WO2001015032A1 - A system for competitive pricing procurement of customized goods and services - Google Patents

Abstract

An apparatus and method for selecting a lowest bidding vendor from a plurality of vendors (8) of a customized good or service, including receiving a set of vendor's attributes from each of the plurality of vendors (8) representing their respective capabilities, and receiving an invitation-for-bid data from the buyer (6) defining a custom job for which the buyer (6) desires price quotes or bids. The vendor attributes or the invitation-for-bid, or both, are received through a web browser (10). The invitation-for-bid is compared to each of the vendor's attributes according to certain standard or optional selection criteria to generate a vendor selection pool of vendors (14) qualified to bid on the job. Each vendor in the vendor selection pool receives a vendor's invitation-for-bid. A bid is received from at least one vendor in the vendor selection pool, the lowest price bid is identified, the buyer (6) is informed of the identity of the selected vendor, and solicited for approval of the selected vendor. Upon receipt of approval from the buyer (6), an order is issued to the selected vendor. The non-selected vendors in the selection pool are informed of the bid prices and of the selection results.

Description

A System for Competitive Pricing Procurement of

Customized Goods and Services

Field Of The Invention

The present invention generally relates to an apparatus

and method for creating a database representing pools of

vendors of customized goods and services for one or more

subscribing buyers, and for selecting the lowest bidder from

the database's represented vendor pool on a per-job basis and,

more particularly, for (i) creating and maintaining a database

representing a vendor base or pool for each subscribing buyer

of customized goods and services, the database further

representing capabilities of said vendors, (ii) receiving

solicitation data containing production specifications and

related contracting terms and vendor qualification criteria

from buyers, (iii) extracting vendor qualification criteria

data from said solicitation data, (iv) transmitting

'invitations to bid on said solicitations to qualified ones of

said vendors, based on said vendor qualification criteria

data, and (v) selecting from among the responding vendors

based on the response price and other factors. Background Of The Invention

Customized goods and services, such as print and other

types of digitally mastered information product goods (e.g.

CDs and DVDs) and services, differ from non-custom

manufactured goods or services in that such goods and services

are generally not pre-stocked as "off-the-shelf" items but,

instead, must be specifically manufactured or provided to meet

the buyer's particular requirements. Consequently, customized

goods and services cannot simply be purchased "off-the-shelf"

at fixed prices appearing on standard price lists. Instead,

their prices are established when the exact goods or services

are actually specified, either by single or multiple order (s),

invitation-for-bid ("IFB"), request-for-quote ( "RFQ" ) , or

request -for-proposal ("RFP"); only then can the manufacturer

or service provider assess the precise quality and

manufacturing or service specifications required to perform

the job.

The general procedure used in the prior art of

procurement of customized goods and services is that the buyer

provides the actual solicitation to one or more vendors with

whom, in general, the buyer has had sufficient previous

experience or recommendation to know what type of product or level of service can be provided. For purposes of this

description the term "vendor", unless further qualified or

clearly having a different meaning readily apparent from the

context, means an entity in the market for providing

customized goods and services and, unless specified, does not

require that the entity being qualified meets any criteria or

preference. Similarly, for purposes of this description, the

terms "solicitation" or "solicitations" shall mean,

individually or collectively, an order, IFB, RFQ, or RFP,

while the terms "quote" or "bid" shall be used interchangeably

and mean any type of pricing or other response from a vendor

to an order, IFB, RFQ, or RFP.

After receiving the solicitation, the vendor reviews the

buyer's product manufacturing and delivery specifications and

requirements that are stated therein, including but not

limited to physical specifications, characteristics of style,

quantities, mode of shipment, delivery schedule, and quality

level required to perform individual jobs or estimated job

requirements over a given period of time. Then based on its

previous experience in producing or providing the requested

goods or services, the vendor provides an estimated price

quote or bid to the buyer. Generally, the buyer will provide

the solicitation to a single or very limited number of vendors, and either (1) award the contract to the single or

lowest bidder; (2) award the contract to a vendor whose

quality or working relationship is preferred if that preferred

vendor's quote or bid is sufficiently low; or (3) "shop" the

lowest quote or bid to other vendors to determine if they are

willing to match or underbid the initial low quote or bid.

In following this general procedure in the prior art,

however, buyers of customized goods or services confront the

so-called "iron triangle" of quality, timeliness, and cost.

Buyers want a product or service that is good, fast, and

cheap, but what they discover is that traditional procurements

methods will, at best, only achieve two of these three goals

on any given job. Thus, a buyer might demand and receive top

quality on a "rush" order, but only at a high cost.

Conversely, negotiating a lower price may achieve cost

savings, but also compromise quality and timeliness.

This problem is heightened by great elasticity in the so-

called "market" price of many customized goods or services,

which can vary widely from vendor to vendor and from week to

week. This elasticity results from the fact that pricing of

such customized goods or services greatly depends on (1) the

level of service and quality desired; (2) the labor and

equipment required to produce the job or provide the service; (3) the amount time involved in producing the job or providing

the service; (4) whether the job or service can be engineered,

designed, or furnished in a cost-effective way; and (5) whether

the customer order can be included in the vendor's production

schedule, while still complying with the required delivery

date .

This last factor is particularly crucial when the vendors

are "hard-iron" manufacturers or service providers with high

overhead and labor costs, such as suppliers of print and

information products. In the case of such vendors, idle

equipment and labor can be devastating to their profit

margins. At the same time, such vendors must be ready to

service their regular customers on short notice, which means

planning for downtime in the production schedule to ensure

that their machinery is available for "rush" orders. Because

of the limitations of traditional procurement methods, vendors

are often left not only with unscheduled holes in their

production schedules, but also unable to fill downtime

purposefully set aside for last minute "rush" orders from

regular customers. Managing customer job orders in a way that

minimizes these "holes" in the production schedule is

frequently what distinguishes the profitable vendor from the

insolvent one . As a result of this tension between the cost of idle

equipment and labor and the need to preserve downtime for

regular customers, vendors are constantly seeking short -

turnaround jobs to fill their production "holes" when their

regular orders do not materialize. To obtain these short-

turnaround jobs, many vendors will resort to extremely low

pricing, provided that they can do so without losing the

goodwill of their regular customers. This pricing strategy is

called "contribution pricing" because it involves bidding for

work at below normal profit margins knowing that any income

above out-of-pocket costs will still "contribute" 100% to the

vendor's bottom line in comparison to the cost of letting its

labor and machinery remain idle. In current printing markets,

for example, "contribution" pricing on a regular basis is

found in federal and state government procurements of

customized print goods.

Contribution pricing occurs in the pubic sector because

federal and state agencies are often required by law to make

bid opportunities available to large numbers of vendors in

order to obtain "full and open competition." Where government

agencies are further required to award contracts to the lowest

responsive and responsible bidder, procurements of customized

goods typically result in poor quality control and relatively high administrative costs that must be subsidized by the

taxpayer. In contrast, traditional procurement methods and

prior art devices in the private sector have emphasized

quality control by limiting the vendor pool for customized

goods and services to a small number of reliable vendors with

whom the buyer has previously done business.

There is a significant cost problem, however, associated

with limiting the vendor pool to a small number of suppliers.

Lacking the discipline of a more competitive market, vendors

who know that they are bidding against limited competition

will offer and charge higher prices. Prior art methods

attempt to address this problem of non-competitive pricing in

one of two ways: (1) longer term contracts with preferred

vendors in established commercial relationships that lump

procurements together over an extended contract period in the

hope of enhancing the buyer's purchasing power and thereby

obtaining controlled term pricing; and (2) "best buy" or "best

value" procurement practices that award jobs based on factors

other than price and which are largely creative user or

quality control driven. Such alternative prior art methods

are now being adopted increasingly in the public sector due

precisely to quality issues arising from "full and open

competition. " In both public and private sector customized product and

service markets, however, traditional procurement methods and

prior art devices have failed to solve the "iron triangle"

because of their inability to take advantage of "contribution"

pricing without incurring prohibitive administrative costs or

sacrificing quality or timeliness. There are several key

reasons for this failure.

