______________ (of ownership) » ______ = basic source of supply » ________ = middlemen » _______ Marketing involves the product plus labor, packaging, transportation, advertising; overhead… Every change of ownership increases _________! Marketing Share The Food Dollar processing Retail trade; other Foodservice transportation 7¢ 4¢ 4.5 3.5 18¢ 19¢ ¢ ¢ packaging Finance; insurance 34¢ energy 16¢ farm value In the U.S. each $1 spent on food in 2008 went to: Source: USDA, ERS, Food Dollar Series Accessed 9/13/11 from http://www.ers.usda.gov/Data/FoodDollar/documentation.htm The Food Dollar In the U.S. each $1 spent on food in 2006 went to: other 4.5 4¢ 22¢ ¢ advertising pre-tax profit fuels; electricity 4¢ ? ? transportation 8¢ packaging 39¢ labor farm value 18¢ Source: USDA, ERS, Price Spreads from Farm to Consumer: Components of the Marketing Bill. Accessed 9/6/09 from http://www.ers.usda.gov/Data/FarmToConsumer/Data/compone ntstable.htm The Food Dollar In the U.S. each $1 spent on food in 1996 went to: 8.5¢ 4¢ 4¢ 4¢ 3.5 15¢ ¢ fuels; electricity advertising pre-tax profit transportation packaging other 38¢ labor farm value 23¢ Purchasing: The Players Value-added factors Also, supply and demand, competition, government policy, economic trends, weather conditions can affect price Purchasing: The Players Government agencies » _____: meat, poultry, eggs, fish » _____: everything else – standards of identity – standards of quality – standards of fill – sanitation/food safety – labeling » National Marine and Fisheries Service » Public Health Service » EPA: pesticides, water safety » U.S. Treasury: alcohol Purchasing: The Players Laws » Law of agency: buyer’s authority to act for an organization; liability » Law of warranty: supplier’s guarantee of performance of goods » Law of contract: agreement of terms between two or more parties » Law of Title to Goods: when does the shipment change ownership? (FOB: Free-onboard vs. CIF: cash, insurance, freight) Purchasing: The Players The Buyer » Brokers vs. agents » Ethics? » Policies should be established beforehand Purchasing: The Process Types of purchasing • Single-unit purchasing • Warehouse clubs • Centralized purchasing • Group/cooperative purchasing Purchasing: Methods of purchasing Informal/Open-market vs. Formal Bid – If U.S. gov’t related business, must solicit bids from all qualified vendors Purchasing arrangements » Cost-plus purchasing » Prime vending » Blanket purchase agreement » Just-in-Time purchasing Purchasing: The Procedure 1. Identify needs ________ system ________ system 2. Determine product ____________ name, grade, unit purchased, container sizes, count per container, form… 3. Determine __________ needed depends on forecast, portion size, cash available, frequency of delivery, storage space… 4. 5. Research market for availability Negotiate and place an order consider price, quality, service 6. Receive, pay, store… Purchasing: The Procedure Purchasing records: 1. purchase _________ requisition #, date needed, budget account #, quantity needed, item description 2. ___________ (PO) 3. ___________ Purchasing: The Product Form Quality » Grades = comparison to government standards – scoring depends on type of product – is higher (best) grade always the best choice? » Brands » Condition at delivery _____(V) = Quality (Q) Price (P) Purchasing: The Product ______ helps determine form and quantity to buy » AP = » EP = » AS = EP portion ÷ yield % = AP portion AP price ÷ yield % = EP price Purchasing: The Product Make vs. Buy decision » quality » equipment (availability, capacity, turnover time) » labor (availability, skill, training needed) » time » inventory (storage space) » cost _______should be the last decision criteria Practice Questions-Purchasing A. List all the ways you can think of in which buying locally is a positive choice. (Think of the whole food system.) B. Briefly trace the general steps in food procurement, from identifying a need to the final delivery of the product.