What Is the Definition of a Blanket Order?
The definition of a Blanket Order (also called “call-off order”) is an Order designed to cover multiple supplies or deliveries from/to a single company.
At Megaventory, any kind of Order can be a Blanket Order as long as for example you choose to Receive your products on Consignment rather than through a Purchase Bill.
When Should You Use a Blanket Order?
Blanket Orders are used in these situations:
- For a medium/long-term supply of the same products from the same supplier
- For regular supplies of the same products from the same supplier
- Delivery with an uncertain date
- When the exact quantities are unknown until the delivery is made
- When the packing and delivery processes cause price fluctuations
- When the arrangement between your company and the supplier is flexible and the Order is used for control purposes only
Here’s a Simple Example
Let’s say that your company has made an agreement to deliver to Client A a certain amount of bottles of Ketchup over a span of 3 months – this is recorded in the Sales Order 1 (SO1).
Your main supplies are tomatoes, plastic containers and wrappings/labels. We’ll focus on the tomatoes for this example.
In theory, you could order all of them at the beginning of the production run. But do you have the capacity to store all those tomatoes AND in safe conditions?
Let’s say you don’t!
So what you can do is split the production process into 3 runs (one for each month), using 3 Production Orders associated with the Blanket Sales Order SO1: PROD-O1, PROD-O2, PROD-O3.
The purpose of this is to receive 3 separate deliveries of tomatoes from Supplier A (one before each production run) so that you cut down on storage costs and make sure that the tomatoes don’t spoil. Each delivery will be recorded in a Receive On Consignment Document: ROC1, ROC2, ROC3. These three correspond to a single Blanket Purchase Order: PO1.
Here’s a representation of how all of these are linked: