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A Complete Guide To Blanket Purchase Order

  • By ProcureDesk
  • December 06,2023
  • 10 min read

A Complete Guide To Blanket Purchase Order

blanket purchase order

Bonus: Download the purchase order implementation template

Buyers love the convenience of blanket purchase orders, but finance teams always struggle with managing invoice against blanket orders.

But did you know that this doesn’t have to be the case?

We wrote this complete guide on blanket purchase orders to help you understand how easy and straightforward using blanket purchase orders can be. Aside from that, we’ll also show you how blanket purchase orders can increase the efficiency in your business!

We are going to answer these questions:

  • What is a blanket purchase order?
  • How do blanket orders create a commitment between a buyer and a supplier?
  • How can you effectively use a blanket purchase order strategy and reduce administrative costs?
  • Five best practices you can use to get the most out of blanket purchase orders.
  • Practical examples of how to use blanket orders in your purchasing process.

But before we get started, download the Blanket Purchase Order Implementer here.

Afterward, feel free to follow the step-by-step process to implement a blanket purchase order at your company.

What Is A Blanket Purchase Order?

A Blanker purchase order, also called (BPO) is a purchase order with a maximum order amount or not to exceed amount.

A blanket purchase order is a legal document binding on the buyer for the commitment with a supplier.

A blanket is for a fixed amount. The AP team can process invoices from a single vendor against the purchase order until the supplier invoice amount remains below that blanket purchase order amount.

Generally, buyers get approval for a blanket amount. Then they keep on using that purchase order till the amount is consumed or throughout the length of the blanket purchase agreement during the agreement period.

What Is Included In A Blanket Purchase Order?

There are several key elements commonly included in a Blanket Purchase Order:

  • Header Information: This includes details such as the name and address of the purchasing organization, the supplier’s information, the date of issue, and a unique purchase order number for tracking and reference purposes.
  • Contact Information: Names and contact details of individuals responsible for managing the purchase order on both the buyer and supplier sides.
  • Description of Goods or Services: A detailed description of the goods or services to be supplied under the purchase order. This may include specifications, quantities, quality standards, and other relevant details.
  • Pricing and Payment Terms: The negotiated pricing structure for the goods or services, including unit prices, discounts (if any), and the total not-to-exceed value of the purchase order. Payment terms, such as the payment schedule and method, are also specified.
  • Delivery Schedule: The agreed-upon schedule for delivering goods or completing services. Depending on the organization’s needs, this may include specific delivery dates or intervals.
  • Terms and Conditions: Standard terms and conditions that govern the agreement, including any legal or compliance requirements. This section may cover warranties, liability, dispute resolution, and termination clauses.
  • Duration of the Agreement: The period during which the BPO is valid. This can be a specific timeframe (e.g., one year) or until a certain quantity of goods or services is reached.
  • Quantities: The estimated or maximum quantities of goods or services that the organization expects to order under the BPO. This helps in managing inventory and production planning.
  • Change Order Procedures: Information on how changes to the purchase order can be requested, approved, and implemented. This includes any process for adjusting quantities, specifications, or other terms.
  • Reporting and Performance Metrics: Suppliers must provide regular reports or updates on performance, quality, and any other relevant metrics. This ensures transparency and helps evaluate the supplier’s adherence to the agreement.
  • Signature and Approval: Spaces for authorized representatives from both the buyer and supplier to sign and approve the purchase order, indicating their agreement to the terms and conditions.

When Should A Blanket Purchase Order Be Used?

Here are some examples of how to best use the blanket purchase orders in your procurement process

Example 1: Recurring Services From A Marketing Agency

Let’s say your company has set up an agreement with a marketing agency level.

The marketing company will provide creative design services for your Company.

The consistent pricing is based on each job because the creative work required in each job might be different.

Now, you can create a purchase order and a contract purchase for this whereby you come up with some notional unit price they would charge, maybe a per-hour rate.

However, since the rate is blended (due to multiple resources), developing a fixed rate might not be easier.

However, you know that you spent $100,000 on creative services last year, and if the unpredictable demand in business is the same, that is not likely to change.

This is a classic example where using a Blanket purchase order makes a lot of sense.

Here is what that could look like:


So, a blanket order is an amount you are setting aside or committing to spend with the vendor without knowing the exact details of the job.

