Learner Guide Control and Order Stock

LEARNER GUIDE
CONTROL AND ORDER STOCK
Published by
HEART TRUST/NATIONAL TRAINING AGENCY
Produced by
Learning Management Services Department

Gordon Town Road
Kingston 7
Jamaica W.I.
This material is protected by copyright ©. Copying this material or any part of it by any means, or
in any form, including digital is prohibited, unless prior written permission is obtained from the
HEART Trust/NTA.
*** 2008 ***
Version 1 LRDU – Sept 08

TABLE OF CONTENTS
PAGE
Introduction ......................................................................................................... 1
Welcome............................................................................................................ 1
This Competency Unit ....................................................................................... 1
Before You Start ................................................................................................ 2
Planning Your Learning Programme .................................................................. 2
Self-Assessment Checklist ................................................................................. 3
How To Use This Learner Guide........................................................................ 5
Using the Computer and Other Resources .......................................................... 6
Method of Assessment ....................................................................................... 7
Quality Assurance .............................................................................................. 7
Element 1: Maintain stock level and record ....................................................... 8
Self-Assessment Checklist.......................................................................... 19
Element 2: Organize and administer stock takes................................................ 20
Element 3: Identify stock losses........................................................................... 23
Element 4: Process stock orders .......................................................................... 29
Element 5: Follow up orders................................................................................ 35
Version 1 LRDU – Sept 08

THHGAD0153A
CONTROL AND ORDER STOCK
INTRODUCTION
Welcome
Welcome to the Learner Guide for Unit of Competency “Control and order stock”. This is just one
of a number of Learner Guides produced for the General Administration skills stream of the Tourism
and Hospitality Industry, and it is designed to guide you, the learner, through a series of learning
processes and activities that will enable you to achieve the specified learning outcomes for the
competency unit.
The content of this guide was developed from the Competency Standard THHGAD0153A, which is
one of the basic building blocks for the National Vocational Qualification of Jamaica (NVQ-J)
certification within the industry. Please refer to your Learner’s Handbook for a thorough
explanation of standards and competencies, and how these relate to the NVQ-J certification.
You are also advised to consult the Competency Standard and assessment instrument for a better
understanding of what is required to master the competency.
This Competency Unit
“Control and order stock” addresses the knowledge, skills and attitudinal requirements to
effectively control and order stock. There are five main areas or elements, which have been
reorganized for presentation:
Element 1: Maintain stock level and records
Element 2: Organise and administer stock takes
Element 3: Identify stock losses
Element 4: Process stock orders
Element 5: Follow up orders
As you go through each element, you will find critical information relating to each one. You are
advised to study them carefully so that you will be able to develop the necessary knowledge, skills
and attitudes for controlling and ordering stock.
Version 1 LRDU – Sept 08 1

Before you start
Before you start this Learner Guide, you need to:
a. Obtain a Learner’s Logbook. You will use it to record evidence of your new skills/competence.
As you demonstrate your new skills, record your activities and have your learning facilitator sign
off on them. This will allow you to provide evidence of your competence when you are being
assessed against the competency standard.
b. Ensure that you have access to the facilities and equipment necessary for learning.
c. Ensure that your learning resources are available.
d. Ensure that you are wearing suitable clothing, that tools and equipment are safe, and that the
correct safety equipment is used.
e. Plan your learning programme (see below)
f. Understand how to use this Learner Guide (see below)
Planning your learning programme
The self-assessment checklist on the following pages will assist you in planning your training
programme and it will help you to think about the knowledge and skills needed to demonstrate
competency in this unit. As you go through each one you will be able to find out which aspects of
the elements you have already mastered and which ones you already have and which you will need
to pay more attention to as you go through the learning process.
To complete the self-assessment checklist, simply read the statements and tick the ‘Yes’ or ‘No’
box. You should do this exercise now.

Self-Assessment Checklist
Control and order stock
Element 1 Maintain stock levels and records Yes No
1. I can monitor and maintain stock levels at the levels

prescribed by the enterprise ( ) ( )
2. I can monitor and adjust stock security systems as required ( ) ( )
3. I can maintain, monitor and adjust stock re-order cycles as ( ) ( )

required
( ) ( )
4. I can inform colleagues of their individual responsibilities in
regard to recording of stock
5. I can maintain stock storage and movement records in

accordance with enterprise procedures ( ) ( )
6. I can monitor stock performance and report fast/slow selling

items in accordance with enterprise procedures ( ) ( )
Element 2 Organise and administer stock takes Yes No
1. I can organise stock takes at the appropriate time and

allocate responsibilities to staff ( ) ( )
2. I can produce accurate reports on stock take within

designated timelines ( ) ( )
Element 3 Identify stock losses Yes No
1. I can accurately identify, record and assess losses against

potential loss forecast on a regular basis ( ) ( )
2. I can report losses in accordance with enterprise procedures ( ) ( )
3. I can identify avoidable losses and establish reasons for same ( ) ( )
4. I can recommend solutions and implement them to prevent

future avoidable losses ( ) ( )

Element 4 Process stock orders Yes No
1. I can accurately process orders for stock in accordance with

enterprise procedures. ( ) ( )
2. I can maintain stock ordering and recording systems

accurately ( ) ( )
3. I can correctly use purchase and supply agreements and

record appropriate details ( ) ( )
Element 5 Follow up orders Yes No
1. I can monitor delivery process to meet agreed deadlines ( ) ( )
2. I can liaison with colleagues and suppliers to ensure

continuity of supply ( ) ( )
3. I can follow up on routine supply problems or refer them to

the appropriate person in accordance with enterprise policy ( ) ( )
How did you do?
If you ticked all or most of the ‘Yes’ boxes, then you might not need to go through the entire guide.
Ask your learning facilitator to assist you in determining the most appropriate action you should
take.
If you ticked a few of the ‘Yes’ boxes or none at all then you should work through all of the guide,
even though some of the material may be familiar to you.
Plan your learning based on your answers. Be sure to involve your learning facilitator in the
planning process.

How to use this Learner Guide
This Learner Guide is designed to assist you to work and learn at your own pace.
We suggest that you:
 Go through the sections/elements as they are presented (starting at Section 1)
 Check your progress at each checkpoint to ensure that you have understood the material
 Observe the icons and special graphics used throughout this guide to remind you of what you
have to do and to enhance your learning. The icons and their meanings are as follows:
Complete Assessment Exercise

This exercise requires you to think about the knowledge
and skills that you have or will develop in this competency
unit.
Definition Box
Words/phrases are defined or explained in this box. The
words/phrases being explained are in bold print.
Checkpoint
This denotes a brain teaser and is used to check your
understanding of the materials presented. No answers are
provided for the questions asked.
Activity
This denotes something for you to do either alone or with
the assistance of your trainer/supervisor.
Reference
Points you to the reference materials and other support
documents or resources used in compiling the unit content.

