CA2352761A1 - A system and method for competitive pricing and procurement of customized goods and services - Google Patents

Abstract

An apparatus and method for selecting a lowest bidding vendor from a plurali ty of vendors 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 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 (14) of vendors qualified to bid on the job. Each vendor in the vendor selection pool (14) receives a vendor's invitation-for-bid (16). Upon bid approval by buyer, an order is issued to the selected vendor.

Description

WO 00133223 PCTlUS99/28187,. _--A System and Method for Competitive Pricing arsd Procurement of Customized Goods and Services Fi.e=d Of The Irmentio:~
The prese::t inve~~ion generally relates to an apparatus and methcd ;cY creatirig~ a database represen~ir_g pools of vendors of ct==omized goods and services for one or more subscribing b~,:yars, and for seiectirg t::e 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, liii) extracting vendor qualification criteria data from said solicitation data, (iv) transmitting invitations to bid or_ 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 WO 00/33223 PCTIUS99/28187 __ -other types of digitally mastered information product goods (e.g. CDs and DVDs) and sex-vices, differ from ron-eustom manufactured goods or services in that such goods arci services are gene=ally not pre-stock:.d as "off-th8-shelf" items but, instead, must be specifically manufactured or proviced to meet tr~e buyer's particular requirements. Consea::~ntly, customized goods and ~eavices cannot simple be purchased "off-the-shelf" a~
fixed prices appearinc on standard price lists. Ir_stead, their prices are estab?ished when. the exact goods or services are actually specified, either by single or multiple order(s), inv:.tation-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 requires to perform the job.
The general procecure used i:n the prior art of procurement of customized goods a:nd 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 j~he term "vendor", unless further qualified or clear:Ly 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 WU bb133223 PCTIUS99/281$7 entity being qualified meets any criteria or preference.
Similarly, for purposes of this description, the terms '"solicitation" or "solicitations" shall mean, individually o. col lective7.y, an ~~rder, IFB, :~FQ, .or a: P, while the ter«<s "auote" or "bid" shall be use:
interchar~geabl:r a::c mean any type of pri cing er other response from .a v'ndor to an erde:r, IFH, RFQ, or R= P.
After receiving t:~e solicitation; thp vendor reviews the buyer's product mG~ufacturing and delivery specifications and req=.:irements tlZat are stated therein, including but raat limited to physical specifications, characteristics of style, quantities, moue of shipcrent, 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 provid~.ng the requested goods or services, the vendor provides an estimated price quote or bid to the buyer. Generally, t:he 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 relation_~hip is preferred if that preferred vendor's quote or f>id~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 WO 00!33223 PCTNS99/28l$7 art, however, buyers cf customized goads or services confront the so-called "iron triangle" of quality, timeliness, and cost. uyers want a product or serv'_ce that is good, fast, and cheap, but what they discover is that traditional proc::=ements methods will, at best, only achieve two of these t::ree goals on any given job. _'.zs, a buyer might demand G::d receive top quali ty on a "r:=h"
order, but only at a ~_gh cost. Conversely, negctia4.=~c a lower price may achieve cost savings, but also compromise quality and timeliness.
This problem is heightened by great elasticity ir~
the so-called "market" price of many customized goods or services, which can va=y 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 o~ 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 (S) 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 WO 00!33223 PCTlUS99l28.187 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 tire, sucr. vendors ~:9.at be ready to service t'r_eir regular customers on s:~.ort notice, which means p? anning for downtime. in the production schedule to ensure that their machinery is Gvailable for "rush" orders. Because of t:e limitations of traditional procur~e~zent methods, vendors are often left not only with unscheduled holes in t:~eir production schedules, but also unable to fill downtime purposefully set aside for last minute "rush" orders from regular custo~rers. Managing customer job orders in a way that minimizes these "roles" in the production schedTale 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 "contribut:e" 100° to the vendor's WO 00133223 PCT/US9g/2g187 bottom line in comparison to the cost of letting its labor and machinery re:~ain idle. In current printing markets, for example, "contribution" pricing or. a reoular basis is found in fede=~.1 and state government procurements of custo«:;zed print goods .
Contribution pricing occurs in the pubic sector because federal and ~s"=a agencies are often, required by law to make bid opport~:nities available to large nu~wers of vendors in order tc obtain "fu:Ll and open competition." Where g;,vernment a<~encies are further required to award contacts to the lowest responsive ar~d responsible bidder, procurements of customized goods typically result in poop quality <:ontrol and relatively high administrative costs that mu:at 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 o~
reliable vendors with whom the buyer has previously done business.
