Chapter 1 Cost Control Purchasing food and beverage

Cost Control for Food

1. Cost Control Edel Mikel Ali P. Maute

2. Cost Control Cost control  is the systematic process of managing expenses to maximize profitability. It involves identifying areas of potential waste, implementing strategies to minimize unnecessary spending, and monitoring financial performance to ensure adherence to budget constraints.

3. Key Principles of Cost Control: Budgeting:  Develop a comprehensive budget that outlines anticipated income and expenses. This provides a roadmap for financial management and helps track progress towards achieving financial goals

4. Key Principles of Cost Control: Cost Analysis:  Regularly analyze expenses to identify areas where savings are possible. This includes examining spending patterns, comparing prices from different suppliers, and evaluating the efficiency of operations.

5. Key Principles of Cost Control: Value Engineering:  Focus on achieving desired outcomes with the most cost-effective methods. This involves exploring alternative materials, processes, or designs to reduce overall costs without compromising quality.

6. Key Principles of Cost Control: Inventory Management:  Optimize inventory levels to minimize storage costs and prevent spoilage or obsolescence. This involves implementing strategies like just-in-time inventory management or implementing efficient stock rotation systems.

7. Key Principles of Cost Control: Process Improvement:  Continuously seek ways to improve operational efficiency and reduce waste. This might involve streamlining workflows, automating tasks, or implementing lean manufacturing principles.

8. Purchasing: Purchasing  is the process of acquiring goods and services for a business. It plays a crucial role in cost control, as the decisions made during the purchasing process directly impact the overall cost of goods sold.

9. The Purchasing Process: Needs Assessment:  Identify the specific goods or services required by the business. This involves considering factors like quantity, quality, delivery timeframes, and budget constraints.

10. The Purchasing Process: Supplier Selection:  Research and evaluate potential suppliers based on factors like price, quality, reliability, and sustainability practices.

11. The Purchasing Process: Negotiation:  Engage in negotiations with suppliers to secure the best possible prices and terms. This may involve leveraging volume discounts, negotiating payment terms, or establishing long-term contracts.

12. The Purchasing Process: Order Placement:  Issue purchase orders to selected suppliers, specifying the required goods or services, quantities, delivery dates, and payment terms.

13. The Purchasing Process: Receipt and Inspection:  Receive and inspect incoming goods to ensure they meet the specified quality standards and quantities.

14. The Purchasing Process: Payment Processing:  Process payments to suppliers according to the agreed-upon terms.

15. The Purchaser: A Strategic Role The  purchaser  is the individual responsible for managing the purchasing process. This role requires a combination of technical skills, analytical abilities, and strong negotiation skills.

16. Responsibilities of a Purchaser: Identifying and sourcing goods and services:  Researching and evaluating potential suppliers, negotiating contracts, and establishing relationships with vendors.

17. Responsibilities of a Purchaser: Developing and implementing purchasing policies and procedures:  Ensuring consistency and efficiency in the purchasing process, while adhering to company standards and legal requirements.

18. Responsibilities of a Purchaser: Managing inventory levels:  Balancing the need for adequate supply with the desire to minimize storage costs and prevent waste.

19. Responsibilities of a Purchaser: Managing inventory levels:  Balancing the need for adequate supply with the desire to minimize storage costs and prevent waste.

20. Responsibilities of a Purchaser: Analyzing purchasing data:  Tracking spending patterns, identifying cost-saving opportunities, and evaluating supplier performance.

21. Responsibilities of a Purchaser: Ensuring compliance with ethical and legal regulations:  Adhering to industry standards, environmental regulations, and fair trade practices.

22. The Market List: Navigating the Procurement Landscape A  market list  is a comprehensive directory of potential suppliers for specific goods or services. It serves as a valuable resource for purchasers, providing a starting point for identifying potential vendors and comparing prices and terms.

23. Benefits of Using a Market List: Efficiency:  Streamlines the supplier selection process by providing a centralized database of potential vendors.

24. Benefits of Using a Market List: Cost Savings:  Enables purchasers to compare prices from multiple suppliers, facilitating negotiations and securing the best possible deals.

25. Benefits of Using a Market List: Quality Control:  Provides information about supplier reputation, quality standards, and customer reviews, helping to ensure the procurement of high-quality products.

26. Benefits of Using a Market List: Compliance:  May include information about supplier certifications, sustainability practices, and ethical sourcing policies, ensuring compliance with relevant regulations.

27. Purchasing Methods: Tailoring Strategies to Specific Needs Different purchasing methods are employed depending on the nature of the goods, the size of the order, and the specific needs of the business.

