Blanket Purchase Order.

What is blanket purchase order? when do we use it?

Questions by chandrashena

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Blanket Purchase Agreement is raised for long term contract with the supplier. We have price breaks in this. We can create BPA for the item to be supplier by the supplier though we do not know quantity, price, and delivery schedules as it is only any agreement.  Whenever we want good for this agreement we will create Blanket Release which contains the item, quantity, price and delivery schedules.

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mejigs

  • Apr 5th, 2011
 

Blanket Purchase order can be used when
- Duration of contract is fixed
- Buyer knows which items to be purchased (fixed set of items)
- Quantity of items is unknown
- Price given by supplier is fixed (though BPA's can be revised and approved).

Scenario 1- You are a retailer, you know what list of products you buy from its supplier. Supplier offers you 30% discount if you can give long term commitment to him. (say 3 months to 6 months). You can create a BPA for 3 month duration and ask supplier to release various qty when needed.

Scenario 2 - You manufacture a product for which you buy its raw materials from various suppliers. You build product based on orders you receive. In such case you can have a blanket agreement with your suppliers for buying raw material. As you already know what item to order from which supplier based on the price given by suppliers.

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