Unit 3: STORE MANAGEMENT & CONTRACT MANAGEMENT – a) Indent- Purchase- Storage-

Issue- Records - Purchase Principles, Types of purchasing, Purchase cycle, store management,
issuing of linen, laundry, guest room supplies, Record keeping b) Pest control management- Identify
the pests, Areas of infestation in the hotel, Prevention & Treatment, c) Outsourcing / contract
services / Vendor Management- Need, types of outsourced jobs, Steps / guidelines involved when
hiring on contract, Pricing, Contract clauses, Annual Maintenance Contract

PURCHASING SYSTEMS IN HOUSEKEEPING

Indent- Purchasing- Storage- Issue- Records – covered in chapter 1 notes

PRINCIPLES OF PURCHASING
Points to be kept in mind while purchasing
1) Right source of supply or right supplier.
2) Right quality
3) Right quantity
4) Right price
5) Right time

Right selection of supplier

This is the most important principle of purchasing because if the selection of supplier is right then
all other points will automatically be right.
How can you select the right source of supply?
1) Market survey
2) Knowledge and experience
3) Internet
4) Hotel supplier’s directories
5) Libraries
6) Salesperson

Right quality
The housekeeping department is responsible for providing guests with a clean, comfortable, safe,
attractive and luxurious environment. So the department needs to buy the best product. Value for
money is a key factor in this regard.
Right quantity
“How much to purchase” is also kept in mind while purchasing.
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POINTS TO BE KEPT IN MIND WHEN ORDERING THE RIGHT QUANTITY
1) Purchase cost
2) Storage space and storage cost
3) Discount given by supplier on purchasing larger quantities
4) Previous stock
5) Buffer stock (safety stock )

Right price
An in-depth knowledge of the market is important to make sure that the right price is being paid.
Right time
The material should be made available at the right time. ‘Lead time’ should be minimum. Lead time
is the time period from placing the order to the delivery. And also the time should also be right so
that the particular raw material or product is available in the market.
PURCHASING CYCLE
1.) Need recognized
First there is a need because raw materials are required for making the final products.
2.) Specifications and requirements
Complete description of material is required so that you get the same product as you wanted i.e.
you specify the name of the product, quantity, brand etc.
3.) Requisitions
Requisition is sent by the store department to the purchase department about the requirements.
4.) Purchase plan
Now the planning is done because there is a saying failing to plan is planning to fail.
5.) Select the supplier
Now the suitable supplier is selected.
6.) Price & term finalized
Now the supplier is agreed with the price which established by a company and also with the terms
and conditions.

7.) Purchase order

It is an official order in which supplier commits to the buyer to pay for the goods ordered and it is
supplier’s responsibility to deliver the product at the right time and to charge for it. It should have
date of issue, purchase order number, expected date of delivery, product specification, quantity,
brand, batch number, date of manufacture and also delivery instructions should be clearly mentioned
including packaging, mode of transport, time of delivery and charges.
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8.) Supplier’s acceptance
Now the purchase order is accepted by the supplier
9.) Delivery
Now supplier delivers the product in accordance to the purchase order at right place, right time and
in right condition.
10.) Receive and inspection
Now products are received and inspected by the receiving department and invoice is checked with
purchase order. Before transferring product to the store goods receipt note (GRN) is prepared by
the receiving department.
11.) Payment made
If the goods are found in the right condition, the payment is made to the supplier.