Ask your learning facilitator for help if you have any problems with the interpretation of the
contents, the procedures, or the availability of resources.
 Complete each activity as you come to it. If the activity requires you perform an actual task, be
sure to tell your learning facilitator when you get to that activity so that he/she can make any
arrangements, if necessary.
 Get your learning facilitator to sign and date the Learner’s Logbook when you have completed
an activity.
 Complete the self-assessment checklist at the end of each section or element.
When you have worked through all elements of the guide, and when you can tick every ‘Yes’ box,
you are ready for assessment and should ask your learning facilitator to assist you in making the
arrangements to have your performance assessed.
Using the Computer and Other Resources
Where your activities refer you to the library, computer and Internet resources, ask your learning
facilitator to assist you with locating these resources. If you are getting your training in an
institution, there may be a library and a computer laboratory. If this is not the case, visit the local
library and find out what resources are available.
If you are new to the computer and the Internet, someone in the computer room should be able to
show you how to use these resources.
Please note that in many of your activities you have been referred to information on the Internet.
This is because the Internet has a vast amount of information that can help you in acquiring the
particular competencies. We would like to advise you, however, that we cannot guarantee that all
the sites will be available when you need them. If this happens, ask your learning facilitator to assist
you with locating other sites that have the information you require.

Method of Assessment
Competency will be assessed while you are actually performing the tasks related to this competency.
This may be in a real workplace or a simulated situation that accurately relates to the work situation.
Your competency assessment will also encompass those critical employability skills, which you
must acquire as you perform the various tasks. You are advised to consult the associated
competency standard for further details relating to the assessment strategies.
These employability skills may include your ability to:
Collect, analyze and organize information

Communicate ideas and information
Plan and organize activities
Work with others and in a team
Use mathematical ideas and techniques
Solve problems
Use technology
Quality Assurance
A feedback form is included at the back of each learner guide, so all users are afforded the
opportunity to document their concerns pertinent to the various aspects of the guide. Such concerns
will assist in the review process of the learner guides. Users are encouraged to cut out the form,
complete and submit same to the address provided.
You may now start your learning. Have fun while you work!

ELEMENT 1: MAINTAIN STOCK LEVEL AND RECORDS
LEARNING OUTCOMES
As you go through this element, you will acquire the necessary knowledge, skills and attitudes to
maintain stock levels and records. Your learning facilitator is there to assist you with the various
activities so that on completion you should be able to:
1. Monitor and maintain stock levels at levels prescribed by enterprise

2. Monitor and adjust stock security systems as required
3. Monitor, maintain and adjust stock re-order cycles as required
4. Inform colleagues of their responsibilities as they relate to recording of stock
5. Maintain stock movement records in accordance with enterprise procedures
MONITOR AND MAINTAIN STOCK LEVELS
In hospitality enterprises there are many different stock items that have to be monitored and
maintained. These items include the following:
 food
 beverage
 equipment
 linen
 stationery
 brochures
 vouchers and tickets
 souvenir products
When monitoring and maintaining stock levels you should be aware of the par stock levels
established by your enterprise.
You should note that the par stock for certain items may
change according to available delivery times and product
Par stock level – this is sometimes demand. For example:
referred to as par. This is the
amount of a product that must be on  Food items that are in season may be more in
hand between one delivery and the demand and as a result the par stock levels are
next. increased.
 If the time between delivery dates is decreased the
par stock level may also decrease

You should evaluate par stock levels from time to time to ensure that the amount held is sufficient.
When establishing par levels, management should note the following:
 The relative quantities of each item

 The cost of carrying products in inventory
Ideally inventory should be kept to minimum as holding large inventory may not be cost effective.
We will now discuss the methods used to monitor and maintain stock levels in hospitality
enterprises.
Periodic Inventory
Periodic inventory is the most commonly used method of maintaining inventory of non-perishable
items. This inventory system allows management to determine the amount of money that can be tied
up in stock as products are ordered, based on the amount needed until the next delivery date.
Periodic inventory is calculated as follows:
Amount needed for the upcoming period

- Amount on hand
+ Amount required at the end of the period to last until the next delivery
= Amount to order
Many hospitality enterprises use the periodic inventory system. This system however, has the
following disadvantages:
 The amount required and the necessary safety levels are not usually well thought out as it is
in perpetual inventory system
 Managers often order in a hurried haphazard manner
 Managers often fail to check inventory reports and take physical inventory before ordering
 This method is often misunderstood and misused by managers
Perpetual Inventory
The primary purposes of perpetual inventory method

are:
Perpetual Inventory System – This is
a running balance of the quantity of
 To ensure that quantities purchased are sufficient to
stored products, kept by recording all
meet the anticipated need without being excessive.
newly purchased items as they enter the
storage areas and all quantities issued  To provide effective control over those items being
stored for future use.
from storage to production areas.

Some store operators keep a perpetual inventory system so they know what is on hand at all times.
The perpetual management system can ensure that quantities purchased are enough to meet the
anticipated demands without being excessive. In this system the amount of products purchased is
recorded, and the amount of items being issued for use is also recorded. You must record the
movement of items into and out of storage. You can therefore use perpetual inventory system to
ascertain the amount of stock in storage at any given time.
Due to the perishability of many items purchased in hospitality operations and the amount of theft
associated with these items, it is prudent to conduct frequent physical inventories. When you conduct
a physical inventory you can quickly determine whether a product is understocked, overstocked or
missing. The following information is contained in the perpetual inventory records:
 Name and address of supplier

 Most recent purchase price for an item
 Par stock
 Reorder point
 Reorder quantity
Item ________________ Cost ___________

Size ________________ Par Stock ___________
Supplier ________________ Reorder Point ___________
Reorder Quantity ___________
Date Order # In Out Balance
Fig. 1: An example of a Perpetual Inventory Card
Physical Inventory
A physical inventory is an actual counting and valuing of all items in storage, and in some instances
all of the items in the in-progress inventory. There are three main reasons for taking physical
inventory; these are:
 For calculating order sizes and preparing purchase orders Physical Inventory System –
 For accounts to calculate product costs This is the practice of
 For comparing physical inventory with perpetual physically counting stored
inventory products on a periodic basis

Physical inventory is a must for the purpose of control. You should have a list of the products on
hand before taking inventory so that items will not be omitted. The products should be logged in a
manner that shows their location in the storage facility.
Taking physical inventory is often time consuming; however, hospitality operations usually do it at
least once a month. There are several ways in which physical inventory can be conducted.
One method includes two persons, one calling, and the other writing. Usually the storage area is laid
out in a pre-determined pattern. Inventory sheets are pre-printed with the names of the items, and
spaces where the writer records the numerical entries. In a computerized system, the sheets can be
pre-printed by the computer, via manual entry, or entered directly onto a portable computer.
Another, physical inventory method that is popular in hospitality operations is the use of hand-held
bar code scanners to record stock levels.
There are other methods of determining and recording stock levels. Do research to find out about
these other methods.
Refer to: Defranco A. & Noriega P. (2000), Cost Control in the Hospitality Industry,
Prentice Hall Inc, Chapter 8
CHECKPOINT
 What is par stock and how are par stock levels determined?
 What is perpetual inventory and how does it differ from
physical inventory?
 What information is contained on the perpetual inventory
records?
 What are the ways in which physical inventory can be
conducted?

