The process of ordering starts with the purchase requisition and concludes with the approval of the supplier’s invoice. The approach to ordering may differ depending on the Purchasing department.
Blanket Purchase Orders
A purchase order can be made under a blanket agreement or contract when buying materials from a supplier. A blanket purchase agreement is when the customer agrees to purchase a specific amount of material during a set period. This is typically used for regularly bought materials, such as basic production materials and maintenance items.
Blanket Purchase Order – A long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements. Often blanket orders cover only one item with predetermined delivery dates.
In the context of lean manufacturing, the act of purchasing goods can be viewed as a possible source of waste. Instead of relying on purchase orders, the process of restocking is initiated through kanban signals. Suppliers are chosen based on their readiness to work together in a process that reduces waste and enhances quality.