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Issue #12 December 16, 1997
In This Issue
* Feature Article
Eliminate Poor Receiving Habits
In virtually every industry where significant quantities of goods are purchased on a frequent basis, a formal receiving department is charged with the responsibility of making sure what was ordered was received. Only in the restaurant industry is receiving taken lightly. Of course, every operator I talk to tells me that receiving is an important part of the manager or chef's job description, but in practice, what really happens?
Typically, the goods arrive, someone gets the invoice, does a quick check to see if it's all there (optional), signs the invoice, and off the driver goes. Nine times out of 10, there is no purchase order, no receiving log, and no real effort made to check pricing, quality or what's inside the boxes.
I have seen 50 case grocery orders received in less than a minute! I've also seen situations where the driver takes his own inventory, brings in the goods, puts them away, and then gives the chef or manager the invoice to sign. No employee of the restaurant has even seen the goods.
Let's face it. Food cost originates at the back door and can never be higher than the total purchases. Therefore, the receiving function becomes your first chance to control costs once the goods have been ordered.
Our studies have shown nearly half an operation's variance (difference between actual and ideal food cost) is the result of poor receiving habits. To the average restaurant, this represents a whopping 2% of sales. This money would have been additional profit since all of it would drop directly to the bottom line.
Over the years I must have heard every excuse in the book for the typically poor receiving practices which dominate the industry. Among the most frequent is lack of time to do it right. I would think that if it were possible to save 2% of sales through good receiving practices, the operation with gross sales of $500,000 annually could hire part-time help at $5 per hour to do nothing but receive goods 20 hours a week, and still have $5,000 left over at year end in additional profit.
In most cases, however, it is not necessary to hire someone new. By shifting around the schedules of those employees interested in learning the receiving function to correspond with delivery times, the same end result can be accomplished. The isolation and use of these individuals also fits in nicely with a more formal management program.
In order to implement a good receiving function, you need a few tools. First and foremost, you need good scales. A large number of items are purchased by weight, and the only way to tell if you got what you are being asked to pay for is to weigh the stuff. This can be difficult to do without good scales.
Second, you need to record what was ordered and the price. This can be a standard purchase order document, or simply a piece of paper on which the person placing the order writes down the necessary information.
Finally, you need a document to record what was actually received in UNITS. I call this document a receiving log, and it becomes instrumental in the method of control described by my articles. With these tools in hand you are now ready to proceed.
I recommend the following steps for the receiving process:
1. Do not accept the invoice from the driver
2. Have items removed from the truck and stacked just inside the back door.
3. Count the items in units while checking the quality and record what you see on the receiving log.
4. Accept the invoice from the driver.
5. Reconcile the invoice against the receiving log for quantity. Adjust the invoice if necessary.
6. Reconcile invoice against purchase order for price and adjusted quantity. Adjust invoice if necessary.
7. Sign corrected invoice and dispatch driver.
8. Put the goods away immediately.
Also note that the goods are put away immediately after the driver leaves. This keeps stock in its proper place, aids in the rotation process, prevents perishable items from deteriorating, keeps ice solid and gets the goods away from the back door so as to avoid any temptation on the part of employees to make unscheduled transfers (polite term for stealing).
Think of invoices as legal documents. Once signed, you are legally obligated to pay the amount due, regardless of the accuracy of the invoice. It is therefore extremely important to be sure that the invoice is correct and that all adjustments made are clear and obvious before signing it. If it is not possible to modify the invoice due to lack of space or legibility, attach a memo which clearly defines the modification. Be sure to change the total due on the invoice, and indicate on the invoice that a memo is attached which explains the changes.
Here's another startling discovery. The two worst people to use for receiving goods are the chef and the manager! Although the chef or manager may be the most knowledgeable about what was ordered, they are also the two individuals with the least amount of time to devote to the process. There are far too many interruptions for them to do an accurate receiving job.
Since the receiving function is largely clerical in nature, it is a misallocation of human resource to have managers perform clerical functions. Even though a manager can do a clerk's job, the reverse is usually not true. I strongly advise you to consider another employee for the receiving job.
In order for this to work, you may need to schedule receiving hours with your purveyors. And, you will also need to inform the receiving clerk job what was ordered, from whom, at what price and specification. This can be easily accomplished with purchase orders and specification training.