For example, in the case above – the blanket order is for $100,000, and until invoices are below $100,000, the buyer doesn’t need any further approvals.

So, a blanket order is an amount you are setting aside or committing to spend with the vendor without knowing the exact details of the job.

For example, in the case above – the blanket order is for $100,000, and until invoices are below $100,000, the buyer doesn’t need any further approvals.

Example 2: IT Consulting Services

Let’s take another example where Procurement can use a Blanket order.

Let’s say you are in the IT department and are responsible for managing the corporate website, including enhancements to the site.

You have outsourced the enhancement development to an outside development company. You don’t know how much you would spend a year because all enhancement requests must be estimated.

You have set up an annual budget of $50,000 for enhancements according to your correct vendor rates.

The vendor has agreed to a fixed rate of $100/hour. Based on the enhancement request, they will estimate the cost and charge your Company for the development.

So, in this case, you can create standing orders, i.e., a blanket order like the following:


As you can see in the screenshot above, the blanket order amount is $100,000. However, the unit price is $100.
So, in this case, when the vendor sends the invoice, the system will check for the total amount and unit price.

So, till the period unit price is $100, and the total of all invoices is under $100,000, the system would allow the invoices to be processed.

We hope the two examples have given you some idea of the type of purchases you can use a Blanket purchase order.

Bonus: Ready to implement the blanket purchase order process but don’t know how to get started? Download our free purchase order implementation checklist here.

Different Types Of Purchase Orders

Did you know there is a certain type of purchase order you can use based on the type of purchase you will make?

Here is a basic explanation of purchase orders.

Feel free to skip to the next section if you are familiar with purchase orders and the process of making repetitive purchases.

A purchase order is a commitment from the buyer to a reliable supplier to purchase a product or service.

Since most vendors submit an invoice after the work is done, vendors need a commitment from the buyer before the work starts.

A purchase order is a legal document representing a commitment from the buyer to the seller.

It also helps clarify the deliverables so that there is no confusion about what is being delivered and when.

A purchase order could be of different types. For example,

  1. You could have a purchase order for purchasing physical, tangible products—for example, raw materials for manufacturing.
  2. You could have a purchase order purchasing services from vendors—for example, Janitorial services for the office.

Further, you can categorize purchase orders into one of the following categories.

One-time Purchase Orders

As the name suggests, one-time purchase orders are non-recurring and are for one-time purchases.

For example, you are setting up a new office and must purchase office furniture.

The purchase order mentions what you are purchasing, including line-item details, quantity, price, delivery date and delivery terms.

For example – the following is an example of a one-time purchase order:



If you have received a quote from the vendor, then the quote is usually converted into a purchase order.

Recurring Purchase Orders

Recurring purchase orders are for those products or services that are purchased regularly.

For example, you purchase kitchen supplies every month to support staff needs.

The product requirement might not be the same every month, so you could say that it is a one-time purchase order.

A use case for recurring purchase orders is raw materials purchased by manufacturing companies.

This purchase order is to support the manufacturing needs and support a smooth delivery schedule.

Manufacturing companies generally have MRP (Material Resource Planning) software. This software helps them with planning the raw material requirements and placing the purchase order for raw materials.



In this case, you have a fixed unit price for the product you are purchasing.

Sometimes, you are purchasing a service with a fixed monthly price.

Recurring purchase orders can work very well for that, too.

However, there are cases when you might not have a fixed price for the service, but you don’t know the final amount.

For example, you are recruiting an accounting software developer for a project. You pay the developer based on their work hours in a week or month. Let’s say you agreed to pay them $100/hour.

However, the number of hours can vary based on the number of hours worked every week, but you have a minimum commitment of $5,000 every month.

The above example is an excellent example of issues companies face when creating orders where the standard purchase order doesn’t work.

Blanket purchase orders cover this very well, and that is covered next.

Bonus: Ready to implement the blanket purchase order process but don’t know how to get started? Download our free purchase order implementation checklist here.

Related: Purchase Order Software Compatible With Sage Intacct

Standard Purchase Order Vs. Blanket Purchase Order

Now let’s look at some differences between a standard purchase order and a Blanket purchase order.