There is a significant cost problem, however, associated with limiting the vender pool to a small number of suppliers. Lacking tre discipline of a more competitive market, ve.~.dors who know that they are bidding against limited competitic>n will offer and charge higher prices. Prior art methods attempt to address this problem of non-competitive przcing~ in one of two ways:

(1) longer tern: contrac;.s with preferred vendors ir.
established commercial relationships that lump procurements together c-.er an extended contract period ir~
the hope o~ er_?:ancing t a buyer';s purchasir:g power and thereby obtaining controlled term pric~rg; and t2) "best buy" or "best value" procurement practices trLat award jobs based on factors c~her than price and which a;°
largely creative user c~ quality control driver. Such alternative prior art r.:ethods are: now being adopted increasingly in the public sectoz~ due precisely tc quality issues arising from "full. and open competition."
In both public and private ~>ector 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 "contributionp pricing without inCUrring prohibitive administrative costs or sacrificing quality or timeliness. There are several key reasons for this f ai lure .
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 WO 00133223 PCTIUS99128.L87 can be received. This is well.-known in the general business world. In tl:e actual business environment, however, identifying ~sch a large vendor pool is generally not practicG~. The main reason is that gathering and maintai::_ng information about a large number of current and potential vendors is time corsumia and expensive. Few cc~panies have the time, money, or inclination to mainta~:: a large, up-to-date database on such potential vendors, particularly when soliciting dozens of quotes or b~cs 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 se=vices invo:Lve 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.the:ir bidding, the buyer is often reluctant to do so becau:~e 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 duality and dependability of goods and services output by each vendor WO 00/33223 PCT/US99l281$7 _.
in the vendor pool. ~':~is is difficult not due only to the volume and nature of the information required, but also to the fact that the buyer mmst generally obtain such informa~ion from .ts own dealings with the vendor..
Tn such circu~,~stances, the reliability, price history, and quality o~ a vendc~'s work .for other buyers may not be obtainable. As a result, buyers are reluctant to seek, goods or sere=ces frog: new vendors because negative information or. the_r 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 res5onsibility for a wide range of purchases. As a result, the purchasing official is ill-equipped to manage large numbers of customized procurements efficiently and withcaut 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 expe:~sive (and more profitable for the vendor) design, engineering, or production prccess.
Third, even if the buyer is urilling to make the financial investment necessary to hire procurement personnel with the administrative experience, staffing WO 00/33223 PCT/US99/281-87 _._ resources, and specialized product knowledge to manage a large pool of vendor aid monitor each job closely for quality control and con~ract compliance, the buyer has ro guarantee that vendors ~~rill offer contribution pricing.
The reason is that even vendors who would gain, in an immediate sense, fron contribution pricing to fill a production hole a=a fr~;izently 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 ate the vendor's production plant when the contract must be performed), the regular customer would expect to pay the same low prices fore all future jobs from that same vendor, even when the vendor Lacks idle producf:ion 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 tc> 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 far a system WO 00133223 PCT/US99/28~87 ._ _.
and method of competi~ive pricing for custom goods and services that: (1) ide:~tifies and manages a vendor poo?
large enough to obtai:: the benefits of enhanced pri~ir~
competition, without ::.;posing hi~~h administra:.ive ccs~s;
(2) enables the buyer ~o procure from a greater nucr..ber of vendors without caus~::a a Ions of quality cor_trol o.
contract compli.ar:ce; aid (3) encourages vendors to offer contribution-level pricing on a consistent basis, w'._~_.il~
identifying vendors w'lling to oi:fer contribution pric~na on any given job.
Sumr~~.a~y Of The Invention It is therefore G:~ 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 arid 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 qu<~ntified buyer's WO 00!33223 PCT/US991281-$7 attributes to each qua:.tified sei: of vendor's attributes corresponding to each of the plurality of vendors, the comparison being in accordance w»th a buyer defined selection cri teria a~~ generatincr, as G result of t're comparison, a data se~ representing a vendor selection goal for the particular buyer. 7:n addition, the exar;,p'._e er;~.bodiment corsprises ~;.eans and method s;.eps for receiv_ng a data representing a ;~uyer's invitation for bid to manufacture, produce, and/or provide at least one manufactured item or customized service and for submitting a correspc.~.ding data to each of the vendor represented by the data in the vendor selection pool.
