Michigan State University Extension
Tourism Educational Materials - 33300004
06/06/02
Receiving, Storage, Issuing, Inventory
Evaluating Food Service Establishments...Key Check Points
HE-205
by Robert D. Buchanan, Restaurant, Hotel and Institutional
Management Specialist
The manager of a food service establishment and/or the
manager and his supervisor need to take the time to make
an overall analysis to determine the results that the
organization is actually obtaining. This should be done
several times a year. The evaluation should determine
how well the food service operation is doing and where
improvements should be made. Then some priorities,
objectives, methods, and deadlines for improvements can be
established.
This is one of a series of pamphlets describing how a
person can fairly comprehensively, yet in less than a day,
provide an overall evaluation of a food service operation.
The key items, or food service conditions, to evaluate
under each major category are described. Taken together,
the key indicators of general conditions measure the
degrees of efficiency (minimal costs) and effectiveness
(optimal organizational satisfaction). A major category
that has a deficient key indicator should be investigated
further, and corrective adjustment should be considered
and/or made where appropriate. A discussion of facts by
management with the operating personnel is perhaps most
needed to develop mutual understanding of the problems.
Attainable performance objectives should be jointly
established and reviewed at a later date.
If all key indicators are satisfactory in a major
category, other aspects of that category are probably
being handled with similar care. If all of the key
indicators are high, but the profit is not adequate, then
it will be necessary to examine the operation for
inefficient purchasing and receiving practices, improper
menu pricing, inaccurate records or financial statements,
inventory method and method of computing the value,
production waste, plate waste, security and pilferage, and
so forth.
These operational analysis guidelines may be used by the
manager of a single food service establishment for
self-analysis, or by the unit manager's supervisor.
1. Management Planning, Organizing, and Controlling
(HE-202)
2. Personnel (HE-203)
http://www.msue.msu.edu/msue/imp/modtd/33300002.html
3. Purchasing (HE-204)
4. Receiving, Storage, Issuing, Inventory (this publi
5. Food Preparation (HE-206)
6. Food Presentation and Service (HE-207)
7. Maintenance of Building and Equipment (HE-208)
8. Sanitation and Housekeeping (HE-209)
9. Statistical and Ration Analysis (HE-210)
10.Consumer Satisfaction (HE-211)
4. Receiving, Storage, Issuing and Inventory
It is important to control the functions of receiving,
storage, issuing and inventory because of the thousands of
dollars of merchandise involved, to maintain the quality
level of food, to insure that what was ordered was
delivered and that what is needed is available. It may be
that your profit dollar is shrinking at your back door-by
pilfering of food, by accepting products below
specifications, by items being short on count or weight
and, most often, by paying for items that did not arrive.
One employee should be trained to verify both quantity and
quality of food and supplies received. This employee
should have the authority and responsibility for
receiving, storage, and issuing. Procedures must be
designed to maintain the quality of the product and to
minimize the loss of food and supplies through spoilage
and theft.
Receiving
Receiving of food and supplies is a process that
management must initiate, supervise, and regularly
evaluate to insure that the specified food quality and
quantity at the quoted price is actually received and
stored. The receiver will be only as demanding as he is
trained to be. The receiving function should be assigned
to a competent, trustworthy, and trained person.
Careful purchasing, detailed specification and competitive
bidding are all wasted if receiving procedures and
controls are casual or non-existent. Receiving is more
than just signing for the merchandise. The basic elements
of a sound receiving system include the following:
training of receiving personnel, use of scales and other
equipment, and the establishment of a receiving procedure
that verifies the quality, size, quantity, and price as
specified on the purchase order. The higher the standards
of the receiving function, the less chance the operation
will be actually shorted (by error or intention)
merchandise.
A key procedure in receiving is to check every item
delivered against the purchase order. A minimum receiving
and verification procedure should include:
* Against the purchase order document, check that every
item is delivered, and verify for each item:
--Count for items purchased by the case, unit or piece.
--Weight for each item purchased by weight. Each must be
weighed, and items purchased by portion size must be
checked for both total weight and to verify each portion
is within the specified weight range.
