What is Blanket Order?

A blanket order (also called a blanket purchase order or standing order) is a long-term agreement between a buyer and supplier to purchase goods at pre-negotiated terms over an extended period, typically with periodic deliveries as needed. Rather than issuing individual purchase orders for each shipment, the blanket order establishes pricing, quality standards, and general terms upfront, with specific quantities and delivery dates specified through release orders as demand dictates.

Why It Matters

Blanket orders reduce procurement overhead by eliminating the need to negotiate terms and issue purchase orders for every replenishment cycle. They lock in favorable pricing through volume commitments, provide suppliers with demand visibility for better planning, and streamline the purchasing workflow for frequently ordered items. For high-velocity e-commerce operations that reorder the same products regularly, blanket orders can significantly reduce administrative costs and lead times.

How It Works

• Agreement: Buyer and supplier negotiate a blanket order covering a defined period (typically 6–12 months) with agreed pricing, maximum quantity, quality standards, and payment terms.
• Release Orders: As inventory needs arise, the buyer issues release orders (also called call-offs) against the blanket order, specifying exact quantities and delivery dates for each shipment.
• Delivery: The supplier fulfills each release according to the blanket terms. The buyer receives and inspects goods per the standing quality agreement.
• Tracking: Both parties track cumulative releases against the blanket order maximum to ensure they stay within the agreed volume and budget.

How Nventory Helps

Nventory supports blanket purchase orders with automatic tracking of cumulative releases, remaining quantity, and budget utilization. The system can automatically generate release orders based on reorder point triggers, pulling from the blanket order terms without requiring manual PO creation for each replenishment cycle.