28. Common Purchasing Methods: Informal or Open Market Buying:  Frequently used for smaller purchases, involving direct negotiations with suppliers and obtaining price quotations.

29. Common Purchasing Methods: Formal Competitive Bid Buying:  Used for larger purchases, involving a formal bidding process where multiple suppliers submit bids based on specified requirements.

30. Common Purchasing Methods: Blanket Orders:  Long-term contracts with suppliers for recurring purchases, providing pre-negotiated prices and terms for a specific period.

31. Common Purchasing Methods: Just-in-Time Purchasing:  Minimizing inventory levels by procuring goods only when needed, reducing storage costs and minimizing waste.

32. Common Purchasing Methods: Centralized Purchasing:  Consolidating purchasing activities under a single department or individual, enabling greater bargaining power and economies of scale

33. Common Purchasing Methods: Decentralized Purchasing:  Distributing purchasing authority across different departments or locations, allowing for greater flexibility and responsiveness to local needs

34. Purchasing Perishables: Managing Time-Sensitive Goods Perishable goods  are products with a limited shelf life, requiring careful planning and management to minimize spoilage and waste.

35. Key Considerations for Purchasing Perishables: Quality Inspection:  Thoroughly inspect perishables upon receipt to ensure freshness and quality. Storage Conditions:  Maintain proper storage temperatures and humidity levels to extend shelf life. Inventory Rotation:  Implement a system of first-in, first-out (FIFO) inventory rotation to ensure that older products are used first.

36. Key Considerations for Purchasing Perishables: Demand Forecasting:  Accurately predict demand for perishable goods to minimize overstocking and waste. Relationship with Suppliers:  Establish strong relationships with reliable suppliers who can consistently provide fresh, high-quality products.

37. Purchasing Non-Perishables: Optimizing Long-Term Value Non-perishable goods  have a longer shelf life, allowing for greater flexibility in purchasing and inventory management.

38. Key Considerations for Purchasing Non-Perishables: Bulk Purchasing:  Leverage volume discounts by purchasing larger quantities of non-perishable goods. Storage Optimization:  Utilize efficient storage methods to maximize space and minimize damage. Quality Control:  Ensure that non-perishable goods meet quality standards and are free from defects

39. Key Considerations for Purchasing Non-Perishables: Inventory Management:  Implement a system for tracking inventory levels and replenishing stock as needed. Cost Analysis:  Regularly evaluate the cost of non-perishable goods to identify potential savings.

40. Product Satisfaction: The Cornerstone of Customer Loyalty Product satisfaction  refers to the level of contentment customers experience with a product or service. It is a crucial factor in driving customer loyalty, repeat purchases, and positive word-of-mouth marketing.

41. Factors Influencing Product Satisfaction: Quality:  The product meets or exceeds customer expectations in terms of functionality, durability, and performance. Value:  The product offers a fair exchange of value for the price paid. Customer Service:  Customers receive prompt, helpful, and courteous assistance when needed.

42. Factors Influencing Product Satisfaction: Brand Reputation:  The company has a strong reputation for delivering quality products and providing excellent customer service. User Experience:  The product is easy to use, understand, and navigate.

43. Product Testing: Ensuring Quality and Meeting Expectations Product testing  is a systematic process of evaluating a product's performance, functionality, and usability. It helps identify potential defects, improve product quality, and ensure that the product meets customer expectations.

44. Types of Product Testing: Functional Testing:  Verifies that the product performs its intended functions correctly. Usability Testing:  Evaluates the ease of use, intuitiveness, and overall user experience. Performance Testing:  Measures the product's speed, responsiveness, and stability under various conditions.

45. Types of Product Testing: Security Testing:  Assesses the product's vulnerability to security threats and breaches. Compatibility Testing:  Ensures that the product works seamlessly with other systems and devices.

46. Benefits of Product Testing: Improved Product Quality:  Identifies and resolves defects before release, enhancing overall product quality and reliability. Enhanced Customer Satisfaction:  Ensures that the product meets customer expectations, leading to greater satisfaction and loyalty.

47. Benefits of Product Testing: Reduced Development Costs:  Early detection of defects can prevent costly rework and delays in product launch. Competitive Advantage:  Delivering high-quality products can give a company a competitive edge in the marketplace.

48. Conclusion: A Holistic Approach to Business Success By implementing effective cost control measures, optimizing purchasing practices, and prioritizing product satisfaction, businesses can achieve sustainable growth, profitability, and customer loyalty.

49. Merci..