The described example ~:nbodiment 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, ~~h~ describ.ed example embodiment includes means and method steps for receiving an approval data tram the buyer and, in response to receipt, for generating and transrnitting an order to the selected vendor for the purchase of at least one manufactured item or c;atomized service at the bid price, and for transmitting o. otherwise releasing a da4a to all vendors in the selection pool, informing each of to identity o~ the se? ecte3 vendor wand the rank order ~,r~? a.a of the bids submitted by all other selection pool vendors.
A.~urther describ~3 embodiment of the invention implements the receptic:~ of buyer: attribute data and vendor attribu~e data cv a web s»te accessible throua the Internet. According to this embodiment, a web s~.te includes a graphical user interf~~ce 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 ec;;oodiment 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.
t3 A still further erwodiment of the invention automatically generates a set of project milestone data, in reverse scheculing format; for use in monitoring to winning vendor's progr,css on the buyer's requested manufactured item or cz~~omized service.
A still further emr.odiment of the invention has means and method steps _-'or receiving an invoice date «or the winning vendor upon. completion of the job, and generating a corresponciag invoice for the buyer's approval. In this embociment, upon invoice approval, the system can prepare the invoice data for direct transmission to the buyer's accownting system for (i) the proper allocation of co=ts associated with the job within the buyer entity and (i'_) 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 ve-dor. Thi:y embodiment provides a single source accounting feature i:or 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 s:.milar fee for using the invention to each job transaction.. For purposes of this description, such fee s:~al1 be referred to as a "job transaction fee." In t~:is embodiment, the system receives an invoice data from the winning vendor upon WO 00/33223 PCT/US991281.87 completion of the job, and gener<~tes 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 associate>_d with the individuGl job, Upon invoice approval and t:he transfer of funds indicated on the buyer-approved. invoice into an escrow account, the system ca.-_ t:hen allocatE and distribute suc:~
funds by transmits ing the job transaction fee included o::
the buyer-approved invoice to a :system administration:
account and transmitting the remainder of such fur_ds 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 Iike numbers x-efer to like parts and further wherein:
Figs.~lA and 1B show a typical communications system and arrangement of an example embodiment of the invention, .and a flow chart of the system operation;
Figs. 1C and 1D .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. lA and 1H;

i WO OOI33223 PCT/US99I28~.87 Fig. 2H shows a :-ore detailed example .embodi:ne.~.t of an arrangement of the system's web servers and database servers shown general'.r on Fig: 2A at Block 621.
Figs . 3 -I~ show screen di:aplays used ir. cc~__~..ec t i on with a specific ec~,odiment of a print procure:~ent applica4ion of the presant invention; and Fig. 15 snows a genei:al embodime::t o. the communications system c= Fig. lA.
Detailed Descri~~;.ion 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 o the attached figures. It is to be understood, though, that the ~~resent invention is not limited to the example embodiments and arrangements described herein, but that it al~~o comprises any modifications or equivalents within the scope of the claims.
Figs. lA and 1B set forth a first example embodiment of the present invention. Referring to Fig.
lA, 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 buyers) 6 and the plurality of vendors 8 each access the web site 4 through WO OOI33223 PCTIUS99l2$.1.87 respective Internet browsers such as, for example, Netscape or Internet Explorer. An example of such an arrangement is shown a~ Fig.2A. It should be noted ~a~
the actual physical location of ~:he computer(s) or. whic.
the web site 4 resides, and of the computers) (not sho~~rn) which perform ~~ operations described below on tre database 2 conten~s, and of t;he buyers' computers a::d 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 c~eb 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 61:3 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 WO 00/33223 PCTIUS99/281.~7 communication. network 614. This high-volume bid processing system shown at 621 i~~ similarly conrecte3 to the common communication network 614. This high-volu;ae bid processi~ g system . thus has access to comrnunicatzo::
with a large number o. system users. This high-volur..:e bid processing system ~.s illustrated in greater deta~.'.
below with rw'ererce to Fig. 2B.
As shown in Fig. 23,~an example embodiment of the high-volume bid prcces~ing system is shown ge::4rally at 710. In this example embodiment, one or more robust, high-capacity telecomr~~:nications lines 712, which fen example may be T1 lines, provide access to the communication network 614, which .as noted in the preferred embodiment is the Internet. The T1 lines are directly connected to one or more web server units ?14.
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 va~rzous web pages used with the system to the various sy:atem users that are connected through the Internet. '.Che interconnection between the T1 lines and web servers is a conventional connection that may be scaled for increased volume.