METHODS OF PURCHASING
1.) Formal buying
In this type of purchasing advertisement is released through newspapers for purchasing the
products with their specifications and quotations are invited from the supplier against their written
specification for each item to be purchased and the quotations remain sealed and they are opened
by the purchase manager in the presence of bidders. The usual practice is to accept the quotations
of the lowest bidder, unless the product clearly fails to meet the specification.
2.) Negotiated buying
This method involves negotiations between the buyer and the seller regarding the prices. This type
of purchasing is done when there are limited suppliers for a particular item. The buyers contact the
sellers directly and negotiate for the price.
3.) Contract purchasing
This type of purchasing is done when the items are required frequently and the agreement is a long
term one and the suppliers are not changed frequently. Also the discount is offered by the supplier
on the total contract. This method of purchasing is commonly used for purchase of housekeeping
suppliers. The purpose of contract purchasing is to get the product at a fixed price over a stated
period of contract. Moreover the important thing is that the supplier selected is usually a specialist
in the supply of quantities demanded.
4.) Blanket order purchasing
A blanket order is an agreement to provide a specific quantity of listed items for a period of time at
an agreed price. This is similar to contract purchasing but the difference is that in contract purchasing
the agreement is long term but in blanket order purchasing the agreement is shorten. The blanket
order is required in small quantities but more frequently.
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5.) Bulk purchasing
In this method of purchasing large quantities of items are purchased and the discount is given by
the supplier. The transportation cost is very much reduced. It is an economical purchasing
6.) Centralized purchasing
This type of purchasing is mainly practiced by chain hotels. They purchase items for all their main
properties. In this type of purchasing is done and the discounts are enjoyed by the buyer.
7.) Wholesale purchasing
In this type of purchasing, a contract is signed with the wholesaler for purchase of items for a period
of time at an fixed price.
8.) Weekly purchasing
It is done weekly/fortnightly. This ensures regular availability of the items.
9.) Hand to mouth purchasing
It is also known as zero stock buying. It means no purchase is made until the need arise and buying
only the quantity necessary to meet the current needs it is used principally to emergency
requirements.
10.) Speculative purchasing
It means estimation without proof. In this purchasing quantities of items are purchased keeping in
mind the price of the items will definitely rise. The purpose is to resell the product at a high price to
earn the profit but the disadvantage is that storage space & cost and also blockage of large amount
of capital.
11.) Purchase by paid reserve
In this method, money is paid in advance for a commodity to ensure continuity of supply throughout
the year.
12.) Total supply purchasing
In this purchasing all required items are supplied by a single supplier. This helps in reducing the
paperwork and negotiations need to be done with only one person.
13.) Cost plus purchasing
In this purchasing, a supplier buys all the commodities and provides them to the housekeeping
department. The supplier is given a small commission for this.
14.) Standing order purchasing
In this purchasing, daily suppliers are fixed for perishable items such as flowers, meat, milk products.
15.) Purchasing from van sales
This purchasing is rarely used for purchasing in housekeeping department. In this method,
purchasing is done from mobile shops that move from one place to another.
16.) Cash and carry method
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In this purchasing the items are purchased from supermarkets such that the prices are competitive.
17.) Cash on delivery purchasing
This ordering system involves payment on acceptance of a delivery. The order may be placed over
the telephone or through the internet.
18.) Daily market purchasing/ Petty cash system
In this method of purchasing, item quantities in the store are checked on a daily basis and only items
falling short are purchased. This method operates on petty cash system. Petty cash is the sum of
money set aside to meet minor expenses. It is effective for purchasing small orders from the local
market in exchange for a bill so that cash payment is made. The disadvantages are the possible
non-availability of items in an emergency and the possibility of fluctuating prices.

Pest Control
Classification
• Insects – moth larvae, bed bugs, lice, fleas, flies, cockroaches, beetles, silverfish, mites and
spiders
• Rodents - rats and mice
• Fungi – wet rot, dry rot and moulds
Moths
• Common ones are clothes moth and brown house moth
• Attraction – soiled coloured wool, leather, dried fruit
• Damage – holes in textile or spoilage of dried fruits.
• Control –
• Keep clothes, leather items, cork tiles etc. clean
• While storing, seal these items in a polythene bag or paper and store in a cool, dry
area
• Add naphthalene tablets to stored items
• Clean carpets regularly
• Hang insecticidal vaporizing strips in wardrobes
Bed Bug
• Usually 3 mm long and flat, disc like
• Attraction – human blood, overcrowded and dirty rooms
• Damage – irritating bites, unpleasant smell
• Control –
• Keep floors, walls, beds and bedding spotlessly clean

