1. Product Specifications • Description of all the characteristics in a product required to fill certain production and / or service needs. • Use the USDA, vendors and industry sources to develop complete specifications. The Closed Mind Is Like A Stagnant Pond

2. Advantages to Specs • They serve as quality and cost control standards. • Help to avoid misunderstandings between buyers, suppliers, users and other company officials. • They allow someone else to fill in temporarily. • They serve as useful training devices. • They aid in the bidding process to level the playing field.

3. Technology Applications • Fax Machines – Speed up and clarify the bid reception and order process. • Personal Computer – helps operator to sort through large amounts of information. • Computerized POS – • Product mixes and customer preferences. • Touch screen technology • Wireless order systems • Bar Code reader – to track inventory.

4. Technology Applications • Product Specifications – • Meat Buyers Guide • Thomas Food Industry Register • Product Ordering • E-Sysco, Alliantlink, Don.com • Internal Inventory Tracking & Storage Management.

5. Internet Based Technology • Enables buyers and suppliers to acquire information from a variety of sources. • E-Mail – Allows buyers to communicate an identical message to single or multiple sources at any time of day or night. • WWW – Government reports, market trends, industry trends, search engines …..

6. Distribution Systems How will you get the raw materials to produce your menu? • Typical non-chain restaurant uses 10-12 types of suppliers. • Chain units generally use about 6-8.

7. How Does the Distributor Make His Money? • Mark Up Fee – Cost of the goods multiplied times a set markup percentage. • Margin Fee – Cost of the goods divided by a set percentage. Sound better than markup but is actually higher. • Case Fee - Assigned regardless of the value of the cost of goods. • Markup Floor – Minimum amount of distributor charge.

8. Sources of Supply • Growers - provide fresh food products to the hospitality industry. • Manufacturers - controls the manufacture of an item from raw materials. • Processors – takes one or more foods and assembles them into a new end product. • Value-added • Efficiency • Convenience

9. Intermediaries • Distributors – purchase products directly from growers, manufacturers and processors for resale and delivery to customers. • Specialty Distributor – handles only one type or classification of product – Houston’s Finest • Full-Line Distributor – Provides food and non-food supplies – Martin Preferred. • Broad-Line Distributor – Provides food, non-food and equipment – SYSCO • Custom Distributor – Provides specified product for chain restaurants – Performance Food Group

10. Other Intermediaries • Brokers – Agents who represent one or more primary sources. They promote products to potential sources. He / she puts sellers in contact with buyers. – ISA • Manufacturer’s Representative – Similar to brokers. Carry items in stock, possible delivery of items and additional services.

11. Other Intermediaries • Manufacturer’s Agents – Work exclusively for one source and represent the company in a specific geographical area. • National Account Rep • Regional Chain Sales • Commissaries – Processes food products according to exact requirements of the company. • Pappas, Le Madeleine

12. More Intermediaries • Wholesale Clubs – Sam’s Club and Costco • Buying Clubs • E-Commerce Enablers

13. Distribution – Liquor, Wine and Beer • Brewers / Wine Makers / Distillers • Intermediaries • Importers / Wholesalers • Distributors • Alcoholic Beverage Commissions

14. Distributors – Furniture, Fixtures & Equipment (FFE) • FFE – Furniture, Fixtures and Equipment • Dining room furniture • Small-wares, plates, glasses, silverware. • Kitchen equipment and furniture. • Source – Only the manufacturer.

15. Intermediaries - FFE • Dealers – Buy equipment from primary sources and resell it to hospitality buyers. • Catalog House – Little or no inventory. Dealer handles ordering, delivery and setup. • Storefront Dealer – Small inventory on hand. Specialize in handling small, portable FFE • Heavy Equipment Dealer – Large equipment installs. Involved in layout and design of new properties or renovations. • Full-Service Dealer – Full line of inventory and all end user services.

16. Intermediaries • Brokers – Similar to food brokers. Represent a variety of product lines. • Designers – Work as consultants for hospitality firms. • Architects – Perform a function similar to designers. • Construction Contractors • Distributors • Leasing Companies – ie ice machines.

17. Journey Through the Distribution Channel… • Time Value – Cost related to keeping an item on the shelf. • Form Value – Conversion of the raw material into something more user-friendly. • Place Value – Cost of getting the product to a particular place. • Information Value – additional instruction on the item. • Supplier Services Value – Support functions – free test samples, overnight shipments, VIP service

18. Who Checks The Checker? • It is impossible to set-up a complete set of check and balance. 2. Eventually you will have to trust someone 3. Set-up a (MIS) Management Information System