Standard and blanket orders require a commitment from the buyer to the seller. So, no matter what, unless specified otherwise, you must pay the vendor for the amount mentioned on the purchase order.

Length Of Contract

A purchase order is typically for a shorter period, while a blanket is usually for a more extended period with a specific contract start and end date. They typically have long-term contracts and long-term agreements.

We typically see our customers create annual blanket orders.

So think of it this way, you need to purchase office supplies, you create a purchase order and a contract purchase. You must pay a vendor for monthly cleaning services; maybe a blanket order is a better option.

Generic vs. Specific

A purchase order is particular. For example, it would describe the items you want to purchase, the reliable supplier part number, and the internal part number.
While a blanket purchase order is very generic, for example, a blanket order would describe the high-level need, but that is all.

Order Amount

A purchase order has a set amount.

You can calculate that by multiplying the quantity and the item purchase cost. However, a blanket might or might not have a set amount.

Product vs. Service

Employees can use a purchase order to purchase materials or services or a combination. Employees should use a blanket order exclusively for services.

There are few cases where it makes sense to use blanket orders for material purchases, but those use cases are few and far between.

For example, you are setting up a blanket for software development services. We might not know the exact amount you are going to spend.

In that case, users could set up a $0 blanket or a very minimal amount and then later revise the amount when they have a better idea about the annual spend amount.

What Is A Blanket Purchase Order Flow?

If you haven’t done it yet, download the blanket order process optimizer and a follow-along on how best to implement the blanket purchase order process in your organization:

Let’s look at the typical process flow for a blanket purchase order.

On the surface, the steps are the same as standard purchase orders. The main difference is in the details within each step.

Step 1: Setup Blanket Purchase Order

The first step is setting up the blanket purchase order.

The process could vary based on the system you are using. If it is a manual process, it might be ok to stick with a non-PO time invoice process and not create a blanket order.

The first step to deciding is whether you need a blanket order.

If you are a purchasing professional, you understand these concepts. It should be easy to decide between a blanket and a standard order.

However, choosing between a blanket and a standard purchase order could be confusing if you are not purchasing professionally.

So, what guidelines can purchasing professionals provide to non-purchasing professionals on when to create a purchase order?

We recommend the following but feel free to change it based on your business process.

  1. First of all, set up a blanket order for services only. If you purchase a tangible product, use the standard purchase order.
  2. Employees should only create a blanket if they receive multiple time invoices over a more extended time—for example, multiple invoices over six months. Use a standard purchase order if the service is already scoped, and the vendor will invoice only once.
  3. Use blanket orders where you are unsure if the monthly invoice amount could vary because of the supplier’s scope of work.
    With all the guidelines, providing specific examples of services you are purchasing is also helpful.

We do not recommend documenting a purchasing flow for each trustworthy supplier, but take 4-5 suppliers/categories and add that to your guidelines.

Your users can use the examples to decide whether to use a blanket order.

Step 2: Blanket Order Approval

The approval process is no different from your standard purchase order approval process.

So, for example, if your purchasing policy is that a director must approve every purchase order over $100,000.

The approval policy should be consistent whether you use a purchase order or a blanket one.

The main difference is what amount you should put on a blanket purchase order for approval.

Should you use an estimate, or should you use the actual amount?

If you know how much you will spend or a ballpark, you can always enter that amount and later adjust it if it is lower.

With a blanket, you are getting approval to spend up to that amount; you might not spend the total amount.

In some cases, you might go over your estimate, in which case the amount needs to be adjusted later.

So, to summarize, go with your best estimate for the blanket order amount.

We get a general question from our customers: What if I don’t want to inform the vendor about the amount we have kept aside?

The reason for that is if the vendor knows we have this much budget, they will overcharge or find a way for us to spend that money.

That is a valid concern; hence, you should limit the use of BPOs.

However, some systems allow you to show a different amount to the vendor. So, for example, you can get approval for $100,000 but show only $25,000 on the Blanket for that trustworthy supplier.

In our view, that solves the issues around vendors but, at the same time, still reaps the benefits of using a blanket purchase order.

Step 3: Vendor Order Process

The process for sending a purchase order to the vendor differs from a blanket purchase order.

Once a blanket is approved, You send the PO to the vendor.

