Final answer:
A Blanket Purchase Order (BPO) is an agreement between a buyer and a vendor to purchase goods or services at predefined terms and conditions over a specified period of time. It simplifies the procurement process by eliminating the need to issue individual purchase orders for each purchase. It is commonly used when the buyer needs to make repeated purchases from the same vendor.
Step-by-step explanation:
A Blanket Purchase Order (BPO) is an agreement between a buyer and a vendor to purchase goods or services at predefined terms and conditions over a specified period of time, usually for a fixed price. It is commonly used when the buyer needs to make multiple purchases of the same goods or services from the same vendor, without the need to negotiate and issue individual purchase orders each time.
For example, a company may enter into a BPO with a stationary supplier to purchase office supplies throughout the year. The BPO will specify the quantity, price, delivery schedule, and other terms agreed upon by both parties. This helps the buyer streamline the procurement process, ensure consistent supply, and often negotiate better pricing.
To use a BPO, both the buyer and the vendor need to agree on the terms and conditions, including the scope of goods or services, pricing, delivery schedules, and payment terms. Once the BPO is in place, the buyer can request specific quantities of goods or services as needed, without the need to issue separate purchase orders.