How Area Tool Helps You Plan and Forecast for Blanket Orders

At Area Tool & Manufacturing, we frequently partner with customers on both low- and medium-volume CNC machining projects. While we’re always happy to support small-batch work, we’ve noticed that many customers who place repeated low-volume orders could significantly reduce their costs through blanket orders or vendor-managed inventory (VMI).

Some hesitate because their demand isn’t on a fixed schedule, but we can collaborate to find a solution. Our team can help you analyze your historical data and build a forecast for smoother delivery and better pricing.

The Challenge: Unpredictable Demand Leads to Lost Savings

It’s common for some of our customers to order parts in small quantities throughout the year. For instance, one customer we recently spoke to had purchased nearly 100 parts the prior year, but that had been split into several one-off orders. Because each order required a new setup and a smaller material purchase, the per-part cost was significantly higher than it would have been with a single blanket order. 

When we suggested this structure, they had an understandable concern. “We just don’t know when a customer will need the next part.” 

The Solution: Forecasting With Help From Area Tool

Even without perfect visibility, a rough forecast based on your history will usually keep you flexible while delivering cost savings. We’re happy to help you conduct the analysis on your historical data, too. Our team has experience structuring a variety of blanket order arrangements to help customers find the best option for their situation. 

By comparing your low-volume and mid-volume pricing options, we can find the right structure for you. In many cases, even increasing a batch size a small amount (from one to two, for instance) can reduce your per-part cost by a surprising margin.

The Benefits of Blanket Orders and VMI

Blanket orders and vendor-managed inventory are two common strategies for repeat manufacturing. You can estimate annual demand and issue a single purchase order, then we’ll deliver parts at regular intervals. That can be quarterly, monthly, or according to any other schedule.

Here are the benefits you can expect:

Price Breaks

Higher quantities lead to lower prices by letting us optimize production, material purchasing, and more. We can buy material in bulk, process batches together for heat treating or plating, and minimize setup time and labor hours. You’ll also avoid the potential for costly expedite fees when you plan in advance.

Consistent Lead Time

With scheduled machining on our production calendar, you’ll have reliable delivery. You won’t need to worry about a lack of open capacity in our shop when all parties are planning in advance.

Emergency Flexibility

Even with a blanket order, we know demand can fluctuate. Because we often run ahead on machining, we can respond quickly if you need more parts than usual. We’ll hold them safely in our facility, reducing your storage needs and allowing for quick turnaround if required.

Simplified Administrative Burden

Instead of issuing multiple purchase orders throughout the year, blanket orders consolidate everything under one PO. That means fewer administrative steps, less scheduling stress, and fewer chances for missed communication.

Let’s Build Your Forecast Together

Whether you’re a current Area Tool partner or a new customer, we can help you analyze your history to find the right structure for your project. We’ll recommend a strategic annual quantity that aligns with your budget and delivery goals. 

From 5-axis machining to sinker EDM and beyond, we deliver the precision you need. Contact us today about a blanket order or VMI arrangement!