Blanket order
From Wikipedia, the free encyclopedia
Definition
A blanket order is defined as an order the customer makes with its supplier which contains multiple delivery dates scheduled over a period of time, sometimes at predetermined prices. It is normally used when there is a recurring need for expendable goods. Hence, items are purchased under a single purchase order rather than processing a separate P.O. each time supplies are needed.
Advantages
Having a blanket order dispenses the customer with holding large inventories and avoids the administrative expense of processing frequent purchase orders, while favoring discount pricing through volume commitments.
Usage
Blanket purchase orders should be used when
• There is repetitive purchase of specific goods and services from the same supplier, which are paid in a predictable manner.
• Order require numerous shipment / excessive storage.
• Enable the purchaser to obtain favorable pricing through volume discount.
Blanket purchase orders generally should not be used when
• No benefits will be derived over use of a regular Purchase Order (i.e. volume discount)
• Quality of services and goods supplied by vendor are questionable
Content
Blanket orders format usually include the following information:
• The beginning and ending time period for the blanket order.
• A cancellation clause
• Items and/or categories of items to be covered by the blanket purchase order
• The estimated quantity, including a maximum (if any)
• Prices and pricing arrangements
• Terms and billing arrangements
• Personnel authorized to issue order releases