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 • spray with lindane spray or employ contractors to apply a fenitrothion or iodofenphos
insecticide
Fleas
• Measure 2-3 mm, flat from sides, reddish brown colour
• Attraction – fur, feather, clothing, organic debris, fluff and dust under carpets and beds etc.
• Damage – irritating bites which leaves a small red spot
• Control –
• Keep floors, beds, skirting etc. free of dirt
• Burn infested bedding
• Prevent entry of cats, birds etc. and check for birds’ nests within the building spray
bed frames and floors with insecticides
Flies
• Measures 7-8 mm and is grey with black stripes
• Attraction – decaying organic matter
• Damage – Gastr-enteritis, typhoid, diarrhoea, dysentery, diptheria and cholera may be
contracted by consuming food contaminated by flies
• Control –
• Prompt disposal of food waste, tins and bottles
• Regular and thorough cleaning of refuse bins and storage areas
• Tight fitting lids for refuse bins
• Fly screens over windows that open
• Insecticide spray on a regular basis
• Electric ultraviolet fly traps
Cockroaches
• Approx. 2.5 cms long with flat brown/ black body and long antennae
• Attraction – warm, moist atmosphere (bathrooms, kitchen, around hot pipes) and almost all
types of food
• Damage – Food spoilage, unpleasant smell, transmission of food poisoning and other
diseases
• Control –
• Spray infested areas with insecticide ensuring penetration into all cracks and crevices
• Employ contractors to spray or place powders and baits in strategic positions
Carpet Beetles
• Usually 2-4 mm long with oval shaped body and dark brown coloured.
• Attraction – feathers, fur, wool, skin flakes and hair
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 • Damage – Irregular holes on seams of fabric, specially wool
• Control –
• Inspection of roof and eaves for dead birds
• Spray infested areas with a mothproofer
• Dust floorboards and under carpets and crevices with carbaryl or lindane insect
powder
• Place moth repellent crystals around stored clothes, carpets, blankets etc.
Furniture Beetles
• Usually 2-4 mm long with oval shaped body and brown coloured. Their grubs are known as
“woodworms”. They make clean, round holes in furniture, timber and wood-work.
• Attraction – Unprotected wood
• Damage – serious weakening and devaluing of wood, floorboards, rafters etc.
• Control –
• Keep all wooden surfaces dusted, polished and protected with pain, varnish , oil, wax
or plastic
• coat infested areas including base, back and insides of drawers and cupboards with
woodworm killer
• Inject holes with woodwork killer prior to coating the surface
Silverfish
• Usually 7 mm long with a silver-grey, cigar shaped body. Their presence is usually a sign of
fault in plumbing causing unwanted dampness
• Attraction – Carbohydrate material, moisture and warmth
• Damage – Minor damage to wallpaper, books etc.
• Control –
• Inspect building for sources of dampness
• spray cracks and crevices around plumbing fittings with carbaryl insect powder or
aerosol spray or insecticide for crawling insects
Mites
• Very small, barely visible by naked eyes. The furniture mite lives in damp, poorly ventilated
areas and the dust mite in upholstery and mattresses
• Attraction – Food and damplness (furniture and house mutes); human skin particles (dust
mites)
• Damage – food spoilage and minor damage to upholstery. May cause an allergic reaction
• Control –
• Improve ventilation or heating
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 • Dispose unwanted food and tins
• Spray infected surfaces with insecticides
• Remove dust regularly from mattresses and upholstered items

Spider
• Usually harmless, but their presence may indicate inefficiency on part of housekeeping. They
may also cause revulsion in some people (arachnophobia)
• Attraction – undisturbed areas, cracks or crevices neglected during routine cleaning
• Damage – Little or none, psychological disturbances in some people
• Control –
• Regular, thorough cleaning
• General insecticide spray in affected areas
Rodent
RATS -
• Brown rat – nests in areas with loose soil, refuse, paper or cartons. Signs of infestation are
rat droppings and damage by gnawing
• Damage – gnawing of wood, plastic, pipes or electrical wiring, food poisoning, Murine typhus,
rat bite fever, plague
• Control –
• Block all possible entry holes
• Remove possible nesting materials – boxes, cartons, newspapers
• Place bait near signs of infestation
• Remove food sources, cover waste bins, clear up spillages
• Apply rodenticide
Fungi
Occurs due to faulty building construction and poor maintenance of the building fabric.
Damage- Decay woodwork
Signs of fungal infestation:
 Dry rot: Cuboidal cracks in timber; matted, whitish strands on wood
 Wet rot: brittle timber, flaking paintwork
Mould: green, black or pink discoloration on walls & woodwork
Control-
All fungi require water for survival and so any preventive measures should aim at identifying and
removing sources of unwanted moisture.

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CONTRACT

A contract is an agreement between two parties negotiating a business deal. Hotels are increasingly
opting for contract services and outsourcing to sustain cost-effective housekeeping operations and
to ensure that the resources and assets of the property are utilized to the maximum.
All outsourcing involves a contract, but all contracts are not necessarily related to outsourcing.
Ex: internal staff on contract.

