Smackdown: Blanket P.O.'s vs The P-Card

Blanket P.O.'s and Procurement Cards (P-cards) are two tools that non-eProcurement environments can adopt to reduce tactical activities in a purchasing department. Professional purchasing staff should rarely "cut P.O.'s" for orders under $100 when a vendor and pricing have already been determined by the purchasing team. When trying to decide which of these two tools to use, here are a few things to consider...

Speed of Implementation

If your company does not currently have a P-card program in place, it can take some implementation time to research the market, select a provider, strategize a rollout, train users, etc. In contrast, your existing purchasing system may already have blanket order functionality giving you the opportunity to implement blanket orders immediately. If P-cards are your long-term solution across multiple categories, you can always start with blanket orders and migrate to P-card later.

Chance of Paying For What You Didn't Get

With both P-cards and blanket orders, there is a risk of paying for what you didn't receive. It's no secret that use of stolen credit card numbers is widespread and P-cards are not exempt from fraudulent transactions. But, if you use a 2-way match (P.O. matches the invoice) instead of a 3-way match (P.O. matches the invoice matches the receiving records), a supplier could invoice you for more line items than they shipped and still be paid. You have to simply determine which of these two methods represent the least risk as well as which is easiest to audit.

Transaction Cost Savings

It is widely acknowledged that one of the best benefits of P-card is the reduction of administrative costs associated with paying invoices. So, while blanket orders do not provide any of this type of cost savings compared to having the purchasing department place orders, P-cards definitely do.

Ease of Use

Most of your end users should know how to use a credit card to place orders. However, they may struggle with remembering a purchase order number and other relevant details when placing a release against a blanket order. Not a big deal, but something to consider. Because this change affects end users (and may not be popular), you might want to create a team and invite end users on the team so that they feel they have control of their destiny which leads to greater buy-in.

To Your Career,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
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