Finance Department

Hotels & Resorts

Standard Operating Procedure
Update: 15.08.08 / DHR-CO-FI-SOP-006

Purchasing

Objective

This SOP is to ensure, having strong internal controls applying to procurement and cash disbursements
relating to purchasing activities and to ensure that all purchasing of goods and services of any nature
is processed through the Purchasing Department in accordance with established guidelines.

This SOP is to ensure that requests for goods and services is made by the appropriate person and is
properly approved by the management according to the Company guidelines.

This SOP is to ensure that payments are made only for goods and services which are properly
authorized and received.

Consistency in control of
 Quality
 Freshness
 Price (season)

Advantage
 Save storage space
 Prevent spoilage

Food items
 Fresh vegetables
 Fruits
 Herbs, Spices, Condiments
 Meat, poultry
 Fish, Seafood
 All import products (expensive items)

Scope and Responsibility

The Purchasing Policy and Procedure apply to all the departments and represents the minimum
requirements towards the achievement of the Hotel/Resort objectives. All employees are responsible
for compliance with the applicable policy and procedures.

Procedure

1. Purchase Requisitioning

 Departments are responsible for initiating the purchase of goods or services required. The
person who authorities the requisition should ensure that the items to be purchased are
necessary for the department’s operation and are within budget.

© This material is copyright protected and is property of Daniel G. Fuchs and Stephan Faessler. Reproduction without permission is prohibited. 1
 Finance Department
Hotels & Resorts
Standard Operating Procedure
Update: 15.08.08 / DHR-CO-FI-SOP-006

Purchasing

 The requests of goods and services is made by the requesting departments that have to
consider the following information:

1. Adequate quantities (to meet PAR level)

2. Reasonable prices
3. Timely receipt
4. Desired quality
5. Transportation costs involved
6. Applicable VAT
7. Purchases within budget
8. Approved by authorized person according to Company limit

 There are three ways for an operating department or storekeeper to initiate a purchase of
goods or services:

1. Raise a Purchase Requisition

2. Raise a Daily Market List (Pre-printed form)
3. Apply for petty cash

A purchase requisition is prepared for all non-food items. Purchase of food items are handled by daily
market list. A purchase order is made according to the requisition.

 The person in the department who has responsibility for raising requisitions prepares a pre-
numbered purchase requisition stating the following details:

1. Department name
2. Date
3. Required delivery date
4. Place of delivery
5. Description of goods or service and quantity required
6. Price (if known)/ Applicable discount negotiated
7. Reason for purchase
8. Special instruction (of any)

 The authorized person (Usually the department head) should review the items requested to
ensure that they are necessary for the department’s operation and that are within the approved
budget before signing the Purchase Requisition as evidence of approval.

 The Purchase Requisition is distributed as follows:

Original Finance Department, to be attached to the Purchase Order for matching with the
payment supporting document
2nd copy Purchasing Department, filing in numerical order, for reference on purchasing
3rdcopy Requisition/Department, for filing and follow-up of purchase

© This material is copyright protected and is property of Daniel G. Fuchs and Stephan Faessler. Reproduction without permission is prohibited. 2
 Finance Department
Hotels & Resorts
Standard Operating Procedure
Update: 15.08.08 / DHR-CO-FI-SOP-006

Purchasing

2. Purchasing

 Requisition for purchases must be reviewed to ensure that the amount of requisition is within the
Company approval limit.
 Purchase order is used at all times, showing quantities, prices, payment and shipping terms.
 Competitive bids or quotes are obtained prior to placing orders and documentations is to be
maintained to show that competitive bids were obtained.
 It’s the DHR policy to negotiate for discounts, for product quantities/amount exceeding a
certain figure agreed as per Hotel/Resort policy.
 It’s the DHR policy to obtain a minimum of three (3) quotations prior to submission for a Purchase
Order. In selecting a supplier, purchasing has a short list of three potential suppliers. After
obtaining quotations from the potential supplies the purchasing personnel must prepare a price
comparison.
 The purchase personnel must review the offers and select the supplies based on the criteria set-
out. During the review of quotations they should consult with the Purchasing Manager to ensure
that the best offer is selected. The purchasing personnel, after selection of the supplier, may ask
the selected supplier for discount or better terms of payment, if possible.

 The selection criteria which should be applied in vendor selection are as follows:

1. The VALUE FOR MONEY of the materials or goods from the suppliers
2. The QUALITY of the offer compared with those at a lower price
3. The PERFORMANCE of the supplier in terms of punctuality of delivery, after-sales-service,
and cooperation with the company

 After selection of the supplier, the purchasing personnel should place the order with the supplier.
The Purchasing Manager is responsible for issuing purchase orders, They are to be issued in a
numerical sequence stating the following details:

1. Date of Purchase Order

2. Vendor’s name and address
3. Description of items to be purchased
4. Quantity
5. Unit price
6. Amount, VAT, Discounts
7. Purchase Requisition reference
8. Terms of payment
9. Date of delivery
10. Delivery address

 The approval of purchase orders is made on running number of purchase order form, reviewed
for correctness and approved by the authorized person who has such authority to act on behalf
of the Company guidelines (usually to Financial Controller and General Manager/or the
designated person).

© This material is copyright protected and is property of Daniel G. Fuchs and Stephan Faessler. Reproduction without permission is prohibited. 3
 Finance Department
Hotels & Resorts
Standard Operating Procedure
Update: 15.08.08 / DHR-CO-FI-SOP-006

Purchasing

3. Monitoring of Delivery

 The Purchasing Department is responsible for monitoring delivery to ensure that the supplier
delivers the goods according to the schedule stimulated in the purchasing order.
 The Purchasing personnel should perform a review of all the outstanding orders, including
partially filled orders on a daily basis or more frequently as operational needs to expedite the
delivery.

The purchase personnel keeps departments informed of delivery dates. This is to enable them to take
any corrective actions if delivery cannot be made.

Market List Sample:

Supplier……. Order date:…….

Tel:…………. Delivery date:….
Fax:…………

Item Price Unit Received Item Price Unit Received

Unit Order Unit Order

Vegetables Pork
Asparagus Fillet
Broccoli Neck
Carrots Belly

Condiments Chicken
Bean Cured Hip
Pickled Ginger Breast
Wings

Fruits
Water Melon
Seafood
Pineapple Prawns
Papaya Squid
Snapper

Herbs
Basil hot
Basil sweet

Signature __________________

© This material is copyright protected and is property of Daniel G. Fuchs and Stephan Faessler. Reproduction without permission is prohibited. 4