Purchasing procedure

OBJECTIVE

To establish procedures to ensure that the purchase of all goods and services for hotel operations are authorized and implemented in accordance with pre-determined policies

POLICY

 

1. The Purchasing department is responsible for using good purchasing methods; optimizing price savings, quality or value of products, vendor working relationships; placing orders with approved suppliers; negotiating pricing with suppliers.

2. The standard policies and procedures cover all items of purchase and service in the Hotel.

- Non-Perishable items

- Market list items

- Capital Assets

- Contracts for supply of goods and services

3. The Purchasing Department should obtain quotes for goods and services from prospective vendors by implementing a competitive bidding process to minimize the cost without affecting quality, quantity and delivery date.

4. Formal approval by hotel management through purchase order is necessary (except for the daily market list); no verbal order placement or commitment to any third party prior to obtaining formal approval, is permitted nor should be honored.

5. All purchase requests and purchase orders that are cancelled or refused by Management before being placed shall be clearly marked as such and retained to ensure that these are not later placed by accident or followed up on the mistaken assumption that goods or services were requested but not yet provided.

PROCEDURE

 

I- Purchase Requisition

1. Any requesting department will raise a purchase requisition in 3 copies with the description, quantity and the required date as well as the nature of item (FF&E or other), clearly specified.

In the case of a purchase requisition issued by the store department according to the system of “minimum stock reorder point”, the item code nº, stock on hand, min/max stock and the average monthly usage shall be included.

2. After formal approval by the relevant Head of Department, the purchase requisition will be routed to purchasing department for subsequent action.

1. Whenever necessary, purchasing will arrange a meeting with the Requesting department to clarify details of their requirement:

- Whether the specifications and quantity are appropriate. With regard to the quantity of the order, the stock on hand, consumption pattern, and expected consumption rate should be considered.

- Purchasing staff should follow the standard purchase specifications. The purchasing staff should not decide such specifications as paper thickness, paper stock, design, color and makers.

2. Purchasing will call for a written quotation from at least 3 suppliers and sample checking (if necessary) and the Department Head will be invited to check and comment. Any material variances must be notified to the requester prior to the placement of an order.

3. Quotes should be compared to specifications, price and date of delivery. Competitive pricing is one component of the evaluation and may be outweighed by other factors. Pricing alone will not be a deciding factor unless all else (item specification, delivery timing and reliability, etc.) is equal.

When more than one vendor submits a quote with the same price, the volume of business that is done with the respective vendors should be considered to select the vendor. In order to encourage competition among vendors, orders should not be placed with only one supplier.

4. The purchase request attached with the different quotations from the suppliers and proposed selected supplier will be routed to the Financial Controller first and the General Manager second for approval, and sent back to purchasing for purchase order preparation.

For items with exclusive distributor and/or regular order (store items), purchase orders should be prepared and sent to management for approval at the same time that the purchase request (attached) as the quote/supplier is certain. Regular market tests should be performed however to assess the price validity.

5. For the daily market list, the sole signature of the Executive Chef is sufficient to initiate the order. When a fixed price system applies, only quantity will be stated and approved; when daily market price is applied, the Executive Chef must approve the market list after the quote given by the purchasing staff.

6. The distribution of the purchase requisition is as follow:

Original(White)   → Accounts Payable

1st copy(Yellow) → Purchasing Dept

2nd copy(Pink)  → User

3^rd copy(Blue)    → Receiving

II- Purchase Order

1. Based on approved purchase requisition, a Purchase Request is prepared and forwarded with attached initial purchase requisition and all supporting documents, to the Financial Controller、Executive Assistant Manager and then to the General Manager to obtain approval to place the Request. The Purchase Request form must be numbered.

2. Orders can be placed with the vendor either by telephone, fax, internet or mail. When placing orders by telephone, the vendor contact and date of order should be noted and a confirming copy of the order sent to the vendor.

III- Purchase Authorization

	Issuing PR	Finalizing PR	Approval PR
Non-perishable	Department Head	Purchasing Mgr	FC, EAM & GM
Market list	Executive Chef	Executive Chef	Executive Chef
Capital assets	Department Head	Purchasing Mgr	FC,EAM & GM
Contract of supply of good & services	Department Head	Purchasing Mgr	FC,EAM & GM

1. As a rule, purchase request forms should be authorized by Financial Controller, Executive Assistant Manager and General Manager. In some cases, depending on the purchase amount and contract period, the authority may be delegated to the Financial Controller alone. Where there are particular arrangements for approval for purchases between owners and the hotel, such arrangements should be followed. For capital asset purchase, the prior approval of owning company and Accor corporate office is compulsory.

2. Purchases exceeding the certain amounts or contract periods must be approved by the General Manager  The criteria should be determined by the General Manager considering various factors at each hotel:

- All purchase orders in excess of a certain amount per order;

- All contracts which have a term of one year or less and a value in excess of a certain amount; and

- All contracts which have a term of more than one year

All instalment payment contracts and leases should be approved by the Financial Controller and General Manager.

IV- Supervision of deliveries

1. The Purchasing department is responsible for delivering goods to the requesting department by the delivery date detailed in the purchase order. They are responsible for communicating with receiving staff, following-up on the delivery (calling the vendors to verify, trace or expedite the orders).When the requested delivery date cannot be met, the Purchasing Department should immediately notify the relevant department.

1. The Purchasing department should monitor all undelivered and partially delivered items in order to avoid any potential operating problems. When purchase orders are issued, they should be placed in an open purchase order file until the items are received, and only then filed in the closed purchase order file.

At month-end, a list per department of all outstanding purchase requisitions and purchase orders (undelivered and/or partially delivered) should be prepared by purchasing department and reviewed by hotel management during a formal purchasing meeting.

V- Cancellation of Purchase Orders

1. In the event of canceling ordered goods, the Purchasing department will contact the vendors immediately and advice the cancellation. If the vendor insists on a penalty, purchasing staff should contact the Financial Controller and take appropriate measures to rectify the situation.

2. When a vendor reports to the hotel the cancellation of a previously accepted order, the Purchasing department will place a new order with another vendor promptly after contacting the requesting department. The initial purchase order should be cancelled (stamped as such) and a new purchase order will be issued and sent to management for approval with the former and now-cancelled purchase order attached.

VI- Subsequent change of purchase price after placing an order

1. When prices rise after placing an order and it is difficult to negotiate price adjustments, other vendors should be contacted. If goods of the same quantity, quality and within the same delivery frame are available at reasonable prices from other vendors, the original order should be cancelled and replaced with a new order to the other vendor

2. If there is no alternative other than to accept increased prices, the existing purchase order must be cancelled and a new purchase order prepared. The revised purchase order should detail the reason for the revised order and be accompanied by the old purchase order form when sent for approval.

VII- Purchase formats (sample attached)

1. Purchase Request: Please fill in the quantity of the purchase last time in the purchase request form. Monthly consumption, quantity applied, name, type and reasons for purchasing are also requested.