The vendor invoices against the purchase order after delivering the service or performing the agreed-upon work.

There is a difference, though, in what amount the vendor would see.

As we discussed earlier, you might show the supplier a different amount than the approved blanket amount.

If you want to set up the process that the vendor will see the same amount as on the Blanket, then you do the following:

  1. You should clearly state the purchase order if it is an estimated amount and not the exact amount. Something to the effect of “This is just an estimate and not a commitment to spend the entire amount with you. The actual amount might vary based on the terms of the services defined in the contract”.
  2. You can, of course, start with a lower amount and then revise the amount as you have a better idea about the actual purchase amount.
  3. You should also set up a review process for Invoices, which we will discuss in the Invoices section.

Step 4: Receipts

Since blanket purchase orders are generally set up for services (at least we recommend that), there is no process for creating a receipt.

However, there should be a process to ensure the invoice is approved. The review confirms that the vendor has performed the work per the agreed scope.

Step 5: Matching Invoices For Blanket Orders

Matching the invoices is essential in the blanket life cycle; we will spend extra time on this.

In a typical purchase order workflow, Invoices are paid when the product is received.

The receipt of the product is generally done by creating a receipt and uploading the packaging slip.

For services, there is no such thing.

Also, for blanket orders, your vendor can keep on sending invoices until one of the following happens:

  1. The Blanket ran out of money, i.e., The approved blanket amount is 100% used.
  2. Or the Blanket is not active anymore because the blanket end date has passed.

So, how do you ensure you pay invoices after the correct stakeholder review?

The answer is to set up a review and approval process; every invoice against a blanket should be authorized.

Who Should Review It?

The review is not meant to authorize the Spend, so there is no point in sending it for approval to somebody who approved it.

The review should be done by the person responsible for working with the vendor and who knows about the accuracy of the invoice. That is typically someone in operations.

For example, if the blanket order is for a software development project, then the review can be done by the project manager or someone close to the deliverables of the project.

Step 6: Payments

Once the invoice is approved, the payment is issued to the vendor per agreed terms. The payment process is no different compared to a standard purchase order.

Advantages And Disadvantages Of A Blanket Purchase Order?

Now let’s look at some advantages and disadvantages of using a blanket purchase order for the Procurement department and employees.

Advantages Of A Blanket Purchase Order

First, let’s look at the pros of blanket purchase orders

Easy To Set Up

Setting up a blanket purchase order doesn’t need a lot of details. Since it is mainly for services, you don’t need information like supplier part #, manufacturing details, unit price, etc. Users need minimal details, namely – supplier name, amount, account codes, start date, and end date for the service.

Set It And Forget It

You can keep using the blanket order until it runs out of money. So you avoid creating multiple orders for the same service.

This leads to better service lead time.

Instead of creating recurring orders, you can create one blanket order, and the AP team can create multiple invoices against that one order.

Convenient For Processing Of Invoices

It is convenient for vendors, too, especially for small vendors.

Many companies have a No PO No Pay policy, i.e., every invoice must have a matching purchase order number; otherwise, AP will not pay the vendor.

The vendor should enter a purchase order number for every issued invoice for the process to work.

Now, if you are a small vendor, you might not have a dedicated Accounts Receivable team, and you need to ensure that you are not entering just any valid PO but the specific purchase order for that invoice.

It is easy for suppliers to remember the single number they can enter on all the invoices with blanket purchase orders.

There is no need to enter the specific purchase order for every invoice. That saves effort and money on both sides.

Disadvantages Of A Blanket Purchase Order

Though the process is convenient for buyers and suppliers, there are disadvantages.

Tedious Year-end Reconciliation

You must declare your open liabilities in your 10-k annual report if you are a public company.
Now that blankets are easy to set, employees get approval for more than they need.

The justification is that you have an extra cushion, so you don’t run out of money.

For you to effectively reconcile and declare liabilities, you have to do the following:

a ) Calculate the amount based on the invoices that have been paid and submitted by the supplier but not paid.
b) There might be invoices that the vendor has not yet submitted, but the work has already been performed.
c) You have to ask each stakeholder if you can close the blanket purchase order and forfeit the unused amount.

Depending upon the blanket purchase order volume, this could be a laborious process for AP and procurement professionals.

