What defines a blanket order in procurement?

A blanket order, also known as a blanket purchase agreement, is a long-term agreement between a buyer and a supplier that allows the buyer to purchase a specified quantity of goods or services at predetermined prices over a certain period without having to issue individual purchase orders for each transaction.

The correct answer highlights that a blanket order allows for undetermined pricing upfront, meaning that while prices may be negotiated or set for certain items, the specifics can be flexible as the order is utilized over time. This can be particularly advantageous when market conditions fluctuate, as it enables the buyer to procure items as needed without being locked into fixed prices for the entire duration of the agreement.

In contrast, a blanket order does not typically limit itself to only specific suppliers, nor does it mandate that shipments occur on predefined dates. Its purpose is more about providing an ongoing purchasing mechanism rather than specifying rigid constraints. Furthermore, a blanket order involves quantities that are often not limited to a small scope but rather encompass broader and flexible quantity commitments as demand arises.