Procure to Pay
Why Blanket POs could go the way of the Dinosaur with e-Procurement

A Blanket Purchase Order is essentially a way to set aside a bucket of money for future purchases. Usually, a BPO is larger than most to allow for multiple purchases to take place over time.

Once a blanket order has been created, an authorized individual can pick up the phone and order product verbally utilizing the purchase order number for billing purposes. The payment process then becomes the control mechanism to monitor spend as the funds are liquidated as the invoices come into the accounts payable department.

This process is heavily used in the manual based paper environment because the purchasing cycle can be very cumbersome and take up to 3 weeks to get approved. This can vary by organization depending on the number of approvers and workload of the purchasing department but is a common practice among private, government and other public sector entities.

In general, a blanket PO is meant to make the ordering process more convenient since it can easily be done over the phone once a PO has been established. The downside to this process is that purchase detail is usually minimal since the invoice is the only documentation generated against these types of PO’s.

E-procurement applications can drastically decrease the practice of blanket orders as they help to streamline the purchasing process. Because e-procurement can provide an efficient procure to pay process, moving the requisition to PO can be done within a much shorter period of time. This is especially true if P2P application is integrated with your enterprise resource planning (ERP) system.

In summary, an organization may elect to continue to create Blanket POs for services like landscaping, utility payments and other cycle orders.  However, general purchases and specialized services can easily be funneled through your e-procurement system as part of the normal P2P process. The end result is the ability to track more spend detail for periodic analysis and contract negotiations.