Audit Risk: What Is Being Purchased At What Price

Blanket purchase orders generally don’t have unit pricing details.

So, if the auditors want to know if the service has been purchased as per contracted terms, there is no easy way to know that.

You have to review every invoice and match it with the contract terms to confirm whether you are paying what you agreed.

In contrast to the above process, you have a defined unit price in a standard purchase order, and a 2-way or 3-way match process can automatically capture any pricing issues.

Issues With Matching To The Correct Purchase Order

In the advantages section, we discussed how easy it is for suppliers to add the purchase order number to the invoice.

However, it could be a disadvantage, especially when the Blanket runs out of money or has passed its validity period.

For example, it is not uncommon to see vendors enter a blanket order number from the past year on the invoice.

Once the invoice shows up, the system captures it as an exception, and since the Blanket is not valid anymore, it needs to be reviewed and managed through an exception review process.

This leads to much work for AP teams because they need to contact the vendor and resubmit the invoices for payment with the correct blanket order number.

We are not suggesting that this doesn’t happen with purchase orders, but this scenario is more familiar with blanket purchase orders.

Limited Visibility Into Spend

Blanket orders can help you understand what you are spending with a vendor, but you would have difficulty finding that information if you want to understand what you are spending money on.

Let’s take an example –

Let’s say you are purchasing creative design services from a marketing company; the services are priced based on the scope of the work performed.

A user would typically create a blanket with limited service; for example
Description: “Creative design services for marketing collaterals.”
Amount: $50,000
End date: 12/31/2020

Now, if you want to know how much you paid for specific services, there is no way to know unless you review every invoice for the details of the jobs performed by the vendor.

Bonus: Ready to implement the blanket purchase order process but don’t know how to get started? Download our free purchase order implementation checklist here.

Blanket Purchase Order Best Practices

As we mentioned above, blanket orders have advantages and disadvantages compared to standard purchase orders.

So, we want to conclude this topic by mentioning some best practices readers can deploy to best use blanket purchase orders.

Related: Purchase Order Automation: 3 Mistakes To Avoid

Use Them Only For Services

There are certain use cases where Blanket orders might make sense for materials, but for the most part, it should be the preferred method for service purchase.

It is important to communicate regularly on how to use Blanket orders to ensure that employees are using Blanket orders effectively.

We recommend the following cadence to ensure that your employees only use it for services.

1. It makes perfect sense to train your users to effectively use blanker purchase orders when launching a new procurement system.

2. You should do refresher training or reminders to users on how to use blanket orders effectively.

3. If possible, have an in-system reminder or walkthrough so that whenever someone uses a blanket order, they are reminded about the correct usage.

4. You could identify some power users who often create more than average purchase orders. Once those users are identified, you could do a targeted campaign to communicate the correct usage of blanket orders.

Setup Access Control

Prevention is the best cure, and the same is true here too.

If you look at your user base, not everyone is purchasing services.

Among users purchasing services, not all are purchasing recurring services where blanket orders make more sense.

So, instead of opening blanket purchase orders for everyone, you can limit access to only those users who most need it.

Based on our experience, most users can work fine with standard purchase orders, especially for one-time purchases.

You always have the option to extend the access later.

So, to summarize, provide access to only a limited set of power users at first and then expand the scope on a need basis.

Setup A Cadence For 6 Months And Yearly Review Of Blanket Purchase Agreements

As we mentioned earlier, one of the biggest drawbacks of blanket purchase orders is that reconciliation is a challenge and more specifically, knowing whether the remaining amount should be used or forfeited.

To solve this problem, we recommend a regular review cadence to ensure the blanket orders have the correct amount and validity period. Also, ensure it is not an evergreen PO; it should be for a specified period.

We generally see anywhere between 6-12 months timeframe. You can also align the blanket purchase order end date with fiscal year-end.

Here are some recommendations:

1. Set the blanket order validity to the shortest period possible. If the work is projected to be completed over 3 months, then there is no reason to set up a blanket for 1 year.

2. The shortest period could be three months, but a blanket order’s maximum duration should not be more than a year.

3. Review the blanket orders every six months to check the utilization and whether the blanket has been used. If the Blanket order has not been used, You should contact the stakeholder and ask if the Blanket can be canceled.

