The Control Process

Control
¡ The process by which managers attempt to
direct, regulate and restrain the actions of people
in order to achieve desired goals
The control process consists of
four steps:
1. Establish standards and standards procedures for operation

2. Train all individuals to follow established standards and

standards procedures

3. Monitor performance and compare actual performances with

established standards

4. Take appropriate action to correct deviation from standards

CONTROL TECHNIQUES
¡ The control techniques includes the following:
1. Establish standards
2. Establishing procedures
3. Training Personnel
4. Setting examples
5. Observing and correcting employee actions
6. Requiring records and reports
7. Disciplinary employees
8. Preparing and following budgets
What are the two principal
causes of excessive costs?
¡INEFFICIENCY
¡WASTE
Cost Control
¡ It is the process used by managers to regulate
costs and guard against excessive costs.

¡ It is an ongoing process and is involved every

step in the chain of purchasing, receiving,
storing, issuing and preparing food and
beverage for sale
Inventory Control
¡ “How much of each needed ingredient should I have on hand at
any given time?”

¡ With the knowledge of what is likely to be purchased by our

customers (Sales Forecast) and a firm idea of the ingredients
necessary to produce these items ( standardized recipes ) the
food service operator must take decisions about inventory
levels.
Inventory Management
¡ Inventory management seeks to provide appropriate Working
Stock, which is the amount we feel will be used between
deliveries and Minimal Safety stock, which is the extra amount of
a food product we will keep on hand.
Determining Inventory Levels
Inventory Levels are determined by variety of factors:
a. Storage Capacity
b. Item Perishability
c. Vendor delivery Schedules
d. Potential Savings from Increased Purchase Size
e. Operating Calendar
f. Relative importance of stock outages
g. Value of Inventory peso to the operator
Storage Capacity
What would happen if there is too much in stock?
A.Increased inventory of items generally leads to greater spoilage.

B. Loss of items due to theft.

C.Large quantities of goods on the shelf tend to send a message to

employees that there is “plenty “ of everything

D.Overstocking may result in the careless use of valuable and expensive

products.

E. Too many stocks can result in difficulty in finding items.

Item Perishability
What would happen to inventory if all product have the same
shelf life? Or does not have a shelf life?
If all food products had the same shelf life, that is, if all items would retain their
freshness, flavor and quality for the same number of days, the food service
operator would have less difficulty in determining the quantity of each item he or
she should keep on hand at any given time.
Item Perishability
The need for a balanced inventory of perishable items are being considered
because of the following factors :

1. Serving items that are too old is a sure way to remember a

customer complaint.

2. Over stocking of perishable items may lead to moldy, soft, overripe or rotten
food items- a clear indication that the managers does not have a feel for
inventory levels that is based on the need of the operations. It is a sign that sales
forecasting methods either are not in place or have broken down.
Vendor Delivery Schedules
How do we minimize the cost in delivery?
Vendor Delivery Schedules
It is the fortunate food service operator who lives in a large city
with many vendors some of whom may offer the same service and all
of whom would like to have the operators business. In some cases,
however, the food service operator does not have the luxury of daily
delivery. In all situations it is important to remember that the cost to the
vendor for frequent deliveries will be reflected in the cost of goods to
the operator.

Vendors will readily let an operator know what their delivery

schedule to a certain area and it is up to the manager to use this
information to make educated decisions regarding the quantity of that
vendor’s product he or she will require to have both in working stock
and safety stock.
Potential Savings From
Increased Purchase Size
¡ Does purchasing in large quantity minimize your expenses?
Potential Savings From
Increased Purchase Size
¡ Some food service operators find that they can realize
substantial savings by purchasing large quantities and thus
receiving a lower price from the vendor.

¡ But as a general rule, operators should determine their actual

product inventory levels and then maintain their stocks within the
need range.

¡ Only when the advantages of placing an extraordinarily large

order are very clear should such a purchase be attempted.
Operating Calendar
¡ What is the difference in terms of delivery of an operation
serving seven days a week and an operation that is only
open during weekdays?
Operating Calendar
¡ When an operation is involved in serving meals seven days a week
to a relatively stable number or customers, the operating calendar
makes little difference to inventory level decision making.

