Receiving Storing and Issuing Chapter 8 Objectives Evaluate

Receiving, Storing, and Issuing Chapter 8

Objectives • Evaluate the receiving process • Explain the use of a product specification reference guide and the buyer’s order form • Describe product inspections, discrepancies, product rejections, and credit memos

Objectives (cont’d. ) • Summarize the storing process • Define formal and informal issuing • Describe the use of storeroom requisitions and purchase requisitions • Explain the differences between a physical inventory and a perpetual inventory

Objectives (cont’d. ) • Identify the hardware and software used with computerized inventory systems • Describe the methods used to determine inventory valuation • Apply the use of ingredient rooms as they relate to inventory management

The Receiving Process • Operator can exercise greatest control at the receiving dock – Where the financial, physical, and legal responsibility for product is transferred • Receiving department verifies the order – The three “Q’s” of receiving: quality, quantity. and quote

Product Inspections • When setting receiving dock hours – Consider kitchen needs and when receiving personnel are available – Exceptions may need to be made • Conduct efficient, thorough inspections of all products – Specification, quality, and quantity

Product Inspections (cont’d. ) • Reviewing specifications and orders – Verify delivered goods were ordered – Blind receiving • Receiving clerk counts and weighs everything – Key stop (drop stop) occurs without receiving clerk present

Product Inspections (cont’d. ) • Inspecting the quality – Chef must train the receiving clerk – Factors: freshness, color, size, consistency, and taste • Inspecting the quantity – Products must be counted or weighed – Weight tags used to record weight of large cuts of fish or meat

Product Discrepancies • Mistakes can occur in the quality, weight, or count of delivered items – Chefs and clerks have right to reject inferior product • Most vendors have credit agreement in place • Credit memo should be issued • Make sure bookkeeper knows credit is expected for that invoice

Maintaining Statement Files • Receiving clerk should file a copy of vendor’s signed delivery statement – Attach original order form, if required – Send original to bookkeeper for payment • Keep a separate file for each vendor • Validate monthly invoice totals against delivery statements for accuracy

The Storing Process • Delivered products must be stored immediately • Money can be lost in storing process – Carrying excessive inventory – Improper handling of perishables – Product deterioration or inaccurate bookkeeping

Inventory Management • Process of controlling inventory volume until it is to be issued • Consider shelf life – Good food is a financial loss if left to spoil • Informal systems of control – Check sheets used by employee when items are removed from stockroom

Inventory Management (cont’d. ) • Formal systems of control – Consists of a system for tracking issues – Must have staff to do this – Employed by larger food service operations • A system to determine when and how much product to order is needed

Inventory Management (cont’d. ) • ABC analysis – Greatest cost or volume items are given highest priority • Par stock method – Kitchen storeroom containing partial stock • Mini-max method (safety stock) – Establish min and max inventory levels

Inventory Management (cont’d. ) • The Levinson approach – Buyer must closely approximate product to be used between deliveries – Then calculate the amount to order • Economic order quantity – Costs associated with receiving, stocking, and inventory control reduced with infrequent ordering

Conducting Inventories • Physical inventories are done in the storeroom or cooler – Requires complete accounting of all items • Perpetual (virtual) inventory – Count of stock that is supposed to be on the shelves in the storeroom • Allows physical inventory to be taken less frequently

Inventory Record Systems • Storeroom inventory database should contain: – Stock item number – Storage location code – Product description and specifications – Approved brand names and suppliers – Inventory information, and more

Valuing Inventory • Business must determine a method for valuing their inventory – Inventory valuation systems include FIFO (first in, first out), LIFO (last in, first out), weighted average, actual cost, and latest purchase price • Valuation method should be used consistently

Fixed Asset Inventory • Some companies create methods for tracking their fixed assets – Fixed assets include computers, office equipment, vehicles, and furniture – Bar codes may be used • Or determination made by weight or storage area that holds a predefined number of items

The Issuing Process • Food assets must be issued into production in order to earn a profit for the business • One of two methods is used – Informal issuing – Formal issuing

Informal Issuing • Storeroom is open to the kitchen staff – Free to enter when supplies are needed – Room is subject to theft if not properly controlled • No ability to separate costs – If multiple retail outlets use same storeroom

Formal Issuing • Buyer purchases goods on behalf of all outlets and issues them at cost to each individual outlet – Process of releasing items controlled by requisition – Immediate information on daily food cost by revenue center is available

Direct Issues • Products issued immediately into production from the receiving dock – Should be recorded in storeroom’s inventory for recordkeeping purposes – Expenditure must be charged to the cost center to which it is issued • Product requisitions are forms used to identify foods needed by the chef

Direct Issues (cont’d. ) • Purchase requisitions are internal documents used: – In businesses that have formal storeroom operations – For special equipment that is needed

Summary • At the receiving dock, product is inspected for quality, quantity and whether it meets the order specification • There a variety of inventory management systems to choose from • There are formal and informal ways of managing storeroom inventory