First, in order to find the manufacturer or service

provider who is willing to offer the lowest "contribution"

pricing on any given job, the buyer must often request price

quotations from a larger vendor pool than they are prepared or

equipped to manage efficiently. A larger vendor pool would, in

theory, be desirable because it usually means that a lower

price quote or bid can be received. This is well-known in the

general business world. In the actual business environment,

however, identifying such a large vendor pool is generally not

practical . The main reason is that gathering and maintaining

information about a large number of current and potential

vendors is time consuming and expensive. Few companies have

the time, money, or inclination to maintain a large,

up-to-date database on such potential vendors, particularly

when soliciting dozens of quotes or bids can itself require staff and administrative time that costs more than the savings

generated from receiving a greater number of competitive bids.

This disparity is heightened by the fact that many customized

goods or services involve relatively low dollar purchases or

procurements, which is often the case, for example, with

printing jobs.

Second, even if a buyer were willing to absorb the

administrative costs associated with establishing,

maintaining, and managing a large database of vendors to

improve the competitiveness of their bidding, the buyer is

often reluctant to do so because quality control becomes more

difficult as the vendor pool increases. A crucial aspect of

quality control is obtaining information about the performance

record of vendors from whom the buyer would like to solicit

quotes or bids, particularly with respect to the quality and

dependability of goods and services output by each vendor in

the vendor pool . This is difficult not due only to the volume

and nature of the information required, but also to the fact

that the buyer must generally obtain such information from its

own dealings with the vendor. In such circumstances, the

reliability, price history, and quality of a vendor's work for

other buyers may not be obtainable. As a result, buyers are

reluctant to seek goods or services from new vendors because negative information on their reliability or quality may then

have to be learned first hand.

This problem is made more acute by the fact that the

procurement of customized goods and services frequently

requires specialized knowledge and expertise in finding the

right vendor for each job. Most businesses hire purchasing

officials with general procurement knowledge who are then

given responsibility for a wide range of purchases. As a

result, the purchasing official is ill -equipped to manage

large numbers of customized procurements efficiently and

without loss of control over the production of individual

jobs. Instead, the purchasing official is forced to rely on

the vendor's expertise in designing or engineering a job,

which often results in a more expensive (and more profitable

for the vendor) design, engineering, or production process.

Third, even if the buyer is willing to make the financial

investment necessary to hire procurement personnel with the

administrative experience, staffing resources, and specialized

product knowledge to manage a large pool of vendor and monitor

each job closely for quality control and contract compliance,

the buyer has no guarantee that vendors will offer

contribution pricing. The reason is that even vendors who

would gain, in an immediate sense, from contribution pricing to fill a production hole are frequently unwilling to offer

that pricing to their regular customers. Such vendors are

primarily concerned about losing their customers' goodwill

when the vendor is unable or otherwise fails to offer

contribution pricing on a repeat basis. After once receiving a

quote or bid reflecting contribution pricing (e.g., due to

idle machine time at the vendor's production plant when the

contract must be performed) , the regular customer would expect

to pay the same low prices for all future jobs from that same

vendor, even when the vendor lacks idle production capacity.

The vendor is then faced with a Hobson's choice of either

risking the loss of the customer account by refusing the less

profitable job (thereby forfeiting the sales and marketing

costs previously incurred to obtain the customer account) or

suffering financial loss by displacing more profitable work to

accept the regular customer's lower paying work.

As a consequence of the foregoing obstacles to overcoming

the "iron triangle" of quality, timeliness, and cost, there

has been a long felt need for a system and method of

competitive pricing for custom goods and services that: (1)

identifies and manages a vendor pool large enough to obtain

the benefits of enhanced pricing competition, without imposing

high administrative costs; (2) enables the buyer to procure from a greater number of vendors without causing a loss of

quality control or contract compliance; and (3) encourages

vendors to offer contribution-level pricing on a consistent

basis, while identifying vendors willing to offer contribution

pricing on any given job.

Summary Of The Invention

It is therefore an object of the present invention to

provide a system and method meeting the above- identified long-

felt needs. The present invention meets these and other

objectives by providing a system and method for matching and

selecting a vendor meeting both general and job-specific

requirements specified by a buyer, from a plurality of

vendors, comprising, in one example embodiment, an apparatus

and method for quantifying a set of buyer's attributes

associated with at least one kind of customized good or

service and quantifying a set of vendor's attributes

associated with the manufacturing, production, or provider

capabilities corresponding to each of a plurality of vendors.

The example embodiment further comprises means and method

steps for comparing the set of quantified buyer's attributes

to each quantified set of vendor's attributes corresponding to

each of the plurality of vendors, the comparison being in accordance with a buyer defined selection criteria and

generating, as a result of the comparison, a data set

representing a vendor selection pool for the particular buyer.

In addition, the example embodiment comprises means and method

steps for receiving a data representing a buyer's invitation

for bid to manufacture, produce, and/or provide at least one

manufactured item or customized service and for submitting a

corresponding data to each of the vendors represented by the

data in the vendor selection pool . The described example

embodiment further comprises means and method steps for

receiving a bid data, having a field representing a bid price

(which may be based on alternative specifications suggested by

the responding vendor) , from each vendor in the vendor

selection pool that submits a bid data, for identifying the

received bid data having the lowest bid price, and for

transmitting a data to the buyer representing the identity of

the identified vendor and notifying the buyer to transmit a

data representing a approval or disapproval of the identified

vendor. In addition, the described example embodiment

includes means and method steps for receiving an approval data

from the buyer and, in response to receipt, for generating and

transmitting an order to the selected vendor for the purchase

of at least one manufactured item or customized service at the bid price, and for transmitting or otherwise releasing a data

to all vendors in the selection pool, informing each of the

identity of the selected vendor and the rank order value of

the bids submitted by all other selection pool vendors.

A further described embodiment of the invention

implements the reception of buyer attribute data and vendor

attribute data by a web site accessible through the Internet .

According to this embodiment, a web site includes a graphical

user interface through which potential vendors are asked to

input information characterizing their products and services,

their manufacturing capability, and other attribute data.

Similarly, the web site has a graphical user interface

accessible to buyers, for entering solicitation data and other

information, including preferred vendors and standard or

optional vendor selection criteria.

A further embodiment of the invention includes means and

method steps for maintaining multiple vendor pools for each of

a plurality of buyers, the multiple vendor pools for a

particular buyer corresponding to multiple product or service

types that the buyer procures .

A still further embodiment of the invention transmits

and/or releases data representing the bid price of all received bids, to all vendors who submitted bids or received

solicitations .

A still further embodiment of the invention automatically

generates a set of project milestone data, in reverse

scheduling format, for use in monitoring the winning vendor's

progress on the buyer's requested manufactured item or

customized service.

A still further embodiment of the invention has means and

method steps for receiving an invoice data from the winning

vendor upon completion of the job, and generating a

corresponding invoice for the buyer's approval. In this

embodiment, upon invoice approval, the system can prepare the

invoice data for direct transmission to the buyer's accounting

system for (i) the proper allocation of costs associated with

the job within the buyer entity and (ii) the transfer of funds

for payment of the buyer-approved invoice from the buyer into

a single escrow account for subsequent transfer of the payment

funds to the vendor. This embodiment provides a single source

accounting feature for buyers dealing with a plurality of

vendors regardless of the type of fee charged for using the

invention.

