Blanket Orders Definition

A blanket order is an agreement between a buyer and seller for a set amount of goods or services to be delivered over a period of time. The buyer pays for the goods or services in advance, and the seller agrees to provide them as needed.

The main advantage of a blanket order is that it can help smooth out fluctuations in demand. For example, if a company knows it will need 500 widgets every month for the next year, it can place a blanket order for those widgets. This means that the company can make one purchase upfront instead of 12, which can save time and money.

Another advantage of using blanket orders is that they can help you secure a lower price from your supplier. This is because the supplier knows they have guaranteed business from you, so they may be willing to offer a discount.

There are some disadvantages to using blanket orders as well. One is that you may end up with excess inventory if your demand changes and you no longer need all the items you’ve purchased. Another disadvantage is that you may miss out on quantity discounts if your usage varies month-to-month and you don’t purchase enough items at one time to qualify for the discount.

Overall, blanket orders can be a helpful tool for companies that have steady demand for certain products or services. They can save time and money by simplifying the purchasing process and may also secure lower prices from suppliers.