¡ If however, the operation opens on Monday to Friday and closes

for Sat and Sun as in the case of many schools, the operating
calendar plays a large part in determining the desired inventory
levels. This is especially true when it comes to perishable items.

¡ Many operators actually plan menus to steer clear of highly

perishable items at week’s end. They prefer to work highly
perishable items such as fresh seafoods and some meats into the
early or mid part of their operating calendar.
Relative Importance of
Stock Outages
¡ What would happen to the operation if you run
out of stock?
Relative Importance of
Stock Outages
¡ In many food service operations, not having enough of a single
food ingredient or menu item is simply not that important.

¡ In other operations, the shortage of even one menu item might

spell disaster.

¡ A strong awareness of how critical an outage can be helps

determine the appropriate inventory level.

¡ The food service operator who is determined never to run out of

anything must be careful not to set inventory levels so high as to
actually end up costing the operation more than if realistic levels
were maintained.
Peso To The Value of
Inventory Operator
¡ In some cases, operators select to remove peso from their
bank accounts and convert them to product inventory.
When this is done, the operator is making he decision to
value product more than peso.
Setting The Purchase Point
A purchase point, as it relate to inventory levels, is simply
that point in time when an item should be reordered. This point is
typically designated by one of the two methods :

1. As Needed

2. Par Level
As Needed
When operators use the :as Needed” method of determining
inventory level they basically are purchasing food based on
their prediction of unit sales and on the sum of the ingredients
from standardized recipe necessary to produce sales.
Par Level
Food service operators may set predetermined purchase
points called par levels. When demand for a product is relatively
constant, we may set inventory level by determining purchase
points
Purchasing
Regardless of the method used to determine inventory levels,
each food service operator must turn his or her attention to the
extremely important area of purchasing. If we know the number of
guests who will be coming from the sales forecast and what items are
likely to select from our menu, we must purchase the ingredients
needed so that our workers can prepare those items.

Purchasing is essentially a manner of determining the following :

1.What should be purchased ?

2.What is the best price to pay?

3.How can a steady supply be assured ?

What Should Be Purchased ?
¡ Just as it is not possible to determine inventory levels without
standardized recipes, it is not possible to manage costs where
purchasing is concerned without the use of product
specifications, or specs.

¡ A product specs is simply a way for the food service director to

communicate specifically with a vendor so that the operator
receives the exact item requested , delivery after delivery.
What Should Be Purchased ?
A food service specs generally lists the following types of information :

1. Product Name or Specs Number

2. Packaging or unit on which a price is quoted

3. Standard or grade, if established

4. Weight range

5. Type of processing or packaging

6. Size of the basic container

7. Other information such as product yield

Preparing The Purchase
Purchase order preparation can be simple or complex, but in all cases the written
purchase order form should contain for the following information :
1. Item Name
2. Spec Number, if appropriate
3. Quantity Ordered
4. Quoted Price
5. Extension Price
6. Date Ordered
7. Delivery Date
8. Vendor Name
9. Ordered By _______
10.Received By______
11.Delivery Instructions
The Receiving Area
Once the purchase has been prepared by the purchasing
agent, it is time to prepare for the acceptance or receiving of the
goods. In a large operation, this function is performed by the
receiving clerk but in a smaller operation, it maybe done by the
manager or his designee.

There is probably no area of the foodservice establishment

more ignored than the area in which receiving takes place.
Receiving area is where we ensure that the products we
ordered are in the best quality. Proper receiving includes all of
the following features :
1. Proper location
2. Proper Tools and Equipment

3. Proper Delivery Schedules

4. Proper Training
Proper Location
The “back door “
which is usually
reserved for
receiving, is often
no more than that-
just an entrance to
the kitchen.
Proper Location
a. Large enough to
receive and
check the goods
delivered against
both the invoice
with the PO.
Proper Location
b. It should be kept
clean to avoid
contamination of
incoming food
Proper Location
c. It should be well lit
and properly
ventilated. Excessive
heat can quickly
damage delivered
goods especially if
they are frozen
products.
Proper Tools And Equipment
Standard items needed in receiving operation :

a.Scales

b.Wheeled Equipment

c.Box cutter

d.Calculator

e.Records Area
Proper Delivery Schedules
Acceptance hours - In an ideal world, the foodservice
manager would accept delivery of products during only
designated hours. These times would be scheduled during slow
periods when there would be plenty of time for thorough
checking of products delivered.