A still further embodiment of the invention has means and

method steps for allocating a service, user, access, licensing, or similar fee for using the invention to each job

transaction. For purposes of this description, such fee shall

be referred to as a "job transaction fee." In this

embodiment, the system receives an invoice data from the

winning vendor upon completion of the job, and generates for

the buyer's approval a corresponding invoice that, in addition

to the invoice payment data from the winning vendor, includes

the job transaction fee associated with the individual job.

Upon invoice approval and the transfer of funds indicated on

the buyer-approved invoice into an escrow account, the system

can then allocate and distribute such funds by transmitting

the job transaction fee included on the buyer-approved invoice

to a system administration account and transmitting the

remainder of such funds to the winning vendor.

Brief Description Of The Drawings

The features and advantages of the present invention will

be more fully described by the following detailed description

of the preferred embodiment of the invention, which is to be

considered together with the accompanying drawings wherein

like numbers refer to like parts and further wherein: Figs. 1A and IB show a typical communications system and

arrangement of an example embodiment of the invention, and a

flow chart of the system operation;

Figs. IC and ID show flow charts of example embodiments

of the invoicing and payments procedures associated with the

system operation;

Fig. 2A shows an Internet-based arrangement of the system

of Figs. 1A and IB;

Fig. 2B shows a more detailed example embodiment of an

arrangement of the system' s web servers and database servers

shown generally on Fig. 2A at Block 621.

Figs. 3-14 show screen displays used in connection with a

specific embodiment of a print procurement application of the

present invention; and

Fig. 15 shows a general embodiment of the communications

system of Fig. 1A.

Detailed Description Of The Preferred Embodiments

The method and apparatus of the present invention will be

better understood by the description below of its operation in

reference to the attached figures. It is to be understood,

though, that the present invention is not limited to the

example embodiments and arrangements described herein, but that it also comprises any modifications or equivalents within

the scope of the claims.

Figs. 1A and IB set forth a first example embodiment of

the present invention. Referring to Fig. 1A, a system database

2, which is resident on the data storage (not shown) associated

with a conventional general purpose programmable computer (not

shown) , is connected to the Internet via a web site 4 resident

on a conventional web server (not shown) . In a preferred

embodiment of the invention the buyer (s) 6 and the plurality

of vendors 8 each access the web site 4 through respective

Internet browsers such as, for example, Netscape or Internet

Explorer. An example of such an arrangement is shown at

Fig.2A. It should be noted that the actual physical location

of the computer (s) on which the web site 4 resides, and of the

computer (s) (not shown) which perform the operations described

below on the database 2 contents, and of the buyers' computers

and the vendors ' computers (not shown) are not prescribed by

this invention. For example, the conventional general purpose

programmable computer on which the database 2 resides may be

co-located with, or can be located remote from the

conventional web server (not shown) hosting the web site 4.

Further, the database 2 may be resident on the computer (not

shown) of the buyer 6, in which case the buyer 6 would access the database 2, through a web browser or equivalent means, or

the database 2 would automatically access the buyer's computer

and download the database contents .

This specific embodiment shown on Fig. 2A is particularly

suitable for high-speed communications with a plurality of

users operating in parallel. The system is illustrated with a

functional diagram shown generally at 610. In this

illustration, a plurality of entities having projects to be

bid upon 613 are each individually connected to a common

communication network such as the Internet 614. Potential

bidders or product/service vendors 615 are similarly connected

to the common communication network 614. This high-volume bid

processing system shown at 621 is similarly connected to the

common communication network 614. This high-volume bid

processing system thus has access to communication with a

large number of system users. This high-volume bid processing

system is illustrated in greater detail below with reference

to Fig. 2B.

As shown in Fig. 2B, an example embodiment of the high-

volume bid processing system is shown generally at 710. In

this example embodiment, one or more robust, high-capacity

telecommunications lines 712, which for example may be TI

lines, provide access to the communication network 614, which as noted in the preferred embodiment is the Internet. The TI

lines are directly connected to one or more web server units

714. These web server units are capable of handling a

plurality of transmission and reception operations

simultaneously. The web server units also handle publication

and transfer of the various web pages used with the system to

the various system users that are connected through the

Internet. The interconnection between the TI lines and web

servers is a conventional connection that may be scaled for

increased volume. Specifically, additional TI lines or web

server units may be added as necessary to satisfy increases in

user demand.

The web server units are connected to a pair of database

servers 716 that are mirrored. The database servers 716

handle transfer and storage of all vendor and bid data used by

the system as noted above. The database servers 716 are

mirrored as generally known in the art in order to prevent

degradation of system performance should one of the database

servers cease to function properly. It will be appreciated

that this particular embodiment of the system provides all of

the users with ready access to information and a very simple

and straightforward means for exchanging data. Extra database servers may also be added as needed in order to satisfy user

demand .

Referring back to Fig. 1A, block 10 represents the entry

by the vendors 8 of a set of vendor's attributes VATTR, each

VATTR representing the name, geographical location and the

manufacturing, production, and/or provider capabilities and

other attributes of the one of the vendors 8 submitting it,

which are quantified and entered into the system database by

the vendors by way of the web site 4.

An example device for storing the system database

containing the VATTR information is an Internet server

running under Windows NT 4.0, with MS Internet Information

Server 4.0, Oracle Database 7.3.4.0, and an information server

using standard ".dll" files created in any of the standard

programming languages known in the art, e.g., Delphi, MS

Visual Basic, or C++, Java, all running on a conventional

general purpose computer hardware, such as a PC compatible

Eisa/Isa HAL (486 C Stepping) equipment or the like. An

example of a specific embodiment, showing the graphical user

interface, is described later in this specification in

reference to Figs. 3-14.

It should be noted that the entering of the vendors'

attributes VATTR may also be performed via a manual entry of the information into the system database 2 and may also occur

after a vendor has been accepted into a buyer's vendor base

and begun bidding on jobs, for example, to reflect changes in

the vendor's production capabilities or job preferences.

Referring to Fig. 1A at block 12, after receipt of a set

of vendor attributes VATTR from a plurality of vendors 8, a

buyer 6 inputs, by way of the web site 4, an invitation-for¬

bid data BIFBD, defining a customized good or service in terms

of standardized buyer job attributes BATTR. The invitation-

for-bid data BIFBD also defines any standard or optional

selection criteria SC by which a vendor will be selected from

among the plurality of vendors 8 and any additional vendors

that the buyer 6 adds to the plurality of vendors 8 as part of

the invitation-for-bid data BIFBD, as described below. The

invitation-for-bid data BIFBD are quantified and entered by

the buyer 6 in accordance with standard graphical user

interface (GUI) prompts appearing on the particular display of

the web site 4, an example of which is described in reference

to Figs. 3-14 below. The invitation-for-bid BIFBD defines the

customized goods or services according to quantified values of

standardized attributes so that each vendor 8 will understand

what exact manufactured item or customized service is being

placed out for bids by the buyer 6. This arrangement ensures that the bids are comparable and that mistakes as to the

requirements of the buyer are minimized.

Fig. 1A, block 14 illustrates the step of retrieving all

of the vendor attribute sets VATTR from the database 2 and

comparing each to the job attributes BATTR derived from the

invitation-for-bid data BIFBD based on the standard selection

criteria SC (such as product category and quality level)

previously entered by the buyer 6 as part of the job

attributes BATTR. The comparison determines which of the

vendors 8 are qualified to provide the requested customized

goods or services. The comparison at block 14 also uses any

optional selection criteria SC which the buyer 6 had entered

as part of the job attributes BATTR (such as geographical

location of the vendor, whether the vendor must be a union

shop, small -disadvantaged business, or a minority- or women-

owned business) , and includes the names of specific vendors

entered by the buyer 6 as part of the invitation-for-bid data

BIFBD that the buyer wished to be given the opportunity, or

not be given the opportunity, to bid on the job. Based on the

results of the block 14 comparison a vendor selection pool

VPOOL is created, and the formatted vendors' invitation- for¬

bid VIFB is then transmitted at block 16, via web site portal access, e-mail, or equivalent means, to each of the vendors

represented by the vendor pool VPOOL.