MONITOR AND ADJUST STOCK SECURITY SYSTEM
Security of stock is a major challenge for hospitality enterprises and as such tasks must be divided
among different individuals. To ensure security of items in storage you should ensure that:
 Inventory of the storage areas is not completed by storeroom personnel only

 Two persons are used as this reduces the temptation of stealing
 Storeroom is closed during the inventory process
 Access to storeroom is restricted
 Items are strategically placed in the storeroom. For example expensive items should be
placed as far as possible from the door
In addition to the security measures outlined above managers may also implement other types of
control such as surveillance cameras, keys and retina identification.
Surveillance cameras – You should ensure that products are not left unattended or stored in a
manner that encourages pilferage. You should also ensure that products are moved to the storeroom
as quickly as possible after delivery. The level of security should increase with the value of the
item(s) stored.
Because of the affordability of surveillance equipment, many operations have taken the additional
precaution of installing closed circuit television cameras to observe various facilities. These cameras
are often directly linked to the operation’s security department. When these cameras are used they
should be monitored and maintained and act as a deterrent to theft.
Keys – To ensure control, procedures for the distribution of keys should be in writing. The number
of keys available should be kept to a minimum and authorization should be given only for the
number of keys deemed appropriate for efficient operation and maximum security. As a means of
monitoring and maintaining the key system the following measures can be taken:
 Have a sign-in and sign-out log if there is more than one key or if more than one person has
access to keys
 Change locks frequently to minimize the possibility that unauthorized persons may obtain
and duplicate keys
 Change locks when an employee with access to the storage areas leaves the operation
 Install electronic locks that require a code or swipe card, this system should record the times
that the storeroom was opened and by whom
Retina identification – In this security system a computer identifies an individual by scanning the
retina. Research suggests that this is a more reliable method of identification than fingerprinting. If
management adopts this procedure they will be able to control access to the storage facilities with a
lot more security than with the use of keys.
All stock security systems should be monitored and adjustments should be made to the system where
necessary to enable it to function effectively.

CHECKPOINT
What are some of the security systems instituted by hospitality

enterprises to protect stock?
MAINTAIN STOCK RE-ORDER LEVELS
After you have completed needs assessment and determined par stock levels you can go ahead and
order products. Products that have been consumed have to be replaced by additional orders. The
stage in the storage cycle at which additional products need to be ordered is referred to as the reorder
point. You should establish the most effective reorder point in order to control the amount of
products in storage.
Before establishing the reorder point for an item you

Reorder point – This is the number of should know:
units to which the supply on hand
should decrease before additional  The normal usage
orders are placed.  The time needed to obtain delivery
A safety level must also be developed if the products are essential to operational procedures. This
safety level is to allow for delays and possible increased usage. Once you have determined par stock
and safety levels your operation can determine the amount that should be ordered each time the
quantity of a particular product decreases to the reorder point.
This is an example of how to calculate the reorder quantity to bring inventory back to par stock.
50 Par stock
- 15 Reorder point
= 35 Subtotal
+ 5 Normal usage until delivery
= 40 Reorder quantity
You should ensure that the reorder cycles for your enterprise are maintained and monitored and that
adjustments are made where necessary. For example, you may have to make an adjustment if the
delivery time increases or if the usage rate decreases.

Prentice Hall Inc., pp 166
CHECKPOINT
 What is stock re-order point?

 How is the stock re-order level calculated?
ACTIVITY
Make arrangements for a resource person, for example the stores

manager for one of the local hotels, to visit your institution to do a
presentation on Maintaining Stock Levels and Records. Following the
presentation you should ask questions and seek clarification as
necessary.
You should note that due to the nature of the storage function it may be
difficult for you to get an actual tour of a hospitality facility. You may
be able however, to get a virtual tour on the Internet; so do research to
find a site that offers such a tour.
INFORM COLLEAGUES OF THEIR RESPONSIBILITIES
It is important to properly train personnel involved in the control and ordering of stock. The
following example illustrates the importance of having highly trained and competent individuals
working in the storage and issuing of stock. Suppose the owner of your establishment hires
inexperienced personnel to store and issue supplies, pays them low wages, and restricts training to
the minimum, telling persons what their duties are in a general way. Consider some of the problems
your enterprise may face:
 Food items may be stored in inappropriate containers or at improper temperatures thus the
quality may deteriorate very quickly
 An item may be stored in several locations, with quantities in an area spoiling as no one
knows they are there
 New deliveries may be stored in front of old ones and the older ones spoil as the new ones
are being used

 Pilferage may increase significantly if the storage areas are left unsecured
 The values of issues may not be readily available as those issuing foods have not recorded
item prices on requisitions
These are just a few of the problems that your enterprise will face if they fail to train adequately.
You should note that there are a few correct ways and an infinite number of wrong ways to handle a
given item. Personnel working with stock should be taught the proper methods and procedures by a
qualified trainer; one who can explain the correct techniques for ordering, receiving, storing and
issuing stock to new employees. New employees will learn and use the methods they are taught;
therefore the trainers should be qualified to teach the correct methods.
You should note that the savings from good receiving, storage, and issuing procedures can be
quantified. Any savings that your enterprise achieves in this area will correspond closely with the
competence of the person performing these tasks. All workers should be informed of their
responsibilities in regard to the recording of stock. The best designed receiving and storage facilities
and receiving, storing, and issuing procedures do not mean much, if the right person is not on the
job.
ACTIVITY
Mr. Issa is a proprietor of a medium sized hotel on the North Coast. He

has come to you complaining that he loses a lot of money each year as
a result of:
 Spoilage of stock
 Customers turning away because the products needed are not
available
 Damage to stock
 Theft and pilferage of stock
Additionally he complains that sometimes a lot of money is tied up in
stock and this greatly affects his cash flow.
In a simulated setting do a PowerPoint presentation to outline the

following to Mr. Issa and his staff:
 Importance of monitoring and maintaining stock levels
 The importance of monitoring and adjusting stock security
systems
 The importance of maintaining, monitoring and adjusting stock
re-order levels
 Individuals’ responsibilities in regard to recording of stock
Your learning facilitator will assess your performance

MAINTAIN STOCK MOVEMENT AND STORAGE RECORDS
The products received by hospitality operations usually fall into two distinct categories: directs and
stores.
Directs – usually inexpensive perishable products that are frequently bought for immediate use.
Directs include dairy products, fresh produce and baked goods. Directs are usually issued the
moment they are received, therefore no storage records of these items are kept by the receiving or
storeroom personnel.
Stores – usually refers to products that have a longer shelf life and will not be used on the day
delivered. Stores consist of products such as meats, staples, alcoholic beverages and other items that
may be in storage for a while. Products in stores are usually part of inventory until issued for use and
are not included in cost figures until issued, this is done for accountability purposes. Your record-
keeping system must account for stores until they are issued.
Directs are usually added to food costs when they are received, when more than one day’s supply of
directs are purchased, a way has to be established for accountability and storage of these products.
The same principle applies if the entire amount of a product is not used during the day it was
requested for use. You should account for the excess amount of these products. The product should
be returned to the vendor if feasible, or given to the storeroom personnel for greater accountability.
Your establishment must have some type of tracking procedure to ensure that the directs requested
are actually used. This control procedure is essential, therefore if 400 lobsters were requested for a
specific function there must be some means of checking to ensure that all 400 were actually prepared
and served. Beginning and ending forms are often filled out on a per-shift basis to account for high
price items. Even though most directs are not expensive, it is necessary to implement tracking
procedures for these items to prevent leakages in the control process.
Completing and maintaining records is essential to proper control of items in storage. Whenever an
item is required from storage, a requisition should be submitted to the storage personnel. When the
item is not in storage or has to be replaced, a standard purchase order should be used to bring items
back to par. The receiving agent must receive all products. Once the receiving clerk is satisfied with
the quantity, quality and price of products he or she should record the description and quantity on the
receiving sheet. The clerk should then place the product in storage and notify the department that
ordered the product. The auditor in the business office should be sent the invoice.

