In both theory and practice many of the techniques applied in food cost control can be applied to E&S depending on the type of product and usage requirements. Heavy equipment however, is a long term capital investment with useful life and long term operational considerations added to the buying decision. If managed correctly, cost control methods can easily be implemented to insure compliance with specifications, pricing guidelines and product availability. By planning, specifying, and maintaining equipment properly, a well trained staff will be empowered to deliver the highest level of quality and service and the return on investment can be accelerated significantly.
There are three types of E&S Procurement scenarios; (1) new facility – contract package purchasing, (2) on going replacement of supplies and smallwares and (3) the replacement or addition of heavy equipment. This article will focus on new facility contracts.
New Facility, Contract Purchase – Start up Package
Bid Documents
Completed and approved architectural drawing and specifications will provide most of the bid requirement details. Equipment will be listed on the equipment schedule indicating quantity, brand, model number, description and utility requirements. Bid forms can be created and are recommended. The floor plan will show the layout and location of equipment. Other sections of the drawings pertinent to the equipment bid will include elevation drawings, wall backing plan, walk-In refrigeration, and hood ventilation details.
Equipment Vendor / KEC Contractor
Not all foodservice equipment distributors specialize or get involved in contract sales. It is recommended that contract specialists bid a new contract package. A contract specialist is a full line equipment distributor that has staging facilities with separate project storage bays. Avoid internet and mail order suppliers. They most likely lack the ability to consolidate and do not have a system in place for contract work. Negotiate line item price variations with the supplier you are dealing with keeping the package intact. This will maximize service levels and help to insure expected results.
Scheduling
After the contract is executed, a turn over and grand opening date is established based on the construction schedule. Equipment Purchase orders are placed with the required ship date specified to meet scheduled deadlines. Equipment is shipped from the manufacturer to a distributor warehouse location. As equipment is delivered to the staging facility, warehouse personnel carefully receive, look for damage, and check in each item. Coordinators update reports daily, and issue job status reports weekly to insure the project line items are received on time. One late item can hold up the entire project delivery.
Delivery & Installation
A complete contract package includes consolidation, installation and one or two deliveries to the job site depending on the size of the package. Direct shipment of the hood system and walk-ins are standard practice to avoid excessive shipping costs and the likelihood of damage due to double handling. Another reason to ship these items direct is due to the construction schedule normally requiring the hood and walk-in to be installed on site before the balance of the equipment package is delivered. The KEC will quote the complete hood system delivered and the HVAC contractor will be responsible to install and balance the ventilation system. The fire suppression system can be included with the hood package and installed by the KEC. The KEC will normally be responsible to hire a refrigeration contractor to receive and install the refrigeration system complete for the walk-in and any other remote refrigeration items in the contract. Beer systems, millwork and furniture are also typical items for the KEC to furnish and install, but not always the case. These items may also require direct shipment. The main equipment package will be loaded at the consolidation warehouse and delivered on site. An installation crew normally a part of the KEC’s contract will receive, unload, unpack, assemble and set in place ready for final connection by the various trades. A start and check service order should be included with the KEC contract and performed after all the equipment is connected. Shortening should be on site for accurate calibration of the fryers.
Smallwares & Supplies
If smallwares are provided by the same distributor a lump sum total can be represented as a line item and a breakdown can be attached as a separate bill of goods. Smallwares are normally delivered one week after the equipment installation is complete.
Bid Outline
Itemize and compare bids competitively as follows:
Equipment – Consolidation Package – Itemized
Freight out – Hood
Freight out – Walk-In
Freight out – Furniture / Millwork
Incoming Freight – Consolidated Package
Delivery – Consolidated Package
Installation – Consolidated Package
Installation – Refrigeration
Installation – Fire System
Installation – Beer System
Total
Sales Tax
Grand Total
Terms & Conditions
Application, Terms and Security Agreement should be included for review and signature. Typically in two or three parts with an initial deposit of 40-50%, second payment 45-55% one week before delivery and the balance one week after satisfactory completion. Some suppliers require the full balance before delivery. Applications are required to set up an account and UCC forms are filed to protect the distributor. Responsible distributors release the UCC filing immediately after final payment.
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