Referring to Fig. IB, at block 18 all of the vendors 8 in

the vendor selection pool VPOOL of Fig. 1A that received the

invitation-for-bid VIFB can submit, through the web site 4, a

responding bid RBID(i), where "i" is an index or name value

identifying the submitting vendor, having the ith vendor's

fixed price quote or bid to manufacture, produce, and/or

provide a manufactured item or customized service in

accordance with the specifications designated by the buyer in

its invitation-for-bid VIFB or alternative specifications

requested or otherwise recommended by the submitting vendor.

Each responding bid RBID(i) is stored in the database 2 in a

responding bid file RFILE. Prior to award of the job, which

is described below, only the buyer 6 has access to the RFILE,

as shown at block 20. The buyer 6 can access RFILE through

the web site 4, or through direct read of the database 2, if

the database 2 is resident on the computer system (not shown)

of the buyer 6. The RFILE list is preferably presented to the

buyer 6 in rank order according to the bid price.

Referring again to Fig. IB, at blocks 22 and 24 after the

time of bid closing, the lowest price bid is identified as a

system default selection and a WINBID information is transmitted or otherwise provided to the buyer 6 which: (i)

identifies the lowest bidding vendor, and (ii) solicits the

buyer for approval to accept bid RBID of the lowest bidding

vendor. The buyer 6 then approves the lowest bidding vendor

or overrides the default selection and approves another

responding bidder (for example, based on a higher bid

associated with alternative job specifications) , in either

case by visiting the web site 4 and inputting an APPROVAL data

through its web site portal workspace, or by transmitting the

data via e-mail or equivalent means to the computer. Upon

receipt of the APPROVAL from the buyer 6 an ORDER is issued at

block 26 to the winning vendor for the purchase of the

customized goods or services specified by the invitation-for¬

bid VIFB (including any alternative specifications accepted by

the buyer) , at the price bid by the winning vendor among the

vendors 8. If, on the other hand, the APPROVAL is not

received, or if a corresponding data (not shown) indicating no

approval is received, the process goes to block 28 by which

the invitation-for-bid is cancelled or reissued (in which

event, the process reverts to block 6) . It should be noted

that depending on the particular design choice, and on the

resolution of possible legal issues (such as the validity of

digital signatures) , a separate formality, such as a letter of acceptance or a phone discussion between the buyer 6 and the

winning vendor 8, may be used or required before actual award

of the bid, or before the commencing of work on the job. For

purposes of this description, though, receipt of APPROVAL is

sufficient. In the event that the separate formality is

required, this would be carried out before moving to the block

30 described below.

After the ORDER is issued the system goes to block 30

which disseminates via web site portal access, e-mail, or

equivalent means, a BIDINFO data to all of the vendors 8 in

the vendor selection pool VPOOL who submitted bids, the

BIDINFO data representing the identity of the selected vendor

and the identity and rank order value of the bids submitted by

all of the vendors 8. After the ORDER is transmitted at block

26, the system makes the BIDINFO data accessible by Internet

portal to all vendors 8 in the vendor selection pool VPOOL who

did not submit bids in response to the invitation-for-bid

VIFB. Also after the ORDER is transmitted at block 26, either

concurrent with or before or after the BIDINFO is transmitted,

the system goes to block 32 and generates a set of job

milestones MSTONES, which are transmitted to the buyer 6, in

reverse scheduling format. The milestones MSTONES are

calculated based on the buyer's job attributes BATTR associated with the particular item(s) to be manufactured or

customized service (s) to be provided. The milestones MSTONES

are then entered into a database (not shown) that may be

associated with a general purpose programmable computer (not

shown) of the buyer 6 which generates screen alerts, at block

34, on the winning vendor's web site portal workspace (not

shown) at time points specified by the milestones MSTONES.

The winning vendor 8 must then confirm on its web site portal

workspace that the work requirements associated with each

milestone MSTONE have been completed as they have become due.

If the completion of each milestone MSTONE is not confirmed as

they become due, then the system presumes that the milestone

MSTONE was not completed when due and generates a screen

alert, at block 36, on the buyer's 6 web site portal workspace

(not shown) that no confirmation of the completion of the

milestone MSTONE has been received. The buyer 6 is thereby

alerted (i) to check for any messages transmitted through the

system from the winning vendor 8 to the buyer 6 explaining why

the milestone MSTONE was not completed when due, or (ii) if no

such message was transmitted, to contact the winning vendor 8

directly by telephone, e-mail, or equivalent means to

determine if the job is on schedule or take such steps as may

be necessary if the job is not on schedule. In any event, the winning vendor 8 proceeds to manufacture, produce, and/or

provide the buyer-required manufactured item or customized

service, and then to ship the manufactured item or provide the

customized service as instructed by buyer 6.

Referring to Fig. IC, block 38, upon confirmation by the

vendor 8 that the job has been completed, the system generates

an automatic vendor payment invoice that contains any approved

contract modifications at the vendor's 8 web site portal

workspace. Alternatively, the vendor payment invoice could be

transmitted to the vendor 8 by other forms of communication

such as e-mail, facsimile, or equivalent means. In the

embodiment using a web site portal, the vendor 8 confirms the

vendor payment invoice with a digital signature, at block 40,

and the buyer 8 is then alerted on its web site portal

workspace, at block 42, that the vendor payment invoice is

ready for review, approval, and payment, at block 44, in

accordance with the terms of the invitation-for-bid VIFB. For

this embodiment, no fee for using the system is added to the

vendor payment invoice, and the vendor 8 receives payment

directly from the buyer 6, outside the system, at block 46 by

electronic funds transfer (EFT) or physical means. An

alternate embodiment for transmitting payment to the vendor 8

through the system is set out in Fig. IC at block 48. For this embodiment, payment for all buyer 6 jobs is made by

electronic funds transfer (EFT) or physical means to a single

escrow account, at block 48, managed by the system to provide

the buyer with single source accounting. Payment is then made

to the vendor 8 from the escrow account, at block 50, by

electronic funds transfer (EFT) or physical means.

A further alternate embodiment for invoice payment is set

forth at Fig. ID. Referring to Fig. ID, at blocks 52 and 54,

a vendor payment invoice is generated upon job completion and

approved by the vendor 6 , in the same manner described above

with respect to Fig. IC, at blocks 38 and 40. Prior to

invoice approval by the buyer 6, at block 56, however, a job

transaction fee is added to the invoice as payment for the

cost of using the system allocated for each job. Payment of

the buyer-approved invoice, at block 58, is then made to the

system's single source escrow account, at block 60, in the

same manner described above with respect to Fig. IC, at blocks

44 and 48. Upon receipt of funds into the escrow account, the

system allocates and distributes the job transaction fee to a

system administration account, at block 62, and payment for

the job to the vendor 8, at block 64. Transfer of these funds

to the system administration account and the vendor 8 is made

by electronic funds transfer (EFT) or physical means in the same manner as described above with respect to Fig. IC, at

block 50.

The invention and its operation are described above

without limitation to specific application. Example

applications include customized printed goods, digitally

mastered CDs or DVDs, machine tools, furniture, engraved

wares, and insurance, in which jobs are awarded on a

competitive or "bid" basis.

Referring to Figs. 3-14, an example of the present

invention applied to print procurement will be described. It

will be readily understood to one of ordinary skill in the

art, however, that the print procurement example is only an

example application of the system and method of the present

invention, and that the present invention can be applied to

other types of competitive bidding on customized goods and

services. The function of this example embodiment is to match

a printing vendor, these being a specific example of the

above-described vendors 8, to a print job based on

requirements input by the print buyer, which is a specific

example of the above-described buyer 6.