¡ Refusal hours - time wherein the operation may refuse to

accept deliveries.
Proper Training
Receiving clerks should be properly trained to verify the following
product characteristics :

A. Weight – One of the most important items to verify when

receiving food products is of course their weight.
Proper Training
Receiving clerks should be properly trained to verify the following
product characteristics :

B. Quantity – The counting and weighing of products are

equally important. Suppliers make more mistakes in not
delivering products than they do in excessive delivery. The
counting of boxes, cases sacks, barrels and this must be a
routine for a receiving clerk.
Proper Training
Receiving clerks should be properly trained to verify the following
product characteristics :

C. Quality – Checking for quality means checking the entire

shipment for conformance to specifications. The effective
receiving clerk should develop a keen eye for quality
Proper Training
D. Price - In the area of training for price, the following two
major concerns are to be addressed :
1. Matching PO unit price to invoice unit price
2. Verifying Price Extensions

If the receiving clerk has a copy of the purchase order, it is a

simple matter to verify the quoted price and the delivery price.
If this two do not match, suppliers should be notified
immediately.

Contract Price – Simply a price agreed by the suppliers and the

operator. It covers a certain product for a prescribed amount of
time.
Verifying Price Extensions
Price extension is just as important as the ordered or unit price. Price
extension or extended price is simply the unit price multiplied by the
number of units delivered.

unit price X no. of units/quantity = Extended Price

Example :
ITEMS UNIT PRICE QUANTITY / NO. EXTENDED
(PHP) OF UNITS PRICE (PHP)

Tomatoes 18.50 3
Potatoes 12.90 6
Carrots 18.29 4
Verifying Price Extensions
Price extension is just as important as the ordered or unit price. Price
extension or extended price is simply the unit price multiplied by the
number of units delivered.

unit price X no. of units/quantity = Extended Price

Example :
ITEMS UNIT PRICE QUANTITY / NO. EXTENDED
(PHP) OF UNITS PRICE (PHP)

Tomatoes 18.50 3 55.50

Potatoes 12.90 6 77.40
Carrots 18.29 4 73.16
Receiving Record or Daily Receiving Sheet
Some large operations use a receiving record rather than a
copy of the actual purchase order when receiving food items. This
method, while taking more administrative time to both prepare and
monitor have some advantages.

A receiving record generally contains the following information :

a. Name of supplier
b. Invoice Number
c. Item description
d. Unit Price
e. Number of Units delivered
f. Total Cost
g. Storage Area
h. Date of activity
Extension Price & Par Value
a. Delivery schedule is every 3 days.
b. Buffer for Non Food is 50%, and 30% for Food Items.
ITEM PAR LEVEL BUFFER TOTAL ENDING ACTUAL UNIT PRICE EXTENSION
ITEMS INVENTORY ORDER PRICE
NEEDED

MILK 48 tins 8 tins P 46/tin

Extension Price & Par Value
a. Delivery schedule is every 3 days.
b. Buffer for Non Food is 50%, and 30% for Food Items.
ITEM PAR LEVEL BUFFER TOTAL ENDING ACTUAL UNIT PRICE EXTENSION
ITEMS INVENTORY ORDER PRICE
NEEDED

MILK 48 tins 14.4 62.4 8 tins 164 P 46/tin P 7,544

=48 X .30 =48 + 14.4 =(62.4-8)X3 =164 X 46
Always Always Total items Always
given Par level Par level
times buffer
given needed given Actual order
plus buffer
minus times unit
(30% for food ending price
Or
items given inventory
above) times
Working
delivery
stock plus
safety stock
schedule
SAFETY STOCKS
& WORKING STOCKS
Items Jul July July July July July July Working
20 21 22 23 24 25 26 Stock

Tissue Rolls 125 167 153 134 145 176 157 151

Sausages (kg) 15 18 16 12 14 20 16 15.86

Buffer Safety Stocks Total Stocks for

ordering
Tissue Rolls 85% 151 X .85 = 128.35+151=
128.35 279.35 / 280
Sausages (kg) 75% 15.86 X .75 = 15.86 + 11.90 =
11.90 27.76 / 28