Food Storeroom Requisition
Date:______ Date Needed: _______ Dept.:______ Dept Mgr.:______
Qty. Ingredient Description/Item Qty. Unit Cost Unit Total

Ordered # Issued
Fig 2: Sample Requisition Form
Prentice Hall Inc., pp 160
CHECKPOINT
 Distinguish between directs and stores

 What systems can be instituted to track stock movement

MONITOR STOCK PERFORMANCE
If you are to control inventory efficiently then sufficient supplies of products should be available for
use when needed. The challenge of inventory management is to balance the difference between too
little stock and too much. Excessive inventory can pose several problems such as:
 Spoilage as a result of food being held for too long before being used
 Excessive capital being tied up in inventory
 Larger than necessary space allocated to storage
 Unwarranted opportunities for theft
 Higher than necessary labour cost to handle the greater amount of stock
Your enterprise should assess its inventory turnover rate to avoid problems such as those listed
above. The following is an example of how inventory turnover rate can be calculated:
Cost of products sold for the period

Average inventory
Some enterprises find it useful to calculate separate turnover rates for different categories of
products. For example, the turnover rate for lobster may be calculated separately from other seafood
items. The accepted turnover rates for products can vary greatly due to the type of product.
Generally perishable items are expected to have a much higher turnover rate than non-perishable
items.
Determining and maintaining the correct amount of inventory is a challenge for all hospitality
enterprises. Managers have to continuously evaluate usage and projected sales because of the high
cost associated with maintaining inventory.
The usage rates must be determined for all inventories. Storeroom managers must keep accurate
accounts of the usage patterns so that they can revise and improve ordering procedures and par stock
levels. This information can also help to determine the optimal reorder point.
Refer to: Defranco A.& Noriega P. (2000), Cost Control in the Hospitality Industry,
Prentice Hall Inc, pp 170
CHECKPOINT
 What formula is used to determine inventory turnover?

 What are the advantages of performing this calculation?

ARE YOU READY TO PROVE YOUR COMPETENCE?
Now that you have completed this element, check to see whether you have fully grasped all the
components by doing the following Self-Assessment
Checklist 1 Yes No
1. I understand the importance of monitoring and maintaining

stock at levels prescribed by the enterprise ( ) ( )
2. I know how to monitor and adjust stock security systems as

required ( ) ( )
( ) ( )
3. I know how to monitor, maintain and adjust stock re-order
cycles
4. I understand how to inform colleagues of their individual

responsibilities in regard to recording stock ( ) ( )
5. I know how to maintain stock storage and movement records ( ) ( )
6. I can monitor stock performance and identify and report

fast/slow selling stock in accordance with enterprise procedure
( ) ( )
Checklist 2 Yes No
1. Stock levels are monitored and maintained at levels prescribed

by enterprise ( ) ( )
2. Stock security systems are monitored and adjusted as required ( ) ( )
3. Stock re-order cycles are maintained, monitored and adjusted as

required ( ) ( )
4. Colleagues are informed of their individual responsibilities in

regard to recording of stock ( ) ( )
5. Stock storage and movement records are maintained in

accordance with enterprise procedures ( ) ( )
6. Stock performance is monitored and fast/slow moving items are

identified and reported in accordance with enterprise procedure ( ) ( )

ELEMENT 2: ORGANIZE AND ADMINISTER STOCK TAKES
LEARNING OUTCOMES
organize and administer stock takes. Your learning facilitator is there to assist you with the various
activities so that on completion you should be able to:
1. Organize stock takes at appropriate times and allocate responsibilities to staff

2. Produce accurate reports on stock take data within the designated timelines
ORGANIZE STOCK TAKE AND ASSIGN TASKS
Inventory-taking methods have been discussed in Element 1, so you should review this element if
necessary.
You should organize stock takes at the appropriate times and ensure that responsibilities are
allocated to staff members as appropriate. Security of merchandise represents a major challenge for
hospitality operations. For this reason stocktaking tasks must be divided among different individuals.
You should note that inventory of the storeroom should not be completed by storeroom personnel
only.
Two persons should be used when taking inventory as they make a better control team. One person
can count and call out the amount while the other person records in the inventory logbook. This has
the benefit of reducing the time of inventory taking and also reduces the temptation of stealing. You
should ensure that no products are issued during the inventory process to reduce the chance of errors
and stealing. If possible the storeroom should be closed for stocktaking. Except for stocktaking
period no one except the storeroom personnel should have access to the storerooms.
Items should always be placed in the same position as this facilitates access by storeroom personnel,
reduces theft and also reduces the risk of errors in counting during inventory.
You should ensure that adequate time is allocated to staff members to carry out stocktaking
functions. In stock taking adequate time is just as important as employee expertise. It is unfortunate
when hospitality enterprises go through the expense of hiring efficient people and designing
excellent stock taking systems, but then stop short at providing enough time to discharge these
functions adequately.

There are at least five ways of assigning values to products in inventory:
 actual purchase price method

 latest purchase price method
 first-in first-out method
 weighted-average purchase price method
 last-in first-out method
CHECKPOINT
What steps would you take to ensure security during a stock taking
exercise?
ACTIVITY
Do further research on the ways of assigning value to stock and

ascertain why one method may be used over another. Discuss your
findings with your peers and facilitator.
PRODUCE ACCURATE REPORTS ON STOCK TAKE DATA
You should produce adequate reports on stock take data within the designated timelines.
These reports will allow managers to make decisions regarding inventory. Stock take reports will
guide managers and inform them. Reports help management to:
 Determine whether additional steps should be taken to safeguard their investment

 Determine whether inventories are classified and organized in a systematic fashion
 Determine user rates for all inventories. By keeping track of usage patterns; storage managers
can revise and help improve ordering procedures and par stock levels
 Keep track of accumulating surpluses
 Keep track of fast/slow moving items
 Keep stock of inventories and corresponding dollar values
 Determine the level of theft, loss or pilferage especially in cases where perpetual inventory
system is used along with physical inventory and there is a large variance in the stock levels
recorded.