For this description it is assumed that the vendor

attributes VATTR described in reference to Figs. 1A and IB, a

set from each of a plurality of print vendors 8, have already been entered into the database 1 , at the direction and with

the consent of the print buyer 6 and that no additional

vendors are added as part of the invitation-for-bid data

BIFBD. The print vendors 8 enter their respective vendor

attributes VATTR by visiting the web site 4 and using the

vendor's web browser (not shown), e.g., Netscape, in a mode

and manner substantially identical to the process described

below by which the print buyer 6 enters the buyer attributes

BATTR describing the particular print job for which bids will

be requested. Alternatively, the print vendors 8 can transmit

their respective vendor attributes VATTR to the print buyer 6

by e-mail or equivalent means for entry by the print buyers 6

or any authorized third party.

Referring to Figs. 1A, IB, and Fig. 2A, the print buyer 6

begins its interaction with the system by logging onto the

system web site 4 using a Netscape or equivalent browser. The

web site 4 and the buyer's 6 browser 12 are also referenced

herein as the buyer's "quantification means". Referring to

Fig. 1A, buyer 6 logs onto the web site 4 with a unique user

name and password, thus ensuring that the data entered is

unique to that user. Once logged in, print buyer 6 moves to

his or her individual web site portal workspace 72, and the

first page of the workspace is shown at Fig. 3. The buyer 6 then clicks on the Fig. 3 hyperlink point labeled as "Create

New", using a suitable pointing device (e.g., a mouse, roller

ball, track pad, or equivalent) to create a new print job.

Upon clicking this hyperlink, print buyer 6 is presented with

a clear, easy-to-read form such as that shown at Fig. 4.

Print buyer 6 has available to it a "back" button to go back

to the hyperlink point from which any page is accessed. An

example system supporting the particular example of the web

site 4 represented by Figs. 3-14, is Windows NT 4.0, using MS

Internet Information Server 4.0, Oracle Database 7.3.4.0, and

an information server using standard ".dll" files created in

any of the standard programming languages known in the art,

e.g., Delphi, MS Visual Basic, C++, or Java, all running on a

conventional general purpose computer hardware, such as, a PC

compatible Eisa/Isa HAL (486 C Stepping) equipment or the

like .

Referring to Fig. 4, it is seen that the field at the top

of the screen is the master ID and description area 90.

Within this field, print buyer 6 may give a print job an

identifier or name 92. A purchasing instructions field 100 is

shown arranged beneath the ID/description area 90. Print

buyer 6 utilizes the purchasing instructions field 100 to inform prospective print vendors 8 of any special instructions

related to print job.

Referring to Fig. 5, the buyer 6 next inserts the item

for which a bid is to be requested, or adds another item to an

existing list, by clicking on a drop-down menu 110 whereupon a

list of possible options 115 is presented. The information

entered through the screens of Figs. 5-14 is a specific

example of the buyer attributes BATTR described in reference

to Figs. 1A and IB above. Referring to Fig. 5, print buyer 6

selects from the list of options 115 on the basis of the

particular set of needs and requirements associated with the

print job to be quantified. When print buyer 6 selects an

option 115 that best matches its printing needs, the "add

item" button 120 is clicked, via the pointing device.

Clicking the add item button 120, moves the buyer to a

new screen, shown at Fig. 6, requesting additional information

more specific to the added item of the print job. If print

buyer 6 inadvertently clicks the "add item" button 120 and

selects an option that does not match its needs, the print

buyer 6 may scroll to the bottom of the page and activate a

"delete" button (not shown) . Print buyer 6 will then be

presented with the previous Fig. 5, screen to introduce a

correct job item. Assuming that the "add item" button at Fig. 5, was

clicked to correctly select "flat sheets", the buyer 6 is

presented with the example screen of Fig. 6 requesting entry

into a "Master Job ID/Description" field 90, including a "job

number" 92 and "job description" (not numbered) . The print

buyer 6 can also select the required job quality (not

numbered) from the "quality" scroll down, which provides "none

designated" as an option, as depicted at Fig. 6. The Fig. 6

screen provides a "quantity" area 130 so that print buyer 6

may enter the total number of units to be manufactured. For

this example, print buyer 6 also supplies the "overrun

permitted" and/or "underrun permitted" as a percentage in

fields 135. The Fig. 6 screen provides entry, at field 138,

of additional "complete set (s) of film" and "film or plate

ready disc (s) " .

After the data entry screen of Fig. 6 is completed, the

buyer's browser, in this example of adding an order for "flat

sheet", moves to the web page or screen depicted at Fig. 7.

The Fig. 7 example screen includes a proof area 140 which

allows print buyer 6 to enter information about types of

proofs 142 required and inspection requirements 144.

After completion of the example screen of Fig. 7, the

buyer 6 is presented with the example screen of Fig. 8. Near the top of the Fig. 8 screen example is a "production contact"

area 145 with a drop-down menu that allows print buyer 6 to

choose from a list of production contacts, an example being

shown as item 150. For this example, the print buyer 6 then

moves down to the trim field 155 to define the width and type

of trimming operation required for the example flat sheet

order. This portion of the Fig. 8 example screen is shown in

greater detail at Fig. 9. The detailed example screen of Fig.

9 includes a "stock" field 160 for the print buyer 6 to enter

the type of paper stock required for the job, as well as a

"color" 165, "manufacturer" 170, "grade" 175 selections,

"basis weight" 180 and "basis size" 185. In the particular

example screen detailed at Fig. 9, the print buyer 6 is

provided with a field 188 allowing him or her to specify

whether substitutes, such as recycled paper, are allowed.

For this print procurement example, the buyer 6, after

completing the Fig. 9 screen, is presented with the fields for

entering the ink specification data, by a screen such as that

shown at Fig. 10. The Fig. 10 example provides the print

buyer 6 with a field 189 for the selection of ink for front

and back of the flat sheet, with a set of "radio buttons" for

entering "Coverage" as "Light", "Medium" or "Heavy", and with a set of "yes" or "no" buttons specifying additional

requirements for the materials and the process of manufacture.

Next, at Fig. 11, the print buyer 6 is guided through a

series of options related to the finishing of the flat sheet

printed item. Each finish option 190 is associated with a

small "pop-up" screen 195 that acts as an assistant to guide

the print buyer 6 through the process of identifying and

specifying the specific finishing requirements. Each pop-up

assistant 195 provides print buyer 6 with choices of several

options specific to particular types of finishes. Referring

to Fig. 12, a detailed view of an example "pop-up" screen 195

is presented to the buyer 6, having a pull down menu of

available stitching options. If the buyer 6 clicks on the

example highlighted at Fig. 12, which is "Saddle Stitch", he

or she is presented with another "pop-up" screen such as that

shown at Fig. 13. Fig. 14 shows another finishing set of

finishing options 195, defining the packaging requirements for

the print job. Other attributes associated with a particular

print job include binding, folding, perforations, scoring,

punching, numbering, bar coding, and collation.

Referring to Figs. 1A and IB, after the buyer 6 enters

the data into the example screens of Figs. 3-14 describing the

job, the buyer 6 clicks on a "submit invitation-for-bid" button on the screen (not shown) and, in response, the system

generates the buyer's invitation-for-bid data BIFBD, and the

system commences the processing indicated at block 12. More

specifically, the system receives the invitation-for-bid data

BIFBD, and extracts the buyer's attributes BATTR from the

information entered by the screens of Figs. 3-14, and then

compares those attributes to each of the plurality of sets of

print vendor's attributes VATTR, using as the selection

criteria SC for generating the vendor pool VPOOL the standard

selection criteria SC entered by the buyer 6 along with the

buyer's job attributes BATTR (such as product category and

quality level) and any additional optional selection criteria

SC (such as geographical limits or whether the vendor must be

a union shop, small -disadvantaged business, or a minority- or

women-owned business), specified by the buyer 6.

