Discuss the importance of Purchasing

a) Control of costs,
Purchasing takes the risk step in any cost control system. Without first purchasing products and
services, there would be no costs to control, in this regard, effective purchasing system is
important for a successful cost control program me.

b) Value of purchased products & services
In addition to food and beverage products, catering establishment must purchase other items such
as linens, glassware, cleaning supplies, furniture and capital equipment.
The fact that more revenue from sales is for purchasing products supplies and services, then are
used for any other purpose, call for a strong purchasing control.

c)Effect on cash flow
The quantity of items purchased, prices and timing of deliveries ultimately affect the amount of
cash that will be required to satisfy payment for such purchases. In the absence of an effective
purchasing practice, serious cash flow problem could occur
This could create a situation where there could be no cash available to pay for the bills when
such bills are due. In certain cases there could be need to defer purchasing (risking depletion of
stock) or purchasing small quantities (risking the possibilities of reduced volume of discount).
When making such decisions the purchasing officer should be involved by the manager and the
management.

d) Supply of information
The purchasing personnel can be a valuable source of information about new products and
services because they are always in contact with the manufactures, suppliers, and many food and
beverage operations.

e) Continuity of supplies
To attain customer satisfaction and therefore ensure repeat in business, continuity of supplies
must be guaranteed. An effective purchasing system takes care of this by providing the necessary
items of the right quality on the right time.

f) Effect on revenue
Records have shown that in hospitality establishment, the highest percentage of the total revenue
comes from room, followed by the food and beverage and lastly, by the sundry sales. The quality
of food served in any hospitality establishment determines the popularity of such an
establishment and by extension of the volume of business and the revenue. Good quality food
and other items can only be provided through effective purchasing system. Poor quality of food
if served would result in guests running away from an establishment and therefore adversely
affecting the volume of the business and revenue in all sales outlets including room division.

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NatalieR answered the question on May 12, 2022 at 13:11