The data obtained in the stock taking process is essential to the efficient operation of your hospitality
enterprise. Therefore these reports should be submitted in a timely manner. Timelines are usually
given for the submission of these reports and it is imperative that these reports are submitted within
the designated timelines.
ACTIVITY
Work with your colleagues to set up a simulated environment in which

stocktaking will occur. In this simulated work environment conduct
stocktaking activities at appropriate times.
Complete accurate reports and produce stock take data within the
designated timelines.
Ask your learning facilitator to assess your efforts.
Checklist 1 Yes No
1. I know how to organize stock takes at the appropriate time and

allocate responsibilities to staff ( ) ( )
2. I understand the importance of producing accurate reports on

stock take data within designated timelines ( ) ( )
Checklist 2 Yes No
1. Stock takes are organized at the appropriate time and

responsibilities allocated to staff ( ) ( )
2. Accurate reports on stock take data are produced within

designated timelines ( ) ( )

ELEMENT 3: IDENTIFY STOCK LOSSES
LEARNING OUTCOMES
identify stock losses. Your learning facilitator is there to assist you with the various activities so that
on completion you should be able to:
1. Identify, record and assess losses against potential loss forecast on a regular basis
2. Report losses in accordance with enterprise procedures
3. Identify avoidable losses and establish reasons for these losses
4. Recommend and implement solutions to prevent future avoidable losses
IDENTIFY RECORD AND ASSESS LOSSES
Learning outcomes 3.1 and 3.3 have been merged
To maintain adequate control over stock, losses have to be identified, recorded and assessed against
loss forecasts. In the past, hospitality operators considered theft and pilferage as a manageable cost
of doing business and they usually included a slight mark-up in their prices to compensate for these
losses. However, in recent time the industry players have become more concerned about these issues
due to increased competitive pressure and shrinking profit margins.
There has been a heightened level of security in the hospitality industry attributed to the following
factors:
 Hospitality operators have found it increasingly difficult to pass on the security losses to
customers in the form of higher costs
 The public has become more price conscious
 The cost of insurance coverage is high
 Unfavourable publicity focused on the hospitality purchasing function
Several potential security problems arise in relation to the purchasing, receiving, storing and issuing
functions. These security problems include:
Kickbacks – the buyer could easily collude with a supplier, delivery agent or salesperson. Here are
some examples of kickbacks:
 The manager may pay for superior merchandise and receive inferior products while the buyer
and his accomplices pocket the difference between the as-purchased (AP) prices.
 Additionally two and more conspirators may ‘pad an invoice’ by adding a phoney charge.
 The conspirator may send an invoice that has already been paid to the bookkeeper who pays
it again and then they pocket the payment

 A supposedly defective incoming merchandise is ‘returned’ (returned to the conspirators who
hope that the bookkeeper will ignore or forget the transaction)
 The buyer agrees to pay a slightly higher as-purchased (AP) price and without the owners’
knowledge receives an under-the-table payment from the supplier
The hospitality operator and the honest supplier usually lose if his or her salespersons or delivery
agents conspire with the receivers, buyers and bookkeepers. The honest supplier has to be constantly
alert to these practices.
Invoice Scams – When a bill payment is diverted to a fictitious person or account. The conspirators
then pocket the payment.
Supplier and Receiver Error – You should check incoming invoices for arithmetic errors. There
are other errors that will add up in the long run. These errors include:
 Receiving the wrong items unintentionally

 Weighing items with an inaccurate scale
 Losing credit for container deposits or returned merchandise
 Receiving a substitute item of a slightly lower quality than ordered without issuing a credit
memo
The basic aim of storage management is to prevent loss of merchandise due to:
 pilferage
 spoilage
 theft
Inventory Theft - This is pre-meditated burglary. You should try to prevent inventory theft by
restricting access to all storage areas and receiving facilities. Storage facilities should be designed to
make theft more difficult by ensuring there is clear visibility in general access storage and very tight
security in limited access storage. Only the authorized personnel should be allowed access into the
receiving and storage areas and these areas should be locked when not in use.
Pilferage - Pilferage by employees is also referred to as ‘inventory shrinkage’ or ‘skimming’. An

employee may sneak off a bottle of wine or a couple ashtrays. Eating on the job when it is not
permitted and shoplifting also fall into this category. As a security measure, access to storage areas
should be restricted. There should also be adequate supervision in the production and service areas to
reduce or eliminate pilferage and shoplifting opportunities.
Spoilage - Steps should be taken to prevent stock spoilage. These steps may include the adherence to
rigid sanitation practices. Rotating stock to ensure that old items are used first and providing the
ideal environmental conditions for each item in storage.
You should note that except for some degree of shrinkage and spoilage the losses outlined above are
avoidable and you therefore need to take steps to ensure that these losses are kept to a minimum. The
steps designed to prevent avoidable losses are outlined in detail later in this guide.

CHECKPOINT
 What are ‘kickbacks’

 What are some of the ways in which kickbacks occur?
 What are common examples of theft during receiving and
storage?
 What is the difference between pilferage and theft?
 What can be done to reduce the occurrence of these problems?
REPORT LOSSES ACCORDING TO ENTERPRISE PROCEDURES
Your organization may have written procedures relating to the reporting of losses, as well as policies
regarding:
 What procedures should be followed if losses are observed

 What are considered losses
 Persons to whom reports should be made
 How silence may be construed as acceptance of the dishonest acts
You should realize how losses affect the bottom line and affect promotions, salary increases and job
security. You therefore have to prevent other employees from being unethical. You should also
realize that not reporting unethical practices or suspicious activity may be seen as condoning such
activity.
RECOMMEND AND IMPLEMENT SOLUTIONS TO PREVENT LOSSES
The main avoidable losses that enterprise managers want to prevent are theft and pilferage. The
owner or manager of your enterprise can take three main steps to prevent security breaches. They
can:
 select honest suppliers

 employ honest employees
 design the physical facilities so that effective security conditions can be maintained
However these three ideals are hard to guarantee, therefore operators can take specific steps to
prevent theft and pilferage. Some of these steps are outlined as follows:
 Cash paid-outs should be carefully documented and the delivery person receiving them
should properly initial the copy of the invoice

 No payment should be made to on an invoice that shows a post office box number as
suppliers’ address, without further investigation
 Persons who buy on behalf of the enterprise should never be responsible for paying the bills.
The buying and paying functions must be separated
 An independent audit of the organization’s operating procedures should be conducted. This

audit should be random and the auditor should:
− Analyze payment and invoice checks to determine accuracy, completeness and

consistency
− Check receiving routine and equipment
− Inspect storage facilities and take physical inventory
− Check receiving sheets and stock requisitions for consistency with invoices, purchase
orders, and payment checks
− Check consumption against units of sales
 Employees should be allowed to enter and leave the property through only one door where
possible and this door should not be used to receive deliveries where possible
 Employees should not be allowed to park their cars close to buildings or near doorways or
large windows to prevent employees sneaking out with merchandise
 Receivers should not be hurried, they should take their time to adequately inspect deliveries
 The manager of your enterprise should invest in cost-effective physical barriers such as:
− Time locks that can be opened only at certain times by authorized persons
− Heavy duty locks that are occasionally rotated with key cards and keys given only to
persons who must have them
− Adequate lighting in storage areas
− Closed-circuit television
− Uniformed guards to inspect employees, their packages and their time cards
− Transparent screens on all storage facility doors
− Perimeter and interior alarm systems
 Management can try to eliminate collusion opportunities by separating purchasing, receiving,

storing and issuing functions
 As long as quality will not be compromised, each item should be removed from containers
before storage to minimise ‘inventory shrinkage’. In addition, when physical inventory is
being taken the stocktaker should lift a few containers to ensure that there is something in
them as it is possible for someone to take a full container replacing it with an empty one
 A system must be developed to prevent unrecorded merchandise from getting into the storage
facility or into the in-process inventory

 An approved supplier list must be developed and all persons with ordering responsibilities
must use the suppliers on the list. In instances where there are exceptions to the rule,
management must be informed and the supplier must be investigated. Using approved
suppliers is one of the best ways of controlling problems such as kickbacks
 Restricting access to high-cost products is one of the most effective deterrents to theft and
pilferage
 There should be limited access to inventory records. Only persons authorized to make entries
into records or analyze them should be given access
This list is by no means exhaustive. There is a range of other methods that may be employed to
prevent avoidable losses in hospitality enterprises.
ACTIVITY
You are a new employee at Quest Hotel and Spa, and are employed in
the purchasing department. However, since being there you realized
that the property does not have any set guidelines for the storage of
stock or for dealing with losses. You have taken this concern to your
manager who informed you that he was aware of the problem but had
not been able to create a procedural manual for the receival and storage
of goods and handling losses. You have been given the task of
developing this procedural manual.
Working in groups of about four persons, develop this procedural

manual. Each person can be assigned a specific area. Make/Do a
presentation outlining important aspects of the manual to your
colleagues.
Your learning facilitator will assess your efforts.