After the print vendor selection pool VPOOL is created by

the system, the vendors' invitation-for-bid VIFB is submitted

to each print vendor therein. The vendors' invitation-for-bid

VIFB provides a specification for the printed item (e.g.,

paper forms, snap sets, envelopes, labels, rolled labels,

magazines/booklets, etc.) presented in a form that is derived

from the quantified set of print buyer's job attributes BATTR

so that each print vendor 8 will understand the exact item or service is being placed out for bids by the print buyer 6.

This arrangement ensures that the bids are comparable and that

mistakes as to the requirements of print buyer 6 are

minimized.

As described above with reference to Fig. IB and the

general embodiment of this invention, all of the print vendors

8 in the vendor selection pool VPOOL of Fig. 1A that received

the invitation-for-bid VIFB can submit, through the web site

4, a responding bid RBID(i) having the i^th vendor's price quote

or bid on the print job specified by VIFB. In this example

embodiment for procuring print jobs, the responding bids RBID

do not contain any alternative specifications requested or

otherwise recommending by the submitting vendors and are

stored in the database 2 in a responding bid file RFILE which

is accessible by, or provided to the print buyer 6, preferably

presented to the print buyer 6 in rank order according to the

bid price. After the time of bid closing the lowest price bid

is identified as a system default selection and a WINBID

information is transmitted or otherwise provided to the print

buyer 6 which: (i) identifies the lowest bidding vendor, and

(ii) solicits the print buyer for approval to accept the bid

RBID of the lowest bidding vendor. The print buyer 6 then

approves the lowest bidding vendor or overrides the default selection and approves another responding bidder, in either

case by visiting the web site 4 and inputting an APPROVAL data

through its web site portal workspace. Upon receipt of the

APPROVAL from the print buyer 6 an ORDER is issued at block 26

to the selected print vendor by web site portal access, e-

mail, or equivalent means to provide the printed goods or

services specified by the invitation-for-bid, at the price bid

by the winning vendor.

After the ORDER is issued the system goes to block 30

which transmits, via web site portal access, e-mail, or

equivalent means, a BIDINFO data to all of the print vendors 8

in the vendor selection pool VPOOL who submitted bids, the

BIDINFO data representing the identity of the selected print

vendor and the identity and rank order value of their bids.

After the ORDER is transmitted, the system makes the BIDINFO

data accessible by web site portal access to all vendors 8 in

the vendor selection pool VPOOL who did not submit bids.

Then, at block 32 a set of job milestones MSTONES are

generated and transmitted to the print buyer 6, in reverse

scheduling format, based on the job attributes BATTR

associated with the particular print item(s) to be provided.

As each milestone MSTONE becomes due (e.g. pick-up of buyer-

furnished material, delivery of proofs, required press sheet inspections, partial and complete shipments of final product) ,

an alert is generated, at block 34, on the print vendor's web

site portal workspace (not shown) . The print vendor 8 must

then confirm on its web site portal workspace that each task

associated with the alerted milestone MSTONE has been

completed. If the completion of the alerted milestone MSTONE

is not confirmed by the print vendor 8, then the system

generates a screen alert, at block 36, on the buyer's 6 web

site portal workspace (not shown) that no confirmation of the

completion of the milestone MSTONE has been received. The

buyer 6 is thereby alerted (i) to check the system for any

messages from the print vendor 8 explaining why the milestone

MSTONE was not completed when due, or (ii) if no such message

was transmitted, to contact the print vendor 8 directly by

telephone, e-mail, or equivalent means to determine if the job

is on schedule or take such steps as may be necessary if the

job has been delayed. In this manner, the system automatically

tracks the job's progress until the print vendor 8 completes

the job by producing and/or providing the specified print

item(s) and ships them as specified by the invitation-for-bid

VIFB.

Upon completion the winning print vendor 8 confirms that

the job has been delivered, and the system generates an automatic invoice that contains any approved contract

modifications at the vendor's web site portal workspace. The

winning vendor 8 confirms the invoice with a digital

signature, and the buyer is then alerted on its web site

portal workspace that the invoice is ready for review,

approval, and payment in accordance with the terms of the

invitation-for-bid VIFB. For this example embodiment, it is

assumed that the buyer has chosen to pay a job transaction fee

for use of the system with single source accounting for all of

its solicited printed jobs. Referring to Fig. ID, the job

transaction fee is added to the vendor payment invoice shown

on the buyer's 6 web site portal workspace prior to the

buyer's 6 approval, at block 56. Payment of the buyer-

approved invoice, at block 58, is then made to the system's

single source escrow account, at block 60, by electronic funds

transfer (EFT) or physical means. Upon receipt of funds into

the escrow account, the system allocates and distributes,

again by electronic funds transfer (EFT) or physical means,

the job transaction fee to a system administration account, at

block 62, and payment for the job to the vendor 8, at block

64.

Those skilled in the art will appreciate that the

specific embodiments set forth above are for purposes of example only and the invention may be practiced with a wide

range of alternate structures. For example, referring to Fig.

15, the present invention contemplates alternative memory and

processor structures and connections between these structures,

using a generic external data link instead of the vendor web

browser 10, buyer web browser 12, web site 4 and database 2

depicted at Fig. IB.

As shown in Fig. 15, the database 2 of Fig. IB may reside

on a processor 502 with access to a memory 504. The processor

may be one associated with a personal computer or workstation,

for example. The memory 504 may be dedicated to the personal

computer or workstation. However, the memory 504 may actually

be comprised of one or more distinct memory units which may

be, for example, random access memory (RAM) , EEPROM, floppy

disc drives or hard drives. In such an embodiment, these

separate memory units are simply linked to the processor via a

data bus or other known transmission link.

The memory 504 preferably receives data from an external

data link 506. The data may be routed to the memory via the

processor 502 or through some other data bus or other known

transmission link. The external data link 506 may be a

connection via the Internet, through e-mail or some other

alternate sources for data transfer. For example, the data transfer represented could be accomplished by automated

facsimile reception and downloading of data through optical

character recognition, or through voice recognition-to-text.

The data that is stored in the memory will typically include

the request for bid data used in the claimed process BIFB, the

received bids RBID, as well as the vendor job attributes

VATTR .

Thus, in this alternate embodiment of the present

invention, the bid data may be received in a variety of

different formats for the convenience of all system users.

System users are thus not limited to access through a web

interface. This facilitates a much simpler use of the system

because users may phone in the required information, send it

via e-mail, or even by facsimile. Once a solicitation for bid

information has been transmitted by the overall system

operator, bid data may be received through the various forms

of communications noted above.

The bid data is then transferred and stored in the memory

504. As with the previous embodiments, the processor then

identifies the appropriate bid satisfying all the necessary

requirements and which also has the lowest bid value. The

ultimate selection information may be then transmitted to each

of the bidders or may be maintained in secrecy. In yet a further advanced form of the system, a plurality

of jobs may be processed simultaneously. In this regard,

separate computer processors with separate dedicated memory

units may be associated with each of several distinct jobs.

Alternately, a single computer may receive bid data from a

plurality of sources that are then categorized or tagged in

the memory for the respective jobs to be bid on. The

processor will then be able to identify the lowest bid for a

particular project once the closing date and time has passed.

This is accomplished by examining stored bid data associated

with a particular project based on the categorization or

further information tag.

It will be recognized by those skilled in the art that

the embodiment described above is compatible with the

alternate communications devices previously described.