The person ordering the goods should be responsible for the completion of the purchase order. It takes little or no additional time for that person to write down what is being ordered if this is done while the order is being phoned in to the purveyor. Most people are coordinated enough to hold the phone in one hand and write with the other, and if not, they probably shouldn't be placing orders anyway!
The fact is that receiving is vitally important and needs as much attention in the food-service industry and it gets in every other industry. Receiving must be done religiously, consistently and accurately. The end result will be well worth the effort. It is possible to absolutely eliminate the possibility of purveyor theft or invoice errors overnight. The effect of good receiving practices on profitability will be immediately evident.
System Concepts, Inc. is the maker of FOOD-TRAK - Food and Beverage Management Software - http://www.foodtrak.com
Great Eastern Mussel Farm
Operating Procedures Tips & Tools
Food Lover's Glossary
Concierges & Restaurants
Tips and Taxes
50 States of Beer
Scotland's leading distilleries pioneer new style Whisky Tasting so enthusiasts can call the shots.
At a tasting event scheduled for 25th January 1998 (Burn's Night) Glengoyne Distillery is to be the world's first Scotch Whisky distillery to allow consumers to select which of their best casks should be bottled as a Single Cask-strength Malt Whisky. An unfiltered cask-strength bottling is considered by connoisseurs to provide the fullest depth of flavour amongst single malt whiskies; they are rare and seldom seen in far-flung corners of the globe. But it is to every corner of the world that this Burns Night event will be taken, as it is to be hosted exclusively on the Internet's World Wide Web.
Not only will the world's malt whisky enthusiasts be able to log-on to webpages featuring the Glengoyne Distillery event, but they will be able to actually choose the casks they want to have bottled. The whisky is then being despatched by courier to almost every territory so the lucky recipients can enjoy their limited edition malts and compare tasting notes and thoughts by e-mail or in the tasting event's interactive forum webpage.
These selected casks-strength malts will only be available through the website and they are also expected to appeal to collectors as each event, each cask number and each bottle filled will be specifically recorded on the label.
In recognition of Scotland's many renowned malt whisky distilleries, and the different style of whisky each produces, this Online Tasting will continue throughout 1998 to visit many of the finest distilleries in the country. In March, crossing the Pentland Firth to the Orkney Islands, another tasting will form part of the bi-centenary celebrations taking place at Highland Park Distillery (founded in 1798). In contrast to 200 years of history at Highland Park, Scotland's newest distillery, Lochranza on the Isle of Arran, will host an online tasting when it bottles its first whisky.
Master of ceremonies at the Burn's Night tasting at Glengoyne Distillery will be whisky expert and author Charles Maclean who, along with distillery manager Ian Taylor, will provide detailed tasting notes of each of the four casks that have been specially selected. Each cask will represent the finest cask-strength bottlings available of the delicate, unpeated malt the distillery is renowned for and will be aged from 15 years old to over 20 years old.
The event will take place at http://www.scotchwhisky.com - and you can register for the event now by visiting this major Scotch whisky website.
Says James Thomson, from Online Tasting organisers Clearcut of Edinburgh: "We enjoyed the first Online Tasting in March this year with over 30,000 enthusiasts, where we compared some of the best known Single Malts that are widely available around the world. This new series of events, starting at Glengoyne, builds on this experience and moves the whole initiative up a gear. We recognise that the Internet allows consumers to get much closer and have their say. They are the ultimate influence - and now we can discover how to better deliver exactly what they want."
For all those that haven't been to the site lately (shame on you) we made a major revision to the site earlier this month. We've integrated and added a few new sections to the website that we'll be expanding throughout 1998 and we've modified the navigational sidebar area a bit. Nothing too dramatic...but we think it reflects the direction we want to go in the upcoming year.
...and some new stories:
(Note: Sites will be reviewed on several criteria, achieving a total score, and the top 100 scores will be awarded the inaugural prize.)
We're expanding the BG on a national basis. If your company supplies goods and services to the hospitality industry, please get in touch with us by e-mail at email@example.com with your company contact information and a few words about what you do.
**Special Bonus** If you're an industry insider who knows the ins and outs of your marketplace...we have a special offer for you. For more information, please contact us at the above e-mail address.
Omaha Steaks - http://www.restaurantscene.com/conteststeak.html
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