--Quality for conformance to the purchase order and/or the
current food specification (grade, variety, type, cut,
count, syrup density, drained weight, weight range, depth
of fat, etc.). High-cost items such as meat and some fish
items may need to be checked for quality by the manager.
Some examples of quality identification follows: Meats--
-weight, grade, conformation, finish, amount of fat and
trim. Poultry---size, weight, grade, and cutting style.
Fish---size and weight. Eggs---size, grade, and weight.
Fresh fruits---maturity, size, shape, grade, ripeness,
flavor, appearance, and juice content. Fresh vegetables--
-color, firmness, size, uniformity, and count.
* Frozen goods should be checked to see that they are not
thawed or thawing. Temperature of the product should be
below 10 F.
* Quantities and prices listed on the delivery invoice or
ticket should be compared with the purchase order.
* Invoice extensions and additions should be checked for
accuracy.
* Carefully check each box or carton for possible damage
or quality deterioration. Carefully check the contents of
wet or smashed cartons, open or torn cartons, cases with
an unusual odor, soft or wet cartons of frozen food, etc.
* Procedures need to be established to obtain credits,
return merchandise, and to handle discrepancies as
discovered.
* Accept the shipment after being fully satisfied with the
delivered goods (count, weight, quality, price) and that
all corrections are made and verified with the delivery
agent. The receiving agent should sign all copies and keep
at least one copy. It is very important for the receiving
person to understand that his signature is your
organization's formal acknowledgment of receipt of the
merchandise and the organization's obligation to make
payment for the merchandise.
* Set specific hours during which goods will be received.
A daily receiving report should note all goods received
and any discrepancies on the invoice.
The absence of purchase returns is a key indicator of lax
receiving, because it is highly unlikely that all
deliveries will be complete and in accordance with
specifications.
It is important for management to spot-check the receiving
procedure at frequent but regular intervals. Management
should recheck weight, quantities, quality, and prices
in much the same manner and detail that cash audits are
performed.
Storage
The primary objective of food storage is to protect the
quality of the product, have enough merchandise on hand,
and prevent loss through spoilage and theft. Management
and employees need to protect the $5,000 worth of
merchandise in storage in much the same manner they would
protect $5,000 in one-dollar bills. Control over
merchandise in storage is established by assigning
responsibility to one person, by maintaining proper
physical conditions, and by sound material handling
procedures. Minimum operating procedures should include
the following:
* All food should be placed in the appropriate storage
areas immediately following inspection in receiving area.
* There should be a definite space for each food
classification.
* All food should be stored in a manner that will
facilitate issuing on a "first in-first out" basis. All
cartons should be dated and neatly organized---with the
oldest goods on top of stock, with the most recently
purchased goods on the bottom of stacks. Labels and
date-received markings must face right side up and out for
identification.
* All goods should be stored off of floors so that the
floor can be swept and mopped. Stack away from wall in
order to provide air circulation and so that walls may be
washed regularly. The most frequently used goods should be
located near the door or where they can be easily reached.
The heavy bulky items should be stored on the bottom and
the lighter, smaller items in high places.
* Maximum use should be made of vertical space by the use
of adjustable shelving so that there is minimal distance
between goods and the next shelf.
* Cross-stack items in alternating patterns on shelves or
racks.
* Half-empty cartons should be completely emptied, and any
individual items should be carefully stacked on top of
unopened cases.
* Foods should be organized in refrigerators and freezers
to provide air circulation; open containers should be
covered; and items should be properly separated to prevent
odor and flavor transfers.
* Inventory turnover should be planned for a certain
number of times per month, usually three to four. The
inventory ratio is figured by dividing the average food
inventory into the total cost of food sold.
Example: $200,000 divided by $5,000 = 40 times per year.
* Storage areas should be clean and free from
vermin-cleaned and sprayed regularly.
* Temperature readings should be taken regularly in
refrigerated storage areas to minimize the risk of
spoilage from mechanical deficiencies. Proper temperatures
are:
- Dry Storage - 55-70 F.
