what is a blanket purchase order

what is a blanket purchase order

1 year ago 59
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A blanket purchase order (BPO) is a type of purchase order that a customer places with its supplier to allow multiple delivery dates over a period of time, often negotiated to take advantage of predetermined pricing. It is typically used when there is a recurring need for expendable goods, and it allows the customer to avoid holding more stock than necessary at any time and to avoid the administrative expense of processing frequent purchase orders. Based on the blanket order, sales orders (blanket releases or release orders) and invoice items can be created as needed until the contract is fulfilled, the end of the order period is reached, or a pre-determined maximum order value is reached. A blanket purchase order is set at a fixed priced contract for a period of time, and the buyer looks for the best pricing among competing supplier bids. The main difference between a purchase order and a blanket purchase order is that a regular PO is generally used for a shorter time frame, while a blanket PO is used for recurring orders over a longer period of time with a concrete contractual start and end date. Blanket purchase orders are used by a variety of organizations, from commercial companies to universities and municipalities. Some benefits of using a blanket purchase order include streamlining the procedure of buying several items, reducing the purchasing lead time, and triggering a volume discount from the supplier.

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