Specifically, additional T1 lines or web ser-~er units may be added as necessary to satisfy 3.ncreases in user demand.
s8 WO 00133223 PCT/US99/28~87 The web server units are connected to a pair o database servers 716 t::at are mirrored. The database servers 716 handle tra-sfer and storage of all vendor a=.d bid data used by the s,rste~i as noted above. The aataoas=
servers 716 are mirrored as generally known in tt'.e a=t in order to prevent degraation of ;system performance s:au'd one of the database severs cease to function properly.
It will be appreciateG that this particular embodi:re::~ of the system provides all of the uaers with ready access to information and a very simple and straightforward means for exchanging data. ~xtra.database servers may also be added as needed in order to satisfy user demand.
Referring back to Fig. lA, block 10 represents the entry by the vendors 8 of a.set c>f vendors attributes VATTR, each VATTR representing trEe name, geographical location and the manufacturing, ~~roduction, 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 irz any of the standard programming languages known in the art, e.g., Delphi, MS Visual Basi~~, or C++, Java, all running on a conventional general purpose computer hardware, such as a PC compatible Eisa/Isa FiAL (485 C
Stepping) ecuipmert or the like. An example of a specific embodiment, showing the graphical use:-irterfacp, is described later in this specification in reference to rigs. 3-~4.
It should be r.ote3 that the ent~rirg c~ the v~r_~ors' attributes VATTR may a'_so be perk:ormed via a ma::ual entry of the information into the syste=m database 2 and may also occur after a vendor has bee=n accepted into a buyer's vendor base and begun binding on jobs, for example, to reflect oranges in the vendor's production capabilities or fob preferences.
Referring to Fig. lA at block.l2, 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 BZFBD are quantified and entered by the buyer 6 in accordance with standard graphical user interface (GUI) prompts appearing on the particular WO 00!33223 PCT/US99/28187 display of the web site 4, an example of which is described in reference Lo Figs. ?~-1'4 below. The invitation-for-bid BIFBJ defines the customized goods of services according to cuantified values of standardizes attributes so that eac'.~. vendor 8 will understand what exact manufactures ite-: or customized service is bei~g placed out for bids b1 =he buyer 6. This arrangem~ert ensures that the bids a=a comparable and that mistakes as to the requirements of she buyer are minimized.
Fig. lA, block 14 illustrates the step of retrievi~~g all of the vendor attri~ute sets VATTR from the database 2 and comparing each to the job attributes BATTR derived from the invitation-fc~-bid data BIFBD based on the standard selection criteria SC (s~zch as product category and quality level) previously entered by the buyer & 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 <~ny 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 WO 00/33223 PCTIUS99/281$7 the job. Based on the results of the block lc comparison a vendor selection pool VPOOL is created, and the formatted vendors' invitation-fo:r-bid VIFB is the:
transmitted at block 15, via web site portal access, e-mail, or equivalent me:.ns, to each of the vendors represented by the vendor pool V:POOL.
. Referring to F_.ig. IB, at block 18 ali o. the ~~e~do=s 8 in the vendor selection pool Vl?OOL of Fig. iA ti:at received the ir:vitatio::-for-bid VIFB can s~::bmi~, throug~:
the web site 4, a responding bid RBID(i), w_zere '°i" is an index or name value identifying t:he submitting vendor, having the ith vendor's fixed price quote or bid to manufacture, produce, and/or proz~zde a manufactured item or customized service in accordance with the specifications designated by the buyer in its invitation-for-bid VIFe 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 t:he buyer 6 in rank order according to the bid price.

Referring again to Fig. 1B, at blocks 22 and 2~
after the time of bid closing, th,e lowest price bid 's identified as a system default selection and a WIV3ID
information is transrr,'_tted or otherwise provided to ~re buyer 6 which: (i) id;~tifies the lowest bidding ver_or, and (ii) solicits the buyer for approval to accept bid RBID of the lowest biwc;ng vendor. The buyer 6 the::
approves the lowest bdding vendor or overrides the default selection a:~c approves another responding bidder (for example, based on a higher bid associated.with w alternative job sped°ications), in either case by visiting the web site 4 and inputiting 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 far the purchase of the customized goods or servicea specified by the invitation-for-bid VIFB (includinc; 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 rE:ceived, 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 ox~ reissued (in which event, the process reverts to block 6). 2t 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 o;r a phone discussion between the buyer 6 and the winning vendor 8, mal be used or required before actual award of the bid, cr before the commencing of work on tre job. For purposes cf this descrzptio:~, tho~:gz, receipt of APPROVAL is suff~.cient.