4. At the end of the year, you should review all Blanket orders and close the blanket orders. The only exception is those orders for which the work has been performed, but the vendor has not issued the invoice.

5. We recommend that you ask users to create a new blanket for the new calendar year.

The idea is to ensure you don’t have blanket orders used over the years.

Setup An Efficient Approval Process For Invoices

Since it is a blanket amount for services to be rendered in the future, invoices must be properly reviewed and approved before they can be paid.

So, the workflow process should be focused on ensuring that the approval comes from the person who can verify that the service has been delivered and as per the satisfaction of the customer/stakeholder.

There is no benefit in routing the invoice to a manager for invoice approval because they might not have complete knowledge of the deliverables.

To summarize, ensure that your workflows are routing the invoice approval for a buyer’s review who has complete knowledge of the deliverables.

Related: Purchase Order Vs. Invoice: Understanding The Key Differences

Educate Your Vendors

Vendors play a critical role in ensuring an efficient procure-to-pay process.

It is the job of purchasing to let vendors know how to use a blanket process efficiently.

Here are a few recommendations

1. Communicate the process to the vendors – In an ideal scenario, the same vendor should not have a purchase or blanket order process. So the vendor shouldn’t be confused about the two types of orders.

2. If you are using an estimated amount, the vendors should know that it is an estimated amount. For example, if you created a blanket order for $100,000 and unless you are committing the full amount, vendors need to know that it is for estimate only

3. It is important to let the vendors know about the validity so they can update the purchase order numbers on the invoices. This will ensure you don’t have reconciliation issues because the vendor used an old blanket purchase order number.

Bonus: Ready to implement the blanket purchase order process but don’t know how to get started? Download our free purchase order implementation checklist here.

Potential Challenges of Blanket Purchase Orders

While blanket purchase orders (BPOs) can offer several benefits, such as streamlining procurement processes and fostering long-term relationships with suppliers, there are also potential challenges associated with their use. Here are some common challenges:

  • Limited Flexibility: BPOs may lack flexibility in adapting to market conditions, supplier capabilities, or organization requirements changes. This can be problematic if the business environment is dynamic.
  • Risk of Overcommitment: There’s a risk of overcommitting to a specific supplier or quantity, especially if the organization’s needs change. Overcommitment may result in excess inventory or additional costs to modify the agreement.
  • Supplier Dependence: Relying heavily on a single or a few suppliers for a range of goods or services can create a dependency. If the chosen supplier faces production delays, quality problems, or financial instability, it can disrupt the entire procurement process.
  • Limited Competition: BPOs might discourage competition, as organizations may become complacent with existing suppliers and miss out on potentially better deals or innovations from other suppliers.
  • Inefficient Pricing: BPOs often involve negotiated pricing for a set period. If market conditions change, the organization might miss out on more favorable pricing or discounts that could have been obtained through periodic bidding or re-negotiation.
  • Administrative Burden:  Managing and monitoring a blanket purchase order can be administratively intensive. Keeping track of usage, changes in requirements, and ensuring compliance with the terms of the agreement requires ongoing effort.
  • Lack of Visibility: Over time, the terms and conditions of a BPO may become outdated or no longer aligned with the organization’s strategic goals. This lack of visibility into the ongoing relevance of the agreement can be a challenge.
  • Quality Control Issues: Continuous reliance on a single supplier may result in complacency regarding quality control. There may be a risk that the supplier becomes less diligent in maintaining quality standards over time.
  • Legal and Compliance Risks: Changes in regulations or legal requirements may impact the validity or compliance of a BPO. Organizations must stay informed about any legal changes affecting their procurement agreements.
  • Technology and System Compatibility: Ensuring that the organization’s procurement systems are compatible with the supplier’s systems and can effectively manage a blanket purchase order can be a technical challenge.


Is A Blanket Purchase Order Binding?

Yes, a blanket order is a binding agreement between buyer and supplier. However, you can limit the risk of committed spending in a couple of ways.

For example, you have a consulting agreement with a consultant and don’t know how much you will spend with them.

So internally, you might get approval for potential Spend, say, $100,000, but you can choose not to print that amount on the purchase order.

You could say something like this:

This purchase order is limited to Spending per the scope of the work performed by the consultant.