Specifically, other computer systems that are programmed to

send and receive data in other formats may also be linked with

the database servers to provide more flexibility for the

overall system. In that regard, computers that are dedicated

to received vendor bid information or other data to be used by

the system via facsimile, voice, or electronic mail may be

linked directly with the database servers in order to transfer

this information to the database servers automatically. Any number of computers could be connected in this manner to

enable the system to automatically and simultaneously receive

voice, facsimile, or electronic mail data and transfer this

information to the appropriate file locations on the database

servers. For example, in such a version of the system, the

vendor bid data could be received over the Internet or via any

of the over communication media described above. It is also

contemplated that yet additional forms of communication may be

used by the system in order to create yet greater flexibility

for the system.

Advantages Of The Invention

As can be readily determined by one of ordinary skill in

the art of procuring customized goods and services, numerous

advantages are obtained by employing the present invention.

First, the invention enables the buyer to manage a large

vendor base without costly administrative burdens so that the

buyer's purchasing personnel can focus on budget planning, job

preparation, internal customer service needs, production

quality, and contract compliance.

The invention accomplishes this goal, initially, by

quantifying both the buyer's procurement needs and the

vendors' attributes in a database system that matches objective product specifications with pre-determined vendor

quality levels and manufacturing, production, or provider

capabilities for each approved vendor.

The buyer sets the parameters for both vendor pool

selection and the bidding and award process so that vendor

quality and responsibility can be determined at the time each

buyer's vendor base is established. In this manner the system

eliminates time-consuming assessments of the quality or

capability of each bidder each time a individual job is

solicited. At the same time, the invention obviates the need

to make judgments about the responsiveness of the bids after

they have been submitted. Significantly, the invention is not

a posting system. Rather it is a procurement system in which

the buyer can create and manage a single pool of vendors who

are given specific production category and quality level

ratings that, together with other selection criteria,

automatically designate which solicitations each vendor in the

pool can receive and bid.

Moreover, the specification writing and bidding and award

processes are standardized so as to make the preparation and

dissemination of solicitations, the receipt of quotes or bids,

and the award of the job to the lowest responsive and

responsible bidder virtually automatic and without the need for additional procurement staff or the expenditure of related

out -of pocket administrative costs typically associated with

comparing or evaluating a multitude of vendor bids.

In addition, the process of monitoring production is

enhanced and simplified by the embodiment of the invention

that automatically creates a detailed set of production

milestones in reverse schedule format. These production

milestones then become the focal point for an ongoing dialogue

prompted by automatic system alerts about the job's progress

among the buyer's procurement personnel, the buyer's end-users

or other constituent elements, and each participating vendor,

using the system's network of web site portal communication

links .

Yet another embodiment of the invention provides a single

source accounting method for buyers dealing with a plurality

of vendors, while allocating fees associated with using the

system to each individual job, which further simplifies and

lowers the cost of the administrative process. This

embodiment receives an invoice data from the winning print

vendor upon completion of the job and generates, for the

buyer's approval, a corresponding invoice at the buyer's web

site portal workspace that adds a job transaction fee to the

payment amount requested by the vendor. Upon approval, the system can prepare the invoice data for direct transmission to

the buyer's accounting system for proper allocation of costs

within the buyer entity and the electronic transfer of funds

from the buyer based on the buyer-approved invoice into a

single escrow account that serves as the accounts payable

destination for all of the buyer's vendor payments. The

system can then allocate and distribute the deposited amount

by transmitting the job transaction fee to a system

administration account, and transmitting the remainder from

the escrow account to the winning vendor.

Second, the invention has many built-in features that

help ensure quality control and contract compliance. The

emphasis on quality control begins at the pre-qualification

stage when vendor pools are established, rather than at the

time of job award. This emphasis is underscored by the

vendor's knowledge that poor quality or untimely delivery may

result in the vendor being removed from the buyer's vendor

base and the inability to bid on that buyer's future jobs.

Quality control is further enhanced by the buyer's use of

the invention's specification-writing features to create

precise detailed production specifications that objectively

define the buyer's manufacturing and quality expectations.

The comprehensive, easy-to-use computerized specification writing tools associated with the invention, in effect, free

the buyer from dependency on the vendor's specialized product

knowledge. As a result, the buyer is now able to procure

based on objective specifications that reflect the buyer's

requirements rather than one particular vendor's existing

backlog, manufacturing, production, or provider preferences.

Similarly, the automatic post -award production

milestones, reverse scheduling, and job management

communication aspects of the invention enable the buyer's

procurement personnel to monitor the production process

efficiently at any time and from any computer station with

Internet access. This feature ensures that potential

manufacturing or delivery problems can be addressed early,

thereby enhancing quality control and contract compliance.

Third, the invention creates a unique type of enhanced

competitive bidding that virtually guarantees the submission

of numerous bids containing contribution-level pricing for

each and every job. By furnishing the buyer with easy,

efficient Internet-based tools to create specifications,

disseminate solicitations, and receive and evaluate bids from

some or all of a potentially large number of pre-qualified and

buyer-approved vendors, the invention makes it more cost

effective to solicit competitive bidding on all jobs, including the type of short-term, small-dollar jobs best-

suited to fill production holes and generate contribution

pricing.

Moreover, once approved for a buyer's base of pre-

qualified vendors, the invention enables the vendor to obtain

individual jobs without having to expend additional costs on

sales or marketing. These savings in sales commissions and

marketing costs can then be passed onto the buyer, while the

vendor is assured access to future bidding opportunities that

match the vendor's quantified quality level and/or

manufacturing, production, or provider capabilities. This

assured access not only furnishes the vendor with bidding

opportunities on the type of short-term work most likely to

generate "contribution" pricing, but also allows the vendor to

bid high, low, or not at all without fear of undermining the

buyer's goodwill or compromising the vendor's opportunities to

bid future jobs.

Knowing beforehand that the award will routinely go to

the lowest responsive and responsible bidder, each

participating vendor will also have an incentive to submit

their lowest bid upfront, rather than hold back their lowest

bid in the expectation that the buyer will "shop" the bid

around or otherwise engage in post -bid opening price negotiations. Similarly, having the ability to review a

complete set of detailed objective specifications before

bidding, the vendor no longer will need to build pricing

cushions into its bids in order offset unforeseen production

expenses. Instead, vendors can calculate their bids more

precisely, and hence more competitively, at the time of

submission.

Lastly, the invention offers an additional feature

whereby, at the sole discretion of the buyer, all received

bids can be released after award to all vendors who were

invited to respond. In this manner, the invention allows the

buyer to take advantage of an inherent "ratcheting down"

effect as each vendor learns how low the price range is likely

to be on similar jobs in the future. These factors taken

together virtually assure the buyer of receiving "contribution

pricing" from numerous responding vendors on each and every

job.

In sum, by harnessing Internet technology to handle all

five major steps or operations of an electronic commerce

system for procuring customized goods and services - viz., (1)

vendor base selection and management; (2) job estimating,

specification writing, review, and approval; (3) solicitation

distribution, bidding, and award; (4) job production management, quality control, and contract compliance; and (5)

invoicing, payment, and cost allocation -- the buyer can

create and manage large multiple vendor pools to obtain the

benefits of competitive bidding based on contribution pricing,

while enhancing administrative productivity, production

quality, and contract compliance. In this way, the invention

enables the buyer to overcome the limitations of prior art

systems and methods in escaping the "iron triangle" of

quality, timeliness, and cost.

It is to be understood that the present invention is

described above in reference to specific embodiments which are

for purposes of example only, and that the invention is not

limited to the specific arrangement, order of processing, or

hardware for carrying out the steps as described above or

shown in the drawings, but also comprises the various

modifications readily apparent to one skilled in the art upon

reading this specification, as defined by the broadest scope

of the appended claims .