CONSIDERATION FOR CONTRACT:

A few questions to be thought before giving a contract are:

 What is the cost involved?
 Is there a time, resource or expertise constraint?
 Would an outsider have more credibility?
 Is the activity part of the core business?
 Can the contract be managed effectively?
Outsourcing contract will not work unless properly managed. Steps for determining and
implementing such contracts include evaluating costs, setting objective and appraising results. The
goal of such contract is to develop a trusting partner relationship in which both parties are winner.

CONTRACT SERVICES IN HOUSEKEEPING:

The following are some areas of housekeeping where services MAY be offered on contract basis
 Cleaning
 Linen hire
 Equipment and furniture hire
 Laundry – complete or part
 Flower arrangement and decorations
 Pest control
 Horticulture and landscaping
 Eco-friendly garbage disposal
 Other services like shoe-polishing machines, guest amenities such as hangers, etc.
HIRING CONTRACT PROVIDERS:-

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Following steps should be followed by management once they have decided to have a particular
service on contract:
 Put out tenders to at least three contractors and compare them.
 Check the creditability of the contractor in existing market by contacting previous or current
clients.
 Preferably select a contract provider with a local office.
 Check on the type and training provided to workers.
 Check the degree to which the contract service provider undertakes supervision of work.
 Have contract specification.
 Consider effect on existing labor with regard to possible redundancy and redeployment.

CONTRACT SPECIFICATION:

Contract services should be well defined in order to get the maximum output with a fair amount of
profit. So, contract specification should be carefully worded and should necessarily cover the
following points:

 Duration of contract
 Date of signing
 Provision for regular review of specification
 Areas to be serviced
 Frequency of service
 Description of method, equipment and materials required
 Quality expectation from hotel, appropriate penalty and cancellation clause
 Safety requirement
 Verification of insurance coverage of contracted workers
 Frequency of inspection
 Terms and condition of payment

PRICING OF CONTRACT:

Basis of payment of outsourced services may include

 Management fee consultancy basis
 Fixed periodic cost
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 A cost plus %age profit basis
 Cost plus fixed fee basis
 Unit rate agreement

Management fee consultancy basis

The customer provides his own labor, equipments, materials etc. & the contractor provides the
management with expertise & possible supervisory staff.

Fixed periodic costs

Maybe made either as a total cost or cost per unit of work. This is a very commonly used method &
is available in two forms.
UNCONTROLLED INPUT
The contractor agrees to provide a service of a given nature at a specific cost. There is no indication
of number of workers, hours worked nor type of materials &equipment used. Therefore it is essential
that the specification is detailed indeed.
CONTROLLED INPUT
This type of contract also specifies minimum of workers, hours worked & other equipments.

Cost plus %age profit basis

This has an advantage of providing a perfectly viable, flexible program. In this the customer is free
to determine his own needs as the scenario changes. Occupancy, weather conditions. This also
provides incentives for the contractor to increase his basic cost in order to earn more profits.

Cost plus fixed fee:

In it, the contractor is paid for the cost of job and a given fixed fee. In this case, there is no point’s
cutting cost, as he has a guaranteed profit margin.

Unit rate agreement:

Most contracts are based on unit rate method.
The cost is calculated on the details of areas to be covered and frequency of job to be done. The
cost also includes cost of equipment, agents and supplies plus overheads and profits.

ADVANTAGES OF CONTRACT:

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The basis of running any business is the profit. Contract requires a lot of groundwork and every
aspect has to be considered while going into a contract. One should not get influenced by the trend
but by the need and requirement.

Advantages of contract services are as follows:

 No capital expense on equipment.
 No equipment is lying idle.
 Difficulty of finding, training, organizing and supervising staff is passed to service provider.
 Extra work may be carried out at certain times without increasing the basic staff
 The contractors are accountable for the job. Their staff stays till the job is done.
 Use of new technology and latest equipment by contractors gets known to the hotel.
 Knowledgeable experts provide sound advice and help reduce cost and legal risks.
 It alleviates many problems between the management and worker’s union.

DISADVANTAGES OF CONTRACT:
Despite having advantages, contract service has some disadvantages along with it.
Following are some of the disadvantages:

 It weakens the quality and loyalty of staff.

 Contract workers may not have requisite skill for guest interaction, or the same pride in their
work of job satisfaction.
 Loss of flexibility by the department as there in no control over the entire operation.
 Natural tendency of contractors to use cheaper product to maximize their own profit.
 Poor supervision by contractors may lead to bad result.
 There may be problem pertaining to security.
 The work on contract may not get completed in the set time frame.
 Contract cleaners may not meet the d hotel’s standard of quality.

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