You’re pulling your hair, clenching your teeth, and performing every stress-reducing technique to calm yourself down after yet another delay.
Distressed, you ask yourself, How can I avoid terrible lead times?
Having also experienced numerous delays in the past, Strouse understands the frustration of having to reschedule. That’s why, when applicable, we recommend placing a blanket purchase order.
Once you’ve learned more about blanket purchase orders, you’ll understand when they’re applicable and how they can help you prevent manufacturing delays.
What is a Blanket Purchase Order?
A blanket purchase order (BPO) is a series of simultaneous purchase orders.
For example, let’s say you order fresh bread from your local bakery every week. This month, instead of placing a new order each time, you could make one blanket purchase order that covers the next three weeks. The bakery knows that you’ll want fresh bread each week and can plan accordingly.
It’s worth noting that some businesses might not accept blanket purchase orders. However, because Strouse understands the value of advanced planning, we accept and even encourage them.
To better explain, here are the four main benefits we came up with to demonstrate why you should consider a blanket purchase order.
4 Benefits and Advantages of Placing a Blanket Purchase Order
Blanket purchase orders can serve as early notices for businesses so that they can prepare for when the time comes to fulfill your order. Not only can BPOs mitigate logistical issues, but they can also contribute to a lower overall price.
If you haven’t gotten a quote yet, see what your costs could be before placing an order:
Placing a blanket purchase order enables you to reduce the effect of material lead times, add flexibility into the production schedule, plan product ahead of time, and reach a better Minimum Order Quantity.
1. REDUCING THE EFFECT OF MATERIAL LEAD TIMES
Material lead time will often cause extensive delays in flexible material converting. Depending on your material, you could wait months for delivery.
Although the material supplier mostly determines lead time, you can build a consistent production schedule by placing a blanket purchase order.
Blanket purchase orders help mitigate the strain of material delays and extended lead times by giving your converter a ‘heads-up’ to prepare for your order. If your converter knows you need a certain amount regularly, they can calculate the best time to order material for the job they’re running.
You’ll worry less about potential delays affecting your schedule with planned orders because they give your converter more time to work around the problem.
2. FLEXIBLE PRODUCTION SCHEDULE
Blanket purchase orders allow your converter to schedule longer blocks of run time far in advance instead of multiple scattered instances.
So, why do longer machine run times matter?
Longer machine run times require fewer setups and breakdowns, which reduces your labor time and unit cost. Each time your converter sets up the die cut machine press, they generate waste through testing. By combining these runs, your converter experiences less-frequent setup waste costs, which means a lower cost for you.
Testing is unavoidable due to alignment and adjustments your converter needs to calibrate. However, blanket purchase orders will give you a better chance of fewer setup times, reducing waste and generating a lower overall cost.
3. PLANNING PRODUCT AHEAD OF TIME
One of the biggest problems our clients have encountered over the years is struggling to decide WHEN to reorder.
Firstly, consider how much product you plan to keep in stock at any given time. Secondly, consider whether you’re overlapping your orders in a way that doesn’t leave you stranded without any parts.
Place your order too late, and you’ll find yourself in a part shortage, but order too early, and it’ll sit in a warehouse losing its value.
Part shortages are a nightmare for everyone involved, but using blanket purchase orders can reduce or eliminate shortages. When you place a blanket order, you’re bettering your chances of receiving the parts you need when you need them.
4. BETTER MINIMUM ORDER QUANTITY (MOQ)
Minimum Order Quantity (MOQ) describes the amount of material a converter has to purchase from a supplier based on what quantities suppliers are willing to sell at.
The MOQ can become a large issue when dealing with smaller orders, where our options become finding a different material with a lower MOQ, or paying for material we won’t use.
However, when you make a blanket purchase order, your converter can accurately plan for the future by purchasing cost-effective material quantities.
Whether you’re using it now or later, your converter can navigate the MOQ more smoothly once you confirm that you’ll need more material in the future through a BPO, so all parties benefit from buying in bulk.
Should I Place a Blanket Purchase Order?
Blanket purchase orders aren’t always the best solution.
If you’re debating whether to make a standard purchase order vs. a blanket purchase order, you should know that one isn’t necessarily better; they’re just meant for different situations.
These are factors indicating a BPO suits your project:
- You’re planning on consistent orders
- The material you want has a long lead time
- Your timeline is precise/delicate
- You want to increase your chances of on-time delivery (in case of setbacks)
- You plan on scaling up your adhesive part in the future
On the other hand, if your desired part is a one-time deal or of a limited quantity, it’s probably better to place a standard purchase order.
If you’re still unsure about blanket purchase orders, you can tell us about your project, and we’ll suggest whether we think a BPO is right for you:
And for those of you who have placed, or are in the process of placing an order, see what happens after you place your purchase order with Strouse.