Blanket Orders and Vendor-Managed Inventory at Peerless: Lower Costs, Secure Supply
When we discuss strategies for lower costs with our customers, we nearly always suggest blanket orders and vendor-managed inventory (VMI) as helpful options. If you purchase the same part multiple times every year, placing separate orders generally results in a higher price per piece than a single large order would.
Blanket orders and VMI are great ways to lower per-part pricing and simplify purchasing. At Peerless Precision, we’re happy to help you find a structure that works for your demand.
Why Higher Order Quantities Can Reduce Costs
With a blanket order, a customer can commit to purchasing a quantity of a repeat part over a certain period while only receiving the parts in smaller releases as needed. Instead of placing four separate orders throughout the year, for example, the customer can combine that anticipated demand into one larger purchase order.
Vendor-managed inventory is a similar structure, and it lets us manage your inventory based on what we anticipate you’ll need.
There are several different reasons a blanket order will reduce your pricing, but ultimately a large order allows us to plan production more efficiently. Purchasing more material at once, for instance, often leads to better pricing from material suppliers; we can also reduce the number of machine setups, spreading setup costs across more parts.
Simplicity and Stability for Customers
This setup not only improves pricing, but it can also create greater stability and simplicity for customers. If a customer orders the same part four times in one year, each purchase order may carry a different unit price based on its quantity. But taking your forecast annual demand and combining it into one blanket order can create a more consistent price, and small releases throughout the year won’t require you to store large inventory.
Blanket orders can also reduce the customer’s purchasing workload. Instead of issuing a new purchase order every few months, the customer can place one order. Depending on your preferences, we can ship parts as you release them or schedule multiple delivery dates to match your production schedule.
Keeping Parts Ready for Upcoming Releases
We have managed blanket orders for decades, starting with precision machining programs for aerospace and defense before expanding into other industries. We keep approximately three months of anticipated deliveries in inventory, although for simpler parts it may be more economical to complete the entire order in one production run.
Our exact approach depends on the project, but for many blanket-order releases, we’ll have parts already available and ready to ship within the requested week.
Finding an Arrangement That Works for You
Almost any repeat part can work well for a blanket order, and we can work with you to figure out the best terms. If a year-long commitment is too long, a six-month agreement is often a good place to start.
If you’re looking to lower your part’s price, contact Peerless Precision to learn how our precision machine shop can support your repeat production needs through blanket orders and VMI, or request a quote today!
