The ordering cycle begins with the purchase requisition and ends with approval of the supplier’s invoice. Purchasing’s approach to ordering can vary.
Blanket Purchase Orders
A purchase order can be issued under a blanket agreement or contract with a supplier. Under a blanket purchase agreement, the customer might commit to purchasing a certain amount of material over the agreement period. They are used primarily with materials that are bought on a regular and predictable basis, such as basic production materials and maintenance items.
In lean manufacturing, the purchasing process itself can be seen as a potential source of waste. Rather than purchase orders, resupply is triggered by kanban signals. Supplier partners are selected based on their willingness to collaborate in a waste-saving, quality-improving process.