Checklist 1 Yes No
1. I understand how to identify, record and assess losses against

potential loss forecast ( ) ( )
2. I know how to report losses in accordance with enterprise ( ) ( )

procedure
3. I can identify and establish the reasons for avoidable losses

( ) ( )
4. I understand the importance of recommending and

implementing solutions to prevent future avoidable losses ( ) ( )
Checklist 2 Yes No
1. Losses are accurately identified, recorded and assessed against

potential loss forecast on a regular basis ( ) ( )
2. Losses are reported in accordance with enterprise procedures ( ) ( )
3. Avoidable losses are identified and reasons are established ( ) ( )
4. Solutions are recommended and implemented to prevent future

avoidable losses ( ) ( )

ELEMENT 4: PROCESS STOCK ORDERS
LEARNING OUTCOMES
process stock orders. Your learning facilitator is there to assist you with the various activities so that
on completion you should be able to:
1. Process stock orders accurately and in accordance with enterprise procedures

2. Maintain stock ordering and recording system accurately
3. Use purchase and supply agreements correctly and record appropriate details
PROCESS ORDERS FOR STOCK
Before placing an order you must determine the appropriate order size. The par stock approach is the
most common way in which this is done. This was discussed earlier in the guide. You must then
prepare the appropriate purchase orders and send them to suppliers or call them in. You should keep
one or more copies for your records.
The paperwork used in placing orders may vary from one establishment to the next. However, the
information contained is relatively standard throughout the hospitality industry. The purchase order
represents a request that a supplier delivers what your enterprise wants, when it is wanted. The
purchase order usually contains the following:
 Date
 Transportation requirements and packing instructions
 Desired receiving date (optional)
 Quantity desired, item type and unit size
 The unit price and the extended price (number of units multiplied by the unit price)

Date _______ Name of Operation ___________ Order No. _________
Account No. ____________ Page _____ to _____
To: (supplier)
Please send the following items

Via (transportation requirements)______
Unit size Quantity Description Unit Price Total Price
For use by Rec. by __________ Condition of goods ________

Receiving clerk: Date rec. __________ Other remarks ___________
Fig 3: Example of a Purchase Order Form
The number of purchase orders prepared may vary depending on the enterprise. Some enterprises
prepare and use as many as eight copies. However, it is more common that three copies are used:
 One for the receiving clerk

 One for the supplier
 One for the buyers records
Once the order size is determined you can place the order in one of the following ways:
 By giving the order to the supplier’s salesperson or distributor sales representative

 Telephoning in the order
 Sending the order via email attachment to the supplier
 Using fax machine to convey ordering information
The management of your enterprise usually determines the ordering procedures that should be used.
Regardless of the method chosen, you should ensure that orders are accurately processed in
accordance with enterprise procedures.

Refer to: Feinstein A. H. & Stefanelli J., (2002). Purchasing (Selection and
Procurement for the Hospitality Industry) (5th ed.). John Wiley and Sons pp 236-242
CHECKPOINT
 What information is usually contained on the purchase order?
 What is the purpose of the purchase order?

MAINTAIN STOCK ORDERING AND RECORDING SYSTEMS
Ordering is a time-consuming activity and the paperwork and/or computerization is often costly.
You should note however that the process can be streamlined. Let us examine some of the methods
by which the ordering and recording process can be streamlined.
Blanket order – Several items used by hospitality enterprises have a low dollar value and the time
and effort required in ordering them can be costly, especially if they are ordered frequently. A
blanket order includes a large amount of miscellaneous items. You can set a large par stock for
miscellaneous items thus saving on ordering costs. However this should be considered only if the
cost for storing them is relatively low.
Purchase order draft system – this is a purchase order with an attached cheque to cover the cost of
the items ordered. The supplier may also charge the buyer’s credit card number or credit card. This
can save the buyer money in the form of discounts; additionally this system eliminates the need for a
large amount of clerical work. For this system to work there has to be trust between buyer and
supplier especially in the sensitive area of returned merchandise or where other adjustments are
required.
Supplier’s form – Some suppliers provide web-based order forms or pre-printed paper. These may
be less expensive than the forms provided by your enterprise. You can save a large amount of money
by using supplier’s order blanks especially in instances where your enterprise uses several multipart
forms.
Standing order – the procedure whereby you set a par stock and the supplier leaves enough
products to bring you up to par at specified times maybe twice a week. This procedure minimizes or
eliminates the need to prepare purchase orders and eliminates ordering costs.
Computerization – The cost of computerization has greatly declined over the years and most e-
procurement applications do not rely upon proprietary software; all that is required is a computer,
Internet connection and a browser. E-procurement is an excellent way for buyers and suppliers to
streamline. The cost associated with the use of paper is greatly reduced as there is no need for
multiple paper copies of purchase requisitions and purchase orders, as purchases are done
electronically. Computerization not only reduces cost but also reduces the amount of time required
to place an order. Other benefits include increased order accuracy, reduced lead time and that can
result in minimum investment in inventory, minimum stock outs and increased customer satisfaction.
Refer to: Feinstein, A. H., Stefanelli J., (2002). Purchasing (Selection and
Procurement for the Hospitality Industry) (5th ed.). John Wiley and Sons pp 242-247

USE PURCHASE AND SUPPLY AGREEMENTS
Suppliers should be carefully selected and should be professional. You should select a supplier who
consistently supplies:
 Correct quality products

