Purchase Specification

Module leader –
Dilip Kumar
 Interest
• By giving situation regarding preparation of
purchase specification for wines.
 Need
• To figure out the information that should be
included on Standard purchase specification
• Create a standard purchase specification
• Identify factors that influence the information
included on Standard purchase specifications
• Potential problems related to Standard
purchase specification
• How quality is measured, including the use of
government grades and packers’ brands.
 Product Specification
• Same as purchase specification but does not
contain any information about supplier services the
buyer wants.
• Also known as product identification.
• Purchase specification is a concise description of
the quality, size, weight, count and other quality
factors desired for a particular item.
• Usually also includes some description of the
desired supplier services a buyer wants.
• Product marketing association is a trade
association representing members who market
fresh fruits and related product worldwide.
 Why specification??
1. They serve as quality control standards and as
cost control standards
2. They help to avoid misunderstandings between
suppliers, buyers, users and other company
officials.
3. In the absence of buyer, they allow someone else
to fill in temporarily
4. They serve as useful training devices for assistant
buyers and manager trainees; and
5. They are essential when a company wants to set
down all relevant aspects of something it wants to
purchase.
 Who decides what to
include on the Specs?
• Four potential decision-making entities are –
1. The owner manger or another top mgt. official
2. The buyer
3. The user
4. Some combination of these three
 Information Spec include?

• It can be very short or may include several pages.

1. Formal Specs – Purchase specification
2. Informal Specs
 Formal Specs include
1. The performance requirement, or the intended
use of the product or service
2. The exact name of the product or service
3. The Packer’s brand name, if appropriate
4. Quality grade, if appropriate
5. Size information
6. Acceptable trim or acceptable waste
7. Package size
8. Type of package
9. Preservation/ or processing method
 Formal Specs include
10. Point of origin
11. Packaging procedure
12. Degree of ripeness
13. Form
14. Colour
15. Trade association standards
16. Approved substitutes
17. Expiration date
18. Chemical standards
19. The Test or Inspection procedure
 Formal Specs include
20. Cost and quality limitations
21. General instructions –
• Delivery procedures, if possible
• Credit terms
• The allowable number of returns and stock outs
• Whether the product purchased must be available
to all units in the hospitality company, regardless of
a unit’s location
• Other supplier services desired, like sales help in
devising new uses for a product
 Formal Specs include
22. Specific instructions to bidders, if applicable –
• Bidding procedures
• Criteria for supplier selection, and
• The qualification and capabilities expected from
them.
 Factors influences the types of
information included in the Specs?

1. Company goals and policies

2. The time and money available
3. The production systems the hospitality operation
uses
4. Storage facilities
5. Employee skill available
6. Menu requirements
7. Sales prices or budgetary limitations
8. Service style
 Who writes the Specs?
1. Company personnel
2. Industry and government publications
3. Experts can be hired who can help to write specs
4. Buyer and supplier can work together to prepare
the specifications
 Potential problem with Specs

1. Getting hit with the “Lowball”

2. Inequality among bidders
3. Specifications that are too tight
4. Advertising own mistakes
5. Redundant favouritism
6. Too many ordering and delivering schedules
7. If unable to obtain lowest possible AP price, go for
EP cost
 The Optimal quality to
include on the Specs
• Important to keep in mind the quality is a standard:
something to be decided on by company officials
and the maintained throughout the operation.
• Objective is to examine the typical process by
which the optimal quality is determined.
 Who determines quality?
• Market research is done to determine the types of
value their customers, or potential customers seek
• The owner-manager greatest responsibility is to
interpret the result of the market research into
quality standards. They must examine –
1. The overall value retail customers expect
2. “supplier” services, that is, the property’s
surroundings, service style, décor and so on; and
3. The typical menu or room price ranges
attributable to his or her type of operation.
 Measures of quality
• Various rating systems that can be used to
determine the appropriate product quality needed
to fulfill an intended use.
1. Federal government grades - under the authority
of Agricultural Marketing Service act of 1946
• Maximum of 100 points distributed among two or
more grading factors. To receive a higher grade, a
product must usually score 85 to 90 points or more
2. AP prices
3. Packer’s brands
 Measures of quality
4. Samples
5. Endorsements – Foodservice Consultants Society
International (FCSI)
6. Trade associations – National Cattlemen’s Beef
Association
7. Own Specifications
Is the quality available?
 The Buyer’s major role
• Buyer usually provides his or her supervisors with the
information they need to determine standards
• Buyers normally do not set these standards by
themselves but they do generally participate in these
decisions.
• Buyers role is to determine the quality standards that
someone else has determined.
• Items purchased measure up to company
expectations.
 The Optimal supplier
services to include on the Spec
• Too many supplier or severely restricted supplier
cannot be beneficial for the company.
• There is not much difference in quality of the
product which supplier provides.
 Questions??
1. What is SPS? How does it differ from product
specification?
2. What information is included in a typical standard
purchase specification?
3. Describe five measures of quality? Why or why
not?
4. Explain how company personnel normally
determine quality standards for the food products
they use.
5. What are the costs and benefits of hiring an
outside consultant to help you write
specifications?
 Assignment – Group 5
• Prepare a product specification for fresh meat,
fresh green vegetable, fresh fruits, furniture
and fixtures and non-perishable food by
keeping the factors in the mind which is
already discussed in the class and give a
presentation on the same.