Ir_ the event that the separate formality is re~tzred, this would be carried our before moving to the block 3C
described below.
After the ORDER is issued th,e system goes to block 3O 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 B. 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 VP00L who did not submit bids in,response to the invitation-for--bid VIFB. Also after the ORDER is trans;~itted at block 26, either concurrent with ar before or after the BIDINFO is transmitted, the system goes to block 32 and generates a set of job milestones MSTONES, wh.:~ch 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 t:he particular items) to be manufactured or customized services) to be provided. The mileste:es MSTONES are then entered into a database (not shown) t:.at may be associated with a general purpose progra.-..mable compuCer (rot sho~N-z) of t~e buyer 6 which generates screen alerts, at block 3~, o~
the winning vendor's web site portal workspace (not shown) at time points ~pecifi.ed by the milestones MSTONES. The winning -:'ndor 8 must then. confirm on its web site portal workspace that th.e work requirements associated with each m_lestone MSTONE have beer. completed as they have become dug. If the comp3etion 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 frog the winning vendor 8 to the buyer 6 explaining why the milestone MS~CONE was not completed when due, or (ii) if no such message was transmitted, to contact the winning vendor 8 direcaly by telephone, e-mail, or equivalent mea:~s 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, WO 00/33223 PCT/US99128187 ____ and then to ship the manufactured item or provide the customized service as instructed by buyer 6.
Referring to Fig. lC, block 38, upon confirmation by the vendor 8 that the. job has been completed, t'~~e syste:~
generates an automatic vendor pa;rment invoice that contains any approved contract modifications a~ the vendor's 8 web site portal workspace. Alternatively, the vendor payment invoice could be transmitted to~the vendor 8 by other forms of co;nmunicatiorx such as e-mail, facsimile, or eauivalent 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 c>n 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 fe:e for using the system is added to the vendor payment invoice, and the vendor 8 receives payment directly from th,e 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. 1C 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 WO 00/33223 PCT/US99/28~.$7 vendor 8 from the escrow account., at block 50, by electronic funds trar-..~fer (EFT) or physical means.
A further alternate embodiment for invoice payment is set forth at Fig. :.D. Referring to Fig. 1D, at blocks 52 and 54, a vendor payment invo~'.ce is generated upon job completion and approved by the vendor 6, in the same.
rrianner described above with respect to Fig. 1C, at blocks 38 and 40. Prior to '_nvoice approval by the buyer 6, at block 56, however, a fob transact:ion fee is added to the invoice as payment fog the cost c>f using the system allocated for each job. Payment of the buyer-approved invoice, at block 58, is then maf.e to the system's single source escrow account, at block 60, in the same manner described above with =espect to Fig. 1C, at blocks 44 and 48. Upon receipt of funds into the escrow account, the system allocates and d~'_stributes 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 Fzg. IC, at block 50.
The invention and its operation are described above without limitation to specific ap~~lication. Example applications include customized painted goods, digitally mastered CDs or DVDs, machine too:Ls, furniture, engraved WO 00/33223 PCT/US99/281.87 wares, and insurance, in which j«bs are awarded on a competitive or "bid" basis.
Referring to Figs. 3-14, an example of the prese::t invention applied to mint procurement will be descr_ec.
It will be readily ur_cerstood to ore of o,:dir_ar-y ski=~ i::
the art, however, that the print procure~~ent example is only an example applica~ion of the system and method of tie present invention, and that the present inve:n tie:: ca:~
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. lA and 1B, a set from each of a plurality of print vendors 8, have already been entered into th~~ database 2, 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 5 enters the: buyer attributes BATTR

WO 00/33223 PCT/US99128~7 describing the partic~:' ar print ,job for whic'r~ bids wil=
be requested. Alterr~~=ively, the_ print v~::dors 8 ca:~_ transmit their respect.ve vendor attributes VATTR to t::p print buyer 6 by e-ma.. or equiv<~lent means for er~tr_r by the print buyers & or gay authorized thirc party.