 Reasonable prices
 Prompt delivery
 Service, including product information
When selecting a supplier you should consider the following factors:
 Location – delivery time, transportation costs and unexpected delays may be reduced if
supplier’s facility is close to your operation
 Technical ability of the supplier’s staff
 Value
 Compatibility – that is a good working relationship between the purchaser and the supplier.
There should be mutual beliefs about ethics and the fair treatment of both the guests and the
supplier
 Honesty and fairness – these traits should be part of an ongoing business relationship
 Delivery personnel – the appearance, attitude and courtesy of the supplier’s personnel
contribute to the impression formed by personnel in your enterprise
The person responsible for purchasing should identify possible sources and determine the most
appropriate supplier. You should ensure that purchase and supply agreements are correctly used and
appropriate details recorded. If you are the person signing contracts and agreements or signing for
products you should be well informed and understand the terms of the contract.
You should ensure that purchase and supply agreements are correctly used and accurately
maintained. You should ensure that your agreement speaks to:
 Specifications on quality – When writing specifications for quality you should consider
factors such as colour, size, brand, age, desired ripeness, region, shape, form or length
 Specifications on quantity – You should specify the amount of a product that is needed
 Specification on time and price – You should note that different quality products purchased
in different quantities at different times can vary in cost. Your specifications on time should
include:
− Your enterprise should be able to order goods when desired, not at the convenience of
vendors
− Suppliers must have products available when an order is placed to avoid stockout or
substitutions
− Vendors must be able to deliver products at the specified time
Keep in mind that prices depend on quality, quantity and time specifications and prices will fluctuate
in purchasing. Prices are affected by demand and supply, therefore when an item is in abundance the
cost will be more reasonable; on the other hand when an item is scarce you will have to pay higher

prices to acquire these products. Price specifications are very important when purchasing through a
bid process, as some purveyors may initially bid low to meet price specification then raise the prices
a bit at a time when they have received your business. The purchasing agent therefore needs to
ensure that price specifications are adhered to.
Refer to: Defranco, A. & Noriega, P. (2000), Cost Control in the Hospitality Industry,
Prentice Hall Inc Chpt 6
Checklist 1 Yes No
1. I know how to accurately process orders for stock in accordance

with enterprise procedures ( ) ( )
2. I can explain how to accurately maintain stock ordering and ( ) ( )

recording systems
3. I understand how to use purchase and supply agreements and

recording accurate details ( ) ( )
Checklist 2 Yes No
1. Orders for stock are accurately processed in accordance with

enterprise procedures ( ) ( )
2. Stock ordering and recording systems are accurately maintained ( ) ( )
3. Purchase and supply agreements are correctly used and

appropriate details recorded ( ) ( )

ELEMENT 5: FOLLOW UP ORDERS
LEARNING OUTCOMES
follow up orders. Your learning facilitator is there to assist you with the various activities so that on
completion you should be able to:
1. Monitor the delivery process to meet agreed deadlines

2. Undertake liaison with colleagues and suppliers to ensure continuity of supply
3. Follow up routine supply problems or refer to the appropriate person in accordance with
enterprise policy
MONITOR DELIVERY PROCESS TO MEET AGREED DEADLINES
Receiving is very important to the proper control of purchasing in

Receiving - the act of tourism and hospitality enterprises. It is at receiving that you determine
inspecting and either what you got, not what you ordered but what was received. You should
accepting or rejecting note at this point that there could be a great difference between what you
deliveries ordered and the delivery you receive.
The main objective of receiving is to check that you receive the correct
amount and the correct quality at the correct time with the correct supplier services for the correct
cost.
Obtaining the lowest price is the driving force behind most purchasing decisions, however, your
manager must compare purveyors to ensure that they can also provide quality and consistency over
the long run. You should assess your purveyors’ transportation and method of delivery to ascertain
whether it provides timely delivery and is able to maintain products at the required temperature from
delivery to storage. Your operation may lose clients as a result of poor quality, stockout and lack of
consistency.
Delivery times
You must schedule deliveries for times that are convenient for your operation. This reduces the
likelihood of deliveries arriving when receiving personnel are busy with other tasks. Having a set
time for deliveries also ensures that the storeroom area is prepared to receive deliveries. You should
monitor the delivery process to ensure that all delivery times are adhered to. Some purveyors may
provide incentives for accepting product at off times. This should be done only if such an action is
beneficial to your enterprise and does not lead to stockout or the security function being
compromised.

LIASE WITH COLLEAGUES AND SUPPLIERS
You should undertake liaison with your suppliers and colleagues to ensure continuity of supply.
Procedures should also be established to deal with instances where a supplier may not have a
particular item in stock. This should be communicated to your enterprise as soon as possible and
appropriate action taken according to established procedures.
Your supplier should be able to consistently supply the quantities needed. Dependability is critical.
Your supplier must ensure that you get what you need when you need it. Your relationship with your
supplier should be one of consistency, dependability, loyalty and trust. If a supplier can consistently
provide acceptable value chances are he will be on your approved supplier list for a long time.
Your enterprise should periodically evaluate suppliers’ performance and consider disciplining or
rewarding them as necessary. The ultimate discipline is to switch to another supplier and the ultimate
reward is becoming a house account.
Your enterprise should evaluate consistency, for example consistent quality and consistent supplier
service. If suppliers consistently fulfil their end of the bargain regardless of when these bargains
were made then you should have no complaints. Your enterprise should enumerate the factors on
which you and your suppliers agree and periodically use the consistency yardstick to measure
performance.
If a supplier is deficient you should give him a chance to improve his performance because if you
develop a reputation for making rash decisions other suppliers may be weary of your enterprise.
You should however remain aware of, and examine alternate suppliers in case you need to switch.
Refer to: Feinstein, A. H.& Stefanelli, J., (2002). Purchasing (Selection and
Procurement for the Hospitality Industry) (5th ed.), John Wiley and Sons, chpt12
CHECKPOINT
Assume that you are very happy with your current supplier who has
been supplying most of your needs for two years. You have identified a
new supplier who appears to offer a better deal:
 lower AP prices
 same quality
 same supplier services
What do you do?

Your reference material will assist you.

FOLLOW UP ROUTINE SUPPLY PROBLEMS
You may find that from time to time there are differences between what was ordered and what was
delivered. These variations may arise due to reasons such as:
 The unintentional error

 The dishonest supplier with an honest delivery agent
 The honest supplier with the dishonest delivery agent
 The dishonest supplier with the dishonest delivery agent
The variations encountered when receiving merchandise may relate to:

 Quantity
 Price
 Quality
 Other areas of the specifications, for example, type of goods delivered or unit size
As a receiver you will be required to check each item’s weight, amount and volume as quickly and
efficiently as possible and compare the results with the original purchase order and invoice. The
comparisons should match. If these do not match there is a variance that should be dealt with
immediately.
The receiver should also check the quality of goods delivered, making careful comparison with the
quality established in the standard purchase specification. Unfortunately, except a check for the
packers’ brand name, this is the most difficult check to make in some cases. For example, in food
and beverage establishments a receiver can never tell for sure if the lobster tails, received are bad
until they have been cooked.
In some establishments the receiver is required to check for quantity and someone else checks for
quality. The receiver may call the chef, housekeeper, maitre d’, or some other appropriate person to
check the quality of items to be eventually used in his/her department.
You should ensure that unit prices appearing on an invoice correspond with the prices quoted by the
supplier.
As a receiving agent you may also be required to inspect for things such as:
Freshness – You should check every item delivered to make sure they are fresh. Open boxes and
check everything. Do the items smell ok? Do not be fooled by fresh items on the top as they may be
disguising stale ones below.
Use-by Dates – You should check the use-by dates on any dry or canned goods that are delivered.
You may find that the excellent price that you were quoted on a bulk order could be due to the use-
by date being only a couple of days away.
Correct sizes – Make sure you get what you ordered. If you ordered the cleaning agent in 2-litre
bottles you should get 2-litres and not 1.5-litres.

