Utilizing Blanket POs

Blanket Purchase Orders represents a framework for a long-term agreement between a company and its Vendors. Blanket Purchase Orders are typically used in situations where a customer has committed to purchasing large quantities that are to be delivered in several smaller shipments over a certain period of time. Blanket orders provide a benefit to customers since they prevent the need of having to hold greater than necessary amounts of stock and avoid the administrative expense of processing frequent Purchase Orders.

In DEACOM, Blanket Purchase Orders are setup using the "Pricing" order type since the concepts and features used in these order types match those of the blanket purchase agreements.

Note: Pricing Orders are part of the DEACOM pricing hierarchy. As a result, if a Pricing Order for a specific Vendor exists, that order will be evaluated before considering the item's purchase price when entering new Purchase Orders. The system will also evaluate the "Pricing Based On" field from the Vendor master record when considering pricing.

Configuration

Refer to the Configuration section of the Entering Purchase Orders Best Practice page for required items.

Process

The Blanket Purchase Order process involves two steps: Creating the Blanket order for a specified time period and creating Purchase Orders against the Blanket order. Note: Beginning in version 17.02.011, entering a purchase requisition against the blanket order behaves in the same way as when entering purchase orders against existing blanket orders.

Entering a Blanket Purchase Order

  1. Navigate to Purchasing > Order Entry
  2. Change the Order Type to "Pricing", select the appropriate Vendor, and fill in any additional header fields as necessary.
  3. If a specific time period is required, navigate to the Dates tab and enter the start date in the user-defined field "PO Date 5" and the end date in the field entitled "Expires". The captions of user-defined fields may be set in System > Maintenance > Captions.
  4. Click the "Add" button on the Purchase Order header to display the Edit Purchase Order Line form.
  5. Select the part to be ordered (or enter a description representing the services to be performed) and enter a "1" in the "Quantity" field. Note that when creating pricing/blanket orders, the quantity entered in the "Quantity" field indicates the quantity at which the unit price will take effect. For example, if part A costs $5.00, but customers that buy a quantity of 10 or more will pay $4.00 each for part A, then the pricing order would be set for a quantity of 10 and a unit price of $4.00. In the case of blanket orders, the quantity is generally set as 1 since customers will receive the agreed upon price up to the blanket quantity regardless of the increments in which they order.
  6. Enter the unit price for the item. This represents the price for the quantity or quantities that will be ordered from the Vendor up to the blanket quantity.
  7. Enter the desired blanket quantity in the "Blanket Quantity" field.
  8. Once all the appropriate information has been entered, click the "Save" and "Exit" buttons on the Edit Purchase Order Line form to return to the Purchase Order header.
  9. If additional items are to be added, repeat steps 4-8 as required.
  10. When finished, click the "Save" and "Exit" buttons on the Purchase Order header to complete the process.

Adding a linked Purchase Order (or Requisition)

Regular Purchase Orders will be created to authorize the release of a quantity against a blanket quantity. To create these orders:

  1. Navigate to Purchasing > Order Entry.
  2. Set the Order Type to "Purchase Order", select the same Vendor that was specified on the blanket order, then fill in any additional header fields that are necessary.
  3. Add lines to the order. Select the same Part or enter the same description that was entered on the blanket order. At this point, the system has the linkage between the Vendor, the part or description, and the blanket quantity entered in the first step of the process. It will proceed to populate the unit price, the original blanket quantity, and the open blanket quantity in the appropriate fields. If multiple blanket orders for the same Vendor and Part exist, use the "Pricing Orders" button on the line to select the desired blanket order from the list.
  4. After creating the order, normal Purchase Order processing, such as receiving and invoicing, can be used from this point on.

Notes:

  • Beginning in version 17.02.011, entering a purchase requisition against the blanket order behaves in the same way as when entering purchase orders against existing blanket orders.
  • The System Option, "Prompt PO blanket orders", if marked as true and adding a part which is listed on an existing Blanket Purchase Order, the system will display a search box prompting the user to select a Blanket Purchase Order. This is useful in situations where multiple open Blanket orders exist for the same Vendor/Part and users want to select based on additional criteria besides the lowest price. This flag, which is only available beginning in version 15.00, is located within Purchasing > Options.
  • When creating a Purchase Order from MRP for an item with more than one Blanket Purchase Order and the quantity exceeds the first open blanket quantity, the quantity is split into two or more lines. The first line references the first Blanket Purchase Order and uses the remaining quantity. The second line references the second Blanket Purchase Order and uses as many as it needs to fulfill the remaining requirements. If the second Blanket Purchase Order isn't large enough to meet the required quantity, additional Blanket Purchase Orders will be used if they exist. If none exist, a third line will be added to the order with default pricing. In order to facilitate this change, Blanket Purchase Orders are now consumed from oldest to newest. Regular Purchase Orders continue to prefer newer orders. Additional information on MRP is available via the MRP Encyclopedia page and the Configuring Options for Use in MRP page.
  • Recurring Orders may be used in connection with Blanket Purchase Orders. When copying the Recurring PO into a new PO, the system checks if any of the parts are part of a Blanket Purchase Order. If a match is found, the system will apply the price based on the appropriate blanket order. The blanket order quantity will be also be updated.
  • The "Pricing Order Date" field in Purchasing > Options determines what order line date (on the order line Dates tab) that the system will evaluate to determine if a Purchase Order falls within the range of any applicable Pricing Orders.
  • If multiple pricing orders will be in effect for items, the "Pricing Order Sort" flag in Purchasing > Options determines how the system will apply these pricing orders.
  • Version 16.03.018 introduces a new Purchasing Option, "Re-Calc Purchase Order Prices on Receipt". If the Purchasing Option "Re-Calc Purchase Order Prics on Receipt" is checked, the system will reevaluate all valid pricing orders and, if applicable, will apply any pricing changes for items on purchase orders after purchase order receipt. This option is useful in situations where pricing orders are modified frequently and Purchase Orders have already been entered in DEACOM. Vendors may price items based on a different purchase order date, such as ordered date, pick up date, or received date. If this box is checked, then modification to Pricing Orders can still be applied after applicable purchase orders have been entered but before items/lots are received into inventory. When operating in FIFO cost mode, the lots received will reflect updated prices.

Reporting

There are 2 types of blanket order reports found under Purchasing > Order Reporting > Report Types of Blanket Purchases and Blanket Releases

  • Blanket Purchases - This report can be used to see what blanket purchase orders have been created, their ordered amount; the amount used and remaining and the price of the blanket.
  • Blanket Releases - This report can be used to see the blanket quantity and each purchase order that has been placed against that blanket as separate line items.

Note: Beginning in version 17.02.011, the quantities entered on requisitions against existing blanket orders will be reflected in these reports.