Blanket Purchase Order (BPO)
Definition:
A Blanket Purchase Order (BPO) is a long-term agreement between a buyer and a supplier to purchase a specified quantity of goods or services over a set period, usually at predetermined prices and terms. It simplifies the procurement process for frequently purchased items, reducing administrative costs and ensuring a consistent supply.
Example:
Acme Office Solutions sets up a Blanket Purchase Order with Paper Products Inc. to purchase office paper, toner cartridges, and other supplies over a 12-month period. The BPO specifies the prices, delivery terms, and quality requirements for each item, allowing Acme to place individual orders as needed without negotiating terms each time.
Why is a Blanket PO important to Procurement?:
Blanket Purchase Orders are important for procurement teams as they streamline the ordering process, secure favorable pricing through long-term commitments, and ensure a reliable supply of necessary goods or services. BPOs help reduce administrative overhead, improve budget predictability, and foster strong supplier relationships.