Referrinc to Fins. lA, 1B, and Fig. 2A, the pri~t buyer 6 begins its interaction with the system by logging onto the system web s;te 4 using a Netscape or equivalent browses. The web site 4 and the buyer's 5 brcwser 12 are also referenced hereir_ as the buyer's "quantification means". Referring to _ig: IA, 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 postal 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 s;~stem supporting the particular example of the web site 4 represented by Figs. 3-14, is Windows ~~1T 4.0, using MS Internet Information Server 4.0, Oracle Dai.abase 7.3.4.0, and an WO 00133223 PCTNS99/28.~87 ._ information ser-~er using standard '°.dll" files created in any of the standard programming :languages known in the art, e.g., Delphi, MS V_sual Basic, C+r, or Java, all running on a conventionwl general purpose computer hardware, such as, a PC compatible Eisa/Isa H.~L (486 C
Stepping) equipment or she Iike.
Referring to Fig. v, it is screen that the field at the top of the screen is the master ID and description area 90. Within this __='ield, print buyer 6 may give a print job an identifies or name 5~2. A purchasing instructions field I00 is shown cirranged 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 120 whereupon a list of possible options lI5 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. lA and 1B above. Referring to Fig. S, paint buyer 6 selects from the list of options I15 on t:he basis of the particular set of needs and requirements associated with the print job to be quantified. tahen print buyer 6 selects an option 7.I5 that best m<~tches its printing WO OOJ33223 PCTIUS99J28.187 needs, the "add item" button 120 is clicked, via the pointing device.
Clicking the add item button 120, mo~,res the buys: 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 tre "aid item" button 120 ar_d selects an option that does not match its needs, the print buyer 6 may scroll to the bottom of the paae 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 cam 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. T'he 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 sets) of film" and "film or plate ready discs)".

WO 00!33223 PCT/US99/Z8187 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 & to enter information about tyres of proof:a 142 required and inspection requirements 144.
After completion of the exarnple screen of Fig. 7, the buyer 6 is presented with the: example screen of Fia.
8. Near the top of the Fig. 8 :screen example is a "production contact" area 14S 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 andL 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 Fi.g. 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.

WO 00/33223 PCT/US99I281.87 For this print procurement Example, the buyer 6, after completing the : ig. 9 screen, is presented wit'.~. the fields for entering tr= ink specification data, by a screen sucr. as thaw s~cwn at Fig. 10. The Fig. 10 example provides the p=int buyer 6 with a field 1~9 for the selection of in k fcr front ar.~d back of the fla4 sheet, with a set of "radio buttons" for entering "Coverage" as "Lig:Zt", "Medium" or "heavy", and witr. a set of "yes" o. "ro" b::ttons specifying additional requirements for the r:aterials anal the process of manufacture.
Next, at Fig. 11, the print buyer & is guided through a series of og~~ons 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 specif;Ying 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. :Cf the buyer 6 clicks on the example highlighted at Fig. 1:?, w~.ich is "Saddle Stitch", he or she is presented w~.th another "pop-up"
screen such as that'shown at Fig. 13. Fig. 14 shows another finishing set of finishing options 195, defining WO 00/33223 PCT/US99/28~.8'7 the packaging require:rents for the print job. Other attributes associated P~rith a particular print job inclu3e binding, folding, perforations, scoring, punc::ing, numbering, bar coding, and collation.
Referring to Figs. lA and 1:B, after the buyer o' enters tre data into tie example screens of Figs. 3-~4 describing the job, the buyer 6 clicks or~ a "submit invitation-for-bid" bt~:=on on then screen (not shown) Gnd, in response, the syste:,~ generates the buyer.'s invitat~io~-for-bid data BIFBD, ar:d the system commences the.
processing indicated at block 12. More specifically, the system receives the invitation-far-bid data HIFBD, and extracts the buyer's a~tributes H~ATTR from the information entered by the screens of Figs. 3-14, and then compares those attributes to each of the pluralit~r 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 Jolt 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 vendor:.' invitation-for-bid V~FB is submitted to each print vendor therein. The WO 00/33223 PCTlUS99I28~-87 vendors' invitation-fcr-bid VIFB provides a specification for the printed item (e. g., paper forms, snap sets, envelopes, labels, roI_ed labels, magazines/boo:tlets, etc. ) presented in a f:,=m that i;a derived frog, tre quantified set of prim buyer's :job attributes 3r.TTR sc that each print vendor ~ will understand the exact ite~:, or service is being placed out for bids by the prim buyer 6. This arranger:e:.t ensures that the bids are comparable and that mis_akes as t:o the re,~aireme~ts of print buyer 6 are minirized.
