Food-Service-Manual-for-Health-Care-Institutions

Just-in-Time Purchasing
Just-in-time (JIT) purchasing is a production planning strategy adopted by many manufacturing
firms. The process involves purchasing products and supplies in the exact quantity required
for a production run or limited time period and only as they are needed (“just in time”).
Distributors deliver small quantities of supplies more frequently, and deliveries are timed more
precisely based on production demand. Thus, JIT purchasing has an effect on both purchasing
and inventory. Three goals are achieved with the JIT purchasing process: Inventory is decreased
significantly, as are related costs; space management is simplified; and problems must be
resolved immediately as they occur. Unlike the manufacturing industry, each day food service
operations produce a large number of perishable products in smaller quantities. The effectiveness
of JIT purchasing warrants investigation because of potential cost reductions.
The ability to implement this method depends on several factors. These include complete
support and cooperation of suppliers, the commitment of all employees (including top administrators),
accurate production demand forecasts, and changes in most aspects of the operation
from menu planning through final service.
Locating food service distributors willing to provide frequent deliveries may be a challenge
to some buyers, given that most distributors are requesting that customers accept fewer
deliveries so as to decrease costs. Like the prime vendor concept, JIT purchasing requires
building partnerships with distributors, and the adoption of the JIT-purchasing philosophy
could require a change in attitude regarding quantity of supplies to maintain in inventory. JITpurchasing
practices emphasize ordering small quantities rather than storing large quantities
just in case additional product is needed.
Centralized Purchasing
With centralized purchasing, the most common method of purchasing used in health care institutions,
a separate department in the institution specializes in purchasing the materials and
supplies needed by the institution’s various services and departments. In this system, the food
service director (like all other department heads) requisitions supplies from the purchasing
department. Only representatives from the purchasing department deal directly with outside
vendors and suppliers. Vendors have direct contact with end users of the supplies only if new
products or services are being brought into the purchasing system. In many institutions that use
centralized purchasing, the purchasing department also handles receiving and storage rather
than the individual departments that use the supplies.
Contract and Noncontract Purchasing
Two other general methods of buying are contract purchasing and noncontract purchasing.
Contract purchasing (sometimes called formal buying) involves a binding agreement between
vendor and purchaser. With this process, food service directors develop written specifications
for each product and an estimate of the quantity needed for the designated bid period. A written
notice of requirements, or a bid request (Exhibit 17.4), is made available to vendors, who
are invited to submit price bids based on the quality and quantity needed. The bid request
includes instructions about the method of bidding, delivery schedule required, and frequency
of payment; when the date bids are due; the basis for awarding contracts; and any other information
needed by buyer and seller. This process may be formal, with notices of intent to bid
published under “legal notices” in the local newspaper. Alternatively, it may be informal, with
copies of the bid distributed widely through the mail or by other means.
Purchasing
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