- Freezers - 34-38 F.
- Freezers -10 F.
* A relative humidity of 50-60 per cent in the storeroom;
75-85 per cent in the refrigerators for meats, fish, dairy
products; and 85-95 per cent for fruits and vegetables is
considered satisfactory. Good ventilation provides clean
air at the required temperatures and humidity.
* Production supervisors should be kept informed about
perishable items that should be used promptly.
High spoilage losses indicate poor handling procedures
and/or over-buying. Both deserve immediate attention.
Issuing and Inventory
Usually, about 40 per cent of food sales will be received
and withdrawn from the storage areas. This fact suggests
that strong control procedures should be maintained there.
Minimal requirements for inventory control are:
* All storage areas (dry, refrigerated, freezers) should
be locked when unattended.
* One person should be well trained in receiving duties
and should be held accountable for any inventory
discrepancies.
* No food or supplies should leave the storage areas
without authorized written requisitions.
* Only the quantity of food supplies required for
preparation should be issued.
* Physical inventories should be performed on a regular
basis.
* Unannounced inventories or spot checks should be
performed periodically.
A reconciliation statement of the storeroom physical
inventory should be prepared at the end of each month to
determine the effectiveness of physical control and
security. This is usually prepared on a dollar basis
rather than by individual item, as follows:
Opening Inventory: Physical $2,000.00
Plus: Purchases for Storeroom$2,500.00
Total Food Available: $4,500.00
Less: Issues from Storeroom $2,300.00
Total Value of Food That Should Be
on Hand: $2,200.00
Closing Inventory: Physical $2,100.00
Overage (Shortage) ($ 100.00)
When the overage or shortage is more than 2 percent of the
total value of food that should be on hand, the inventory
should be taken again, security investigated, and accuracy
of receiving, issuing, and transactions reviewed. In this
example: $100. divided by $2,200. = 4.5%. This indicates
slippage that needs immediate corrective action.
It is advisable to maintain a perpetual inventory control
over the high-cost and/or high-volume meat items. This may
be done on an item basis (such as the number of pounds,
pieces, or portions), using the same procedures as in the
dollar value reconciliation.
Summary and Conclusion
What are the procedures for receiving food and supplies?
Foods should be checked for weight, count, quality, price,
and for what was ordered. Extensions on the delivery
ticket need to be checked. Does management schedule
unannounced spot-checks at the receiving area to insure
that established receiving procedures are followed?
Are foods stored immediately after receipt, stored in the
proper place, at the correct temperature, and properly
rotated? A particular individual should be responsible
for the merchandise in the storage area and see that the
storage areas are properly secured.
Are goods only issued by proper authorization and for the
quantity of material required for preparation?
Are all storage areas locked when unattended?
References
Eshbach, Charles E. "Receiving Food in Foodservice
Establishments" in Food Service Management, 2d
ed; Boston: Cahners Books, 1976.
Keiser, James, and Kallio, Elmer, "Controlling and
Analyzing Costs in Food Service Operations." New York:
John Wiley and Sons, 1974.
Lukowski, Robert F. "The Receiving Function," Extension
Bulletin M105. University of Missouri, Columbia, Mo.
Other Publications, Catalogs, Correspondence Courses
National Restaurant Association
One IBM Plaza, Suite 2600
Chicago, Illinois 60611
Educational Institute of the American Hotel
and Motel Association
Stephen S. Nisbet Building
1407 South Harrison Road
East Lansing, Michigan 48823
National Institute for the Food Service Industry
120 South Riverside Plaza
Chicago, Illinois 60606
Cahners Books International, Inc.
221 Columbus Avenue
Boston, Massachusetts 02116
Small Business Administration, 575 N. Pennsylvania Street,
Indianapolis, Indiana 46204, has the following management
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Management Aids (Free)
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Small Business Bibliographies (Free)
Small Business Management Series Booklets
Starting and Managing Series
Small Business Research Series
Cooperative Extension Work in Agriculture and Home
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