As described above with reference to Fig. 1B and the general embodiment of this invention, all of the print vendors 8 in the vendor selection pool VPOOL of Fig. IA , that received the invitation-for-bid VIFB can submit, through the web site 4, a responf~.ing bid RBID(i) having the its vendor's price quote or b~~:d 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 preferably presented tc the print buyer 6 in rank order according to the bid pr~.ce. 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 prinjt buyer 6 which: (i) WO 00133223 PCT/US99I28~87 identifies the lowest bidding vendor, and (ii) solicits the print buyer for approval to accept the bid RBID of the lowest bidding ver..dor. The print buyer 6 then approves the lowest bidding vendor or o;rerrides the default selection and approves another responding bidder, in either case by visiting the we:b site ~ and inputting an APPROVAL data throu~z its web site portal workspace.
Upon receipt of the AP.:~OVAL fronn the prin;. buyer 6 an ORDER is issued at bloc'.~t 26 to tree 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 th.e 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 w::o did not submit bids: Then, at block 32 a set of job milestones hHSTONES are generated and transmitted to the print buyer 6, ir~ reverse scheduling format, based on the job a~.tributes BATTR
associated with the particular pr:i.nt items) to be as WO 00/33223 PCT/US99/281.87 provided. As each milestone MST~NE becomes due (e. a.
pick-up of buyer-furni~aed material, delivery of p=ca~~, required press sheet ir_spections, partial. and cor~o'-ete shipments of final procuct), an ;alert is generates, a~
block 34, on the print vendor's web site portal wc=cspace (not shown) . she print vendor 8 must ther. co ~ir,:~ c..~. .cs web site portal workspace that each task associatew w_=~Z
the alerted milestone r:STONE has been complet4d. If t:=;
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 o' web site portal workspace (not shown) that no confirmation of the completion of the milestone MSiOl~~
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 MSTOI~iE was not completed when due, or (ii) if no such mess<~ge was transmitted, to contact the print vendor 8 directAy by telephone, e-mail, or equivalent means to determine ~:f 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 items) 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, a:nd the system generates WO 00!33223 PCT/US99i28t87 an automatic invoice that contains any approved contract modifications at the ve:.dor's we:b site portal workspace.
Ths winning vendor 8 c~~firrns the invoice with a digital signature, and the buyer is then alerted on its web site portal workspace that to invoice is ready for review, approval, and payment ___ accordance with the terms of the invitation-for-bid VIF~. For this example embodiment, it is assumed that the bu~:er has chose~ to pay a job transaction fee for use of the system with single source accounting for all of its solicik:ed printed jobs.
Referring to Fig. 1D, t-e job transaction fee is added to the vendor payment invoke shown on the buyer's 6 web site portal workspace prior to the buyer's 6 approval, at block 56. Payment of tie buyer-approved invoice, at block 58, is then made to the system's single source escrow account, at bloc:c 60, by electronic fur_ds transfer (EFT) or physical means. Upon receipt of funds into the escrow account, the sys~em allocates and distributes, again by electronic funds transfer (EFT) or physieal 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.
Thase skilled in t.'_'_~.e art will appreciate that the specific embodiments set forth above are for purposes of example only and the in-.rention may be practiced with a wide range of alternate structure:a. For example, referring to Fig. 15, the present invention contemplates 3$

WO 00/33223 PCT/US99/28~7 alternative memory and processor structures and connections between these structures, using a Generic external data link i:atead of the vendor web browses 10, buyer web browses 12, :vsb site 4 and database 2 depicted at Fig. IB.
As shcwn ir. Fig. 5, the database 2 of Fic. I5 may reside on a processor 502 with access to a memo~f 50~.
The processor may be e:~ associated with a persoral computer or workstation, for example. The memory 50c may be dedicated to the personal comp»ter or workstation.
However, the memory 5~; may actua:Lly be comprised of one or more distinct memory units which may be, for example, random access memory (=c,.~M) , EEPROP~i, floppy disc drives or hard drives. Tn such an embodiment, these separate memory units are simply linked to the processor via a data bus or other known transmiss:Lon link.
The memory 50Q pry=erably rer_eives 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 t:he 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 optica.I character recognition, or through voice recognition-to-text. The data that is stored in the memory will typically include WO OOI33223 PCT/US99128~87 the request for bid data used ire the claimed process HIFB, the received bids RBID, as well as the vendor job attributes VATTR.
Thus, in this alternate embodiment of the preser~~
invention, the bid da~a may be received in a variety o' different formats for the convenience of all system users. System users Gre thus no~: limited to access through a web interface. This facilitates a much si~z~Ie=
use of the system because users rnay phone in the reauired information, send it via e-mail, or even by facsimile.
