A blanket purchase order (BPO) is a standing order that allows a business to buy goods or services repeatedly from a supplier without raising a new purchase order each time. Instead, one agreement covers multiple deliveries over a set period.
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This approach is especially useful in industries where consistent supply and stable pricing are essential. By issuing a blanket PO, buyers and suppliers establish clear terms, such as quantities, prices, and timeframes, but avoid the need for repeated paperwork.
How a Blanket Purchase Order Works
A blanket PO typically includes:
- Agreed pricing – fixed rates for the duration of the contract.
- Estimated total volume – the buyer outlines expected quantities.
- Timeframe – such as six months or a year.
- Release schedule – goods or services are requested in batches as needed.
For example, a manufacturing company that uses large amounts of packaging materials may set up a blanket purchase order with its supplier. Instead of raising a new PO for every delivery, the company simply “calls off” stock against the existing agreement.
When to Use a Blanket Purchase Order
Blanket POs are ideal for situations where:
- You purchase the same items regularly.
- Prices fluctuate and you want to secure a fixed rate.
- Administration needs to be reduced.
- Supplier relationships are long-term and stable.
Benefits of Blanket Purchase Orders
Blanket purchase orders provide several advantages:
- Efficiency – fewer purchase orders to raise and approve.
- Cost control – consistent pricing over a set period.
- Supplier reliability – ensures a steady flow of goods or services.
- Administrative savings – less time spent on repetitive paperwork.
- Budget visibility – spend is committed upfront, improving forecasting.
Blanket vs Standard Purchase Orders
| Feature | Blanket Purchase Order | Standard Purchase Order |
|---|---|---|
| Duration | Covers multiple deliveries | One-time order |
| Pricing | Locked for contract period | May vary per order |
| Best For | Regular, recurring needs | One-off or irregular purchases |
| Admin Workload | Low – one agreement | High – each order raised separately |
Why Blanket Purchase Orders Matter
For procurement teams, blanket POs reduce workload and improve supplier collaboration. They are particularly effective in price-sensitive industries such as manufacturing, construction, or retail, where locking in pricing protects margins.
They also give finance teams better visibility of committed spend, as the total contract value is agreed upfront.
Using purchase order software makes it easier to manage blanket purchase orders, track releases, and maintain visibility across finance and operations.
Final Thoughts
A blanket purchase order is a practical tool for managing recurring purchases. It helps buyers secure consistent pricing, reduce admin tasks, and maintain reliable supply over time.
By combining blanket POs with procurement software, businesses can save time, strengthen supplier relationships, and ensure full control of their purchasing process.
Free PO Template
Download Zahara’s free PO Template here: https://www.zaharasoftware.com/template-purchase-orders/
