How does a blanket purchase order work?
A Blanket Purchase Order is a standing, recurring Purchase Order. It is used when an organization needs the same quantity and type of items repeatedly over a period of time.
Under regular situations, organizations use Regular POs and make one-time purchases. However, if a product or service is required repeatedly, Regular POs have to be generated again and again. A Blanket Purchase Order is used in this scenario.
A Blanket Purchase Order is opened to one vendor and uses one contract to cover multiple shipments. This approach makes administration easy, as different suppliers and contracts won’t have to be assessed repeatedly. Consequently, risk management becomes straightforward, and vendor consolidation gets facilitated.
Letting one vendor cater to a repeated purchase makes pricing consistent. It also opens up opportunities for bulk discounts and creates savings opportunities. Given the long timeline and assurance of regular purchases, your company gets more negotiating power as well.
Just like regular POs, you can manage your Blanket Purchase Orders easily through your Purchase Order System.
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