Once a solicitation for bid infox-mation has bean 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 S04. 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 fo}:m 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. T:he processor will then be able to identify the lowest bid :for a particular project once the closing date ar~d time h<~s passed. T~is i s accomplished by examining stored bid data associated with a particular project based on th:~ categorization or further information tac.
It will be recognized by the>se skilled in the art that tr~e embodiment described above is compatible with the altercate communica~ions devices previously described. Specifical?y, 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~uaed by the system via facsimile, voice, or electronic mail may be linked directly with the database server; 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 vendo:r bid data could be received over the Internet or via any of the over communication media described abovea. It is also 4'!

WO 00/33223 PCT/US991281$7 _ contemplated that yet additional forms of communication may be used by the system in order to create yet greater flexibility for the s~rstem.
Advantages Of The Invention As can be readil-: determined by one oL ordinary skill in the art of procuring customized goods and services, numerous ad-:ntages are obtained by employing the present invertior._. First, the invention enables the buyer to manage a large vendor base witr~out costly administrative burdens so that th~~ buyer's purchasing personnel can focus o:: budget planning, job preparation, internal customer servyce needs, 3?roduction 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 caith 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 awai:d 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 WO 00/33223 PCT/US99/28~87 time, the invention ob-riates the need to make judgxe :~s about the responsiveness of the bids after they have beer.
submitted. Significan:ly, the invention is not a cost:~a system. Rather it is a procurement system in ~~rhic:_ t.ze buyer can create and c:Gnage a single pcol of ve:.dors w.o are given specific procuction category and qua?ity le-.:'=
ratings that, together :pith other selection criteri~
.. ,.
automatically d2sianate which so3icitafions each vencor in the pool can receive and bid.
Moreover, the specification writing and biddir_a aid award processes are standardized so as to make the preparation and disse:~~~nation of solicitations, the receipt of quotes or bds, and the award of the job to the lowest responsive and responsible bidder virtually automatic and without the need fo:r additional procurement staff or the expenditure of relate=_d out-of pocket adritinistrative 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 emt~odiment of the invention that automatically creates a detailed set of production milestones in reverse ~;chedule 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 WO 04133223 PCTlUS99/28~7 ._.
system° s network of web site portal communication 1 z..~.:a.
Yet another embodiment of the invention .provides a single source accounting method ~:or buyers dealing tN;tr a plurality of vendors, while allocating fees associa~ec with using the system to each individual job, which further simplifies an:: lowers the: cost of the administrative process. This embodiment receives a invoice data frorz the winning print vendor upon completion of the jab 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 far proper allocation of costs within the bu~rer 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 dee~tination 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 guality control and contract compliance.
The emphasis on quality control begins at the pre-qualification stage when vendor pools are established, WO 00/33223 PCTIUS99128~-87 .-_.
rather than at the time of job avrard. This emphasis is underscored by the vendor's knowledge that poor quality or untimely delivery maI result in the vendor being removed from the buyer's vendor x>ase and thQ ir~abil.~y ~o bid on that buyer's fut=are jobs.
Quality co:arol is further enhanced by tia buyer's use of the invention's specification-writing features to create precise detailed production specifications t?:a~
objectively define tre buyer°s manufacturing and quality expectations. The comprehensive, easy-to-use computerized specification writing tools associated ~Ni.th 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 part:i.cular 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 t:he production process efficiently at any time and from any cor~,puter station.
with Internet access. This feature ensures that potential. manufacturing or delivery problems can be addressed early, thereby enhancing quality control and contract compliance.

WO 00/33223 PCT/US99/28-1-87 ._ Third, the invention creates a unique type of enhanced competitive bidding that. virtually guararte~s the submission of : ume=ous bids containing contrib~.~tion level pricing for each: and every job. By furnish ing ~~:e buyer with easy, e~fic'ent Internet-based tools to create specifications, disse~.'r_ate solicitations, and receive arid evaluate bids fror~ some or all of a potent~'_all.r ? arge number of pre-aualified and buyer-approv6d ~re :dors, to invention makes it more cost effective to solicit competitive bidding on all jobs, including the type o=
short-term, small-dollar jobs beset-suited to fill production holes and generate con~~ribution 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 markeaing. 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 ttrpe 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 futux:e jobs.

W4 00/33223 PCT/US99/28-1~87 ._ Knowing beforehand that the award will routir~Qly gv to the lowest responsive and res~~onsible bidder, each participating vendor will also h<~ve an incentive to submit their lowