Question

Explain when use Blanket PO, and Why use it?

Answer 1

Blanket Purchase order can be interrelated as the contract between a company and supplier in order to deliver products at a defined set of prices over a predefined period of time. In some businesses, there is purchase of the same goods throughout the year for many times so that the organizations issue the Blanket Purchase Order with all the details about the goods. It can be the price, quantity of the goods or delivery time of the products according to the organization's needs. Blanket Purchase Order helps the organization to reduce time and efficiency in processing these on a daily basis that makes the work smooth. On the other hand, the supplier of the goods can submit multiple bills on the same BPO number. The order can be predefined as to time period, price of the goods, the quantity of the goods, and to a specific amount.

Blanket Purchase Order is used when there is need of the same goods, and the organization is making periodical payments for the same thing. It makes it easy for the organization for all the purchases of the same goods throughout the year. The organization will not make the same procedures every time when making a purchase as it has already issued a Blanket Purchase Order to the supplier for delivering goods. Blanket Purchase Order is used when there are many shipments of the same product in a period to avoid wastage of time in processing those purchases.

Blanket Purchase Order is best when the goods are available at discount prices that lower the cost of the product and increase profits of the organizations. An organization cannot issue a Blanket Purchase Order when they don't know the price of the goods while purchasing the goods. Also, when the organization don't know about the quality of the goods that can lead to less production due to lower quality of the goods. Blanket Purchase Order will fail if there are changes in the price of the goods in the time period.

Blanket Purchase Order is used by an organization to reduce the costs and make the work smooth. An organization must use Blanket Purchase Order if it meets the requirement of BPO to make it easy for the organization to purchase goods without any delays in delivery of the goods and also can get goods at discounted prices. For example, if an organization needs many shipments of a product throughout the year, then the organization should use the Blanket Purchase Order to make one-time order for all of the shipments and not every time it purchases goods.