Brand and Variety – Check to ensure that you have received the correct brand as some suppliers
may try to substitute what you have ordered with a cheaper brand.
Damage and Spoilage – You should look for signs of damage such as:
− Broken jars or dented cans
− Partially thawed frozen goods
− Signs of freezer burns
− Incorrect transport temperatures (poorly refrigerated trucks)
− Bags of dry goods infested with insects and weevils
As you are checking through the items, tick each one on the delivery docket if it is acceptable. If
everything is in order, you can sign the docket and return it to the delivery person. However, there
are often instances where there are variations/discrepancies.
All purchase discrepancies should be dealt with as soon as possible for several reasons. For example:
 Waiting too long may cause distrust and confusion among business persons
 A driver may have altered the price on the invoice
 The supplier may have quoted a much lower price over the telephone than the one now
written on the invoice
The receiver should notify the delivery person of all variances so that he/she will be a witness to the
discrepancies.
In some cases, you as the receiver may note a discrepancy regarding prices and or taxes noted on the
invoice. Alternatively, you may have to reject all or a part of an order. You should ensure that all
variations are accurately defined and communicated to the appropriate person. The best way of
reporting/communicating discrepancies is to phone the supplier while the driver is still with you.
Usually you will be able to return the goods with the driver on the spot saving further transportation
costs. You may also be able to organize replacement goods right away or the supplier may arrange a
credit note. You should ensure that the delivery person is given the appropriate documentation
outlining the variance.
You may prepare a request for credit memorandum, which is a written statement attesting to the fact
that the particular item(s) did not meet the quality, quantity or price standards.
The delivery person’s signature shows that the supplier’s representative has agreed that your account
must be credited. This memo is designed to ensure that your account is credited and that all costs are
accurate. You may also need to prepare a request for credit memo if you should receive credit for
product substitutions, such as when a less expensive item than the one ordered is delivered.
You should accurately record all variations and discrepancies according to enterprise policy.
Remember to note and attend to all discrepancies at the time of delivery.

N.B. Stock receiving and storage is a very important exercise, which requires strict control, in order
to safeguard the investment made. Therefore hospitality establishments allow only authorized
personnel to enter the areas where this is undertaken.

CHECKPOINT
 What are the types of variations that may be experienced in goods

delivered?
 What is a request for credit memo and when is it used?
 When inspecting merchandise received what are some of the things
you look for?
 What should you do when a variation or discrepancy is observed?
ACTIVITY 1
Put the following receiving activities in chronological order. Use

numbers 1 (for the first activity) through 7 (for the last activity).
 _____ Reject part of the order

 _____ Check for proper quality
 _____ Open the receiving area
 _____ Note a discrepancy with respect to prices on the invoice
 _____ Check all prices and price extensions
 _____ Prepare a request for credit memorandum
 _____ Check for proper qualities

ACTIVITY 2
Working with your peers, simulate an activity with persons acting in

the following capacity:
 Supplier (responsible for preparing invoice/delivery note)
 Delivery agent
 Receiving agent (responsible for sourcing purchase order)
As a receiving agent you will be required to:
 Check incoming stock against purchase order and other

delivery documentation
 Define, record and communicate variations to the appropriate
person
 Inspect items for specifications to include damage, quality, use-
by dates, breakages or discrepancies, and complete appropriate
records.
Remember to:
 Work in a safe and hygienic manner
 Carefully check all items received
 Ensure that safeguards are in place to prevent pilferage and
theft
 Communicate variations promptly
 Deal with delivery person/supplier in a professional and
efficient manner
 Ensure that all documents are carefully scrutinized to ensure
accuracy
Ask your learning facilitator to assess your work and remember to

alternate roles

ACTIVITY 3
You are responsible for following up on orders made by your

enterprise. You called a supplier who was to provide the lobster
tails for the annual Grand Gala held at your hotel and he informed
you that the items you had requested were out of stock and they did
not have any viable substitutes at that time. How would you handle
this situation?
Discuss with your peers.

Checklist 1 Yes No
1. I understand how to monitor the delivery process to meet the

agreed deadlines ( ) ( )
2. I understand how to undertake liaison with colleagues and

suppliers to ensure continuity of supply ( ) ( )
3. I know how to follow-up or refer routine supply problems to the

appropriate person in accordance with enterprise policy ( ) ( )
Checklist 2 Yes No
1. Delivery process is monitored to meet agreed deadlines ( ) ( )
2. Liaison is undertaken with colleagues and suppliers to ensure

continuity of supply ( ) ( )
3. Routine supply problems are followed up or referred to the

appropriate person in accordance with enterprise policy ( ) ( )

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Learner Guide Control and Order Stock

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Learner Guide Control and Order Stock

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LEARNER GUIDE

CONTROL AND ORDER STOCK

HEART TRUST/NATIONAL TRAINING AGENCY

Learning Management Services Department

*** 2008 ***

Version 1 LRDU – Sept 08

Element 1: Maintain stock level and record ....................................................... 8

Element 2: Organize and administer stock takes................................................ 20

Element 3: Identify stock losses........................................................................... 23

Element 4: Process stock orders .......................................................................... 29

Element 5: Follow up orders................................................................................ 35

Version 1 LRDU – Sept 08

This Competency Unit

Element 1: Maintain stock level and records

Element 2: Organise and administer stock takes

Element 3: Identify stock losses

Element 4: Process stock orders

Element 5: Follow up orders

Version 1 LRDU – Sept 08 1

Before you start this Learner Guide, you need to:

c. Ensure that your learning resources are available.

e. Plan your learning programme (see below)

f. Understand how to use this Learner Guide (see below)

Planning your learning programme

Version 1 LRDU – Sept 08 2

Element 1 Maintain stock levels and records Yes No

1. I can monitor and maintain stock levels at the levels

2. I can monitor and adjust stock security systems as required ( ) ( )

3. I can maintain, monitor and adjust stock re-order cycles as ( ) ( )

5. I can maintain stock storage and movement records in

6. I can monitor stock performance and report fast/slow selling

Element 2 Organise and administer stock takes Yes No

1. I can organise stock takes at the appropriate time and

2. I can produce accurate reports on stock take within

Element 3 Identify stock losses Yes No

1. I can accurately identify, record and assess losses against

2. I can report losses in accordance with enterprise procedures ( ) ( )

3. I can identify avoidable losses and establish reasons for same ( ) ( )

4. I can recommend solutions and implement them to prevent

Version 1 LRDU – Sept 08 3

1. I can accurately process orders for stock in accordance with

2. I can maintain stock ordering and recording systems

3. I can correctly use purchase and supply agreements and

Element 5 Follow up orders Yes No

1. I can monitor delivery process to meet agreed deadlines ( ) ( )

2. I can liaison with colleagues and suppliers to ensure

3. I can follow up on routine supply problems or refer them to

How did you do?

Version 1 LRDU – Sept 08 4

We suggest that you:

 Go through the sections/elements as they are presented (starting at Section 1)

Complete Assessment Exercise

Version 1 LRDU – Sept 08 5

 Complete the self-assessment checklist at the end of each section or element.

Using the Computer and Other Resources

Version 1 LRDU – Sept 08 6

These employability skills may include your ability to:

Collect, analyze and organize information

Version 1 LRDU – Sept 08 7

1. Monitor and maintain stock levels at levels prescribed by enterprise

MONITOR AND MAINTAIN STOCK LEVELS

Version 1 LRDU – Sept 08 8

 The relative quantities of each item

Amount needed for the upcoming period

* 2008 *

Item ______ Cost _

Date:__ Date Needed: _ Dept.: Dept Mgr.:__