Claims

Having described my invention, what I claim as new and to secure by letters patent is as follows:

1. A method for competitive bidding by vendors of customized goods or services, comprising steps of: receiving a vendor record from at least one of said vendors, said vendor record having a vendor identifier data representing a vendor, and a vendor capability data identifying a capability of said vendor to provide a customized goods or services; receiving a job data from said buyer, said job data having a buyer identifier data representing said buyer, and a job descriptor data representing a custom job for which said buyer wishes a price quote or bid; comparing said vendor records to said job data; identifying at least one of said vendor records as qualified for receiving an invitation for bid, based on said comparison; transmitting a solicitation to said at least one vendor; receiving a bid response data from at least one of said vendors to which said transmitting step transmitted said solicitation, said bid response data identifying the vendor it was received from and a bid price; identifying a candidate bid from said received bid data, based on comparative values of said bid prices; outputting to said buyer a vendor selection data identifying said bid response data and said candidate bid; receiving an approval data from said buyer, said data representing one of an approval of said vendor corresponding to said candidate bid and an approval of another of said vendors ; and transmitting an order to the vendor represented by said approval data.

2. A method according to claim 1, wherein said job data further includes a selection criteria data, said selection criteria specifying at least one of a vendor name, a vendor capability, a descriptor of an ownership characteristic of said vendor, a descriptor of a union status of said vendor, and a vendor geographical location, and wherein said comparison is performed in accordance with said selection criteria data.

3. A method according to claim 1 further comprising steps of: ranking said received bid response data according to said represented bid price; and publishing an information data to other vendors identifying said selected vendor and the rank order value of said received bid data.

4. A method according to claim 2 further comprising steps of: ranking said received bid response data according to said represented bid price; and publishing an information data to other vendors identifying said selected vendor and the rank order value of said received bid response data.

5. A method according to claim 3 further comprising steps of: ranking said received bid response data according to said represented bid price; and publishing an information data to other vendors identifying said selected vendor and the rank order value of said received bid response data.

6. A method according to claim 2, wherein said vendor capability data represents the identified vendor's capability to manufacture each of a plurality of different types of customized goods.

7. A method according to claim 1, further comprising steps of: inputting into said central data server a completion of job data; transmitting from said central data server to said buyer an invoice for payment of said bid price; inputting a payment from said buyer into an escrow account serving as a single-source accounts payable destination for the buyer's vendor payments; transferring a payment from said escrow account to an account of said vendor corresponding to the invoice payment data.

8. A method according to claim 7, further comprising steps of: adding the cost to the buyer of using the invention associated with each job as a job transaction fee to the vendor payment invoice prior to buyer approval of the invoice; allocating and distributing a data representing payment of said invoice by transmitting the job transaction fee data to a system administration account and transmitting a remainder vendor payment data to an account of said vendor.

9. A method according to claim 2, further comprising steps of: inputting into said central data server a completion of job data; transmitting from said central data server to said buyer an invoice for payment of said bid price; inputting a payment from said buyer into an escrow account serving as a single-source accounts payable destination for the buyer's vendor payments; transferring a payment from said escrow account to an account of said vendor corresponding to the invoice payment data.

10. A method according to claim 9, further comprising steps of: adding the cost to the buyer of using the invention associated with each job as a job transaction fee to the vendor payment invoice prior to buyer approval of the invoice; allocating and distributing a data representing payment of said invoice by transmitting the job transaction fee data to a system administration account and transmitting a remainder vendor payment data to an account of said vendor.

11. A method according to claim 3, further comprising steps of: inputting into said central data server a completion of job data; transmitting from said central data server to said buyer an invoice for payment of said bid price; inputting a payment from said buyer into an escrow account serving as a single-source accounts payable destination for the buyer's vendor payments; transferring a payment from said escrow account to an account of said vendor corresponding to the invoice payment data .

12. A method according to claim 11, further comprising steps of: adding the cost to the buyer of using the invention associated with each job as a job transaction fee to the vendor payment invoice prior to buyer approval of the invoice; allocating and distributing a data representing payment of said invoice by transmitting the job transaction fee data to a system administration account and transmitting a remainder vendor payment data to an account of said vendor.

13. A method according to claim 1, further comprising a step of: calculating a job milestone data based on said buyer's job data .

14. A method according to claim 2, further comprising a step of: calculating a job milestone data based on said buyer's job data.

15. A method according to claim 3, further comprising a step of: calculating a job milestone data based on said buyer's job data.

16. A method according to claim 13 further comprising steps of: generating a job progress verification request based on said job milestone data; and receiving a data representing a job progress corresponding to said job progress verification request.

17. A method according to claim 14 further comprising steps of: generating a job progress verification request based on said job milestone data; and receiving a data representing a job progress corresponding to said job progress verification request.

18. A method according to claim 15 further comprising steps of: generating a job progress verification request based on said job milestone data; and receiving a data representing a job progress corresponding to said job progress verification request.

19. A method according to claim 1 further comprising a step of creating a web site having areas for at least one of a group consisting of said buyer and said vendors to visit, and wherein step of receiving a vendor record comprises a step of said vendor visiting said web site and inputting said record using a web browser.

20. A method according to claim 1, wherein said job data includes a preferred vendor data identifying at least one preferred vendor, and wherein said step of transmitting a solicitation includes transmitting said solicitation to said at least one preferred vendor

21. A method according to claim 1 wherein said bid response data represents a proposed alternative specification for said custom job represented by said solicitation data and further comprising a step of: displaying said alternative specifications; receiving an alternative specification approval data; and identifying the vendor associated with the bid response data as qualified or not qualified to receive said invitation for bid, based on said alternative specification approval data .

22. A system for competitive bidding by vendors of customized goods and services, comprising:

A general purpose computer having a data storage; means for inputting a plurality of vendor records into said data storage, each of said vendor records having a vendor identifier data identifying a vendor and a vendor capability data representing a capabilities of said vendor, means for inputting a job data into said data storage, said job data having a buyer identifier data identifying a buyer, a job description data describing a custom job, and a selection criteria data; means for generating a vendor pool data, said vendor pool data representing vendor records qualified to bid on said custom job, each vendor record represented by the vendor pool data being qualified based on a match of at least one of a group consisting of said buyer identifier data, said job description data, and said selection criteria data to at least one of a group consisting of said vendor qualification data and said vendor identifier data; means for transmitting a solicitation to the vendors represented by vendor records in said vendor pool ,- means for inputting into said general purpose computer a plurality of bid data, each being from a vendor to which said solicitation was transmitted, each of said bid data representing a bid price; means for identifying a bid data from said received bid data having the lowest represented bid price; means for outputting to said buyer a -selected vendor data representing the identity of the vendor corresponding to the lowest bid data identified by said identifying means; means for receiving an approval data from said buyer, the approval data indicating an approval of one of said vendor represented by said selected vendor data or another of said vendors means for transmitting an order to the vendor represented by said received approval data.

23. A system according to claim 22, wherein said means for receiving a plurality of vendor records includes a web host, and a web browser associated with at least one of said buyer and said vendors .

24. A method for competitive bidding by vendors of customized goods or services, comprising steps of: receiving a job data from said buyer, said job data having a buyer identifier data representing said buyer, and a job descriptor data representing a custom job for which said buyer wishes a price quote or bid; distributing to a plurality of vendors, by electronic publishing, a job advertising data representing said custom job; receiving a bid response data from at least one of said plurality of vendors, said bid response data identifying the vendor it was received from, a bid price, and an alternative specification data representing a proposed deviation from said job descriptor data; identifying a selected bid from said received bid response data, based on comparative values of said bid price and said alternative specification data; transmitting an order to the vendor represented by said selected bid; generating a job milestone data based on said job descriptor data; and receiving job progress data from said vendor represented by said selected bid.