Purchasing functions

The main functions performed by the purchasing department are as follows:

• To collect information on items such as method of purchase, product information, price changes, etc…

• To select potential vendors

• To receive and proceed with purchase requisitions received from all hotel’s departments, obtaining quotes from vendors, designating vendors for particular purchases and bidding

• To prepare purchase orders and place orders once approved

• To follow up on orders up to the final delivery of the merchandises

  
  

I- Items purchased at hotels

The Purchasing department is responsible for the procurement of all items needed in a hotel’s operation as well as the services necessary in installing and maintaining these items. Four main categories of items are usually defined:

• Food and beverage items: include fridge, dry stores and beverage

• General items: include housekeeping (guest supplies, linen, etc…), printing and stationeries, cleaning supplies (soaps and detergents, sanitary supplies, household sundries, etc…) and paper goods (napkins, menus, etc…)

• Engineering items

• Capital items: furniture and fixtures, office furniture and equipment, machinery, food & beverage (chinaware, glassware, silverware, linen, kitchen utensils)

II- Centralization of the purchasing function

All purchases should be centralized in the purchasing department allowing better efficiency in ordering process and effective inventory management.

The purchasing department should be independent of other departments and follow fair procedures in selecting vendors and placing orders.

III- General principles for purchasing operations

 All purchases (including service contracts) are to be based on the following criteria:

• Competitive quotation basis except for those from pre-selected suppliers

• The lowest possible price provided that the best quality products or services for a specific purpose are obtained and the delivery schedule meets the hotel’s need.

  
  

Orders should be placed in quantities that reflect past consumption patterns and the latest operating forecast in order to ensure that adequate but not excessive supplies of all required products are on hand at all times. This will minimize or eliminate any disruption in hotel operation and keep inventory investment as low as possible.

With the large variety of items to be requested, purchasing staff must develop a wide and thorough knowledge of hotel operations. Developing and maintaining good external relationship with suppliers will allow them to obtain valuable technical assistance and to secure smooth operation (shorter delivery times, stable price and quality of product) of the purchasing cycle.

When placing an order, authorization rules must be clearly defined in terms of the items to be purchased, purchasing amount and the effective period of the service contracts. Internal control procedures must be established in terms of organizational structure and procedures to prevent risk of misconduct, and based on the concept of segregation of purchasing function from receiving and stores functions.

The purchasing department is responsible for monitoring delivery to ensure that suppliers deliver the goods according to the schedule stated in the purchase order.

IV- Maintaining purchase information

 

The purchasing department is responsible for maintaining relevant purchasing information in order to assist them in purchasing goods or services efficiently.

1. Information research: to respond to the needs of the Requesting department and to be recognized by the vendors as an educated buyer, the purchasing department should always research information such as:

   - Distribution channel, buying method and dealer names for each item to be purchased

   - Market price and product information

   - Price and product information from purchasing department of other hotels

   - Availability of new products that may be beneficial to the departments

2. As part of establishing an information source about the hotel’s supplies, the following records should be kept:

   - Purchase, stock and consumption records

   - Good specification files / price records / contract files

   - Suppliers records, manufactures’ catalogues

V - Purchase meeting

A purchase meeting should be organized regularly with the participation of the General Manager, the Financial Controller and all relevant head of department to review and discuss the following:

• Pending purchase requisitions, undelivered and/or partially delivered orders

• Procurement plan for capital expenditures and new projects

• Change of major vendors

• Change in specification or design of major purchase items

• Exchange of information regarding market conditions and new products, etc…