How Do I Make A Blanket Purchase Order?

You can use your standard purchase order template to create a blanket order or use ProcureDesk to create the blanket purchase order.

The elements of the purchase order remain the same, whether it is a blanket purchase order or a standard purchase order.

Blanket purchase orders have an overall spend vs. a specific amount and quantity.

How Do Blanket Orders Create A Commitment Between A Buyer And A Supplier?

Yes and No.

Yes, it is a commitment from the buyer to Spend with the supplier.

No, it is not for a fixed amount.

The idea for using blankets is that it allows you to keep the spending flexible without getting approvals for every purchase.

In other words, you might create a purchase order for $10,000 and only use $5,000.

What Is The Difference Between Tender And Blanket Order?

A tender and a blanket order are both methods of purchasing goods or services from a vendor. However, there are some key differences between the two.


A tender, or a request for proposal (RFP), is a formal invitation to vendors to submit bids for a specific project or product. The tender will typically include a detailed description of the requirements and the evaluation criteria that will be used to select the winning bidder.

Blanket order

A blanket order is a long-term agreement between a buyer and a seller to purchase goods or services over a specified period. The blanket order will typically include the following information:

  • The maximum quantity of goods or services that can be ordered
  • The price of the goods or services
  • The delivery terms

Key differences

The key differences between a tender and a blanket order are as follows:

  • Purpose: A tender is used to solicit bids from multiple vendors, while a blanket order is used to establish a long-term relationship with a single vendor.
  • Specificity: A tender is a very specific document that outlines the requirements of the project or product in detail. A blanket order is a more general document that states the maximum quantity of goods or services that can be ordered and the price.
  • Pricing: The price of goods or services is typically negotiated as part of the tender process. The price of goods or services is typically fixed for the duration of the blanket order.

What Is The Meaning Of Blanket Purchase Order In SAP?

In SAP Materials Management (MM), a blanket purchase order (BPO) is a long-term agreement between a buyer and a vendor to purchase goods or services over a specified period. It is used to streamline the procurement process for recurring or frequently purchased items, reducing the need for creating individual purchase orders for each transaction.

What Is The Purpose Of A Blanket Purchase Agreement?

A blanket purchase agreement (BPA) is a contract between a buyer and a seller that establishes a long-term agreement for purchasing goods or services over a specified period. It simplifies the procurement process by eliminating the need to create individual purchase orders for each transaction.

What Is The Difference Between A Blanket Purchase Order And The Framework Order?

A blanket purchase order (BPO) and a framework order (FO) are agreements between a buyer and a seller to procure goods or services. They are similar in that they both establish a long-term relationship between the parties and can simplify the procurement process. However, there are some key differences between the two.

Blanket Purchase Order (BPO)

A blanket purchase order is a more specific agreement that outlines the maximum quantity or value of goods or services purchased over a specified period. It also includes the pricing, delivery, and payment terms for the goods or services. BPOs are typically used for recurring or frequently purchased items, such as office supplies, maintenance, or utility services.

Framework Order (FO)

A framework order is a more general agreement establishing the overall framework for procuring goods or services. It does not specify the quantity or value of goods or services. Instead, it outlines the general terms and conditions of the agreement, such as pricing principles, delivery expectations, and quality standards. FOs are typically used for more complex or strategic purchases, such as IT equipment, consulting services, or construction projects.

The Bottomline

Blanket orders used correctly can greatly increase the efficiency of the purchasing process and reduce the number of transactions. However, it should only be used for limited or specific service cases.

What you should do now

Whenever you’re ready… here are 4 ways we can help you scale your purchasing and Accounts payable process.

  1. Claim your Free Strategy Session. If you’d like to work with us to implement a process to control spending, and spend less time matching invoices, claim your Free Strategy Session. One of our process experts will understand your current purchasing situation and then suggest practical strategies to reduce the purchase order approval cycle.
  2. If you’d like to know the maturity of your purchasing process, download our purchasing process grader and identify exactly what you should be working on next to improve your purchasing and AP process.
  3. If you’d like to enhance your knowledge about the purchasing process, check out our blog or Resources section.
  4. If you know another professional who’d enjoy reading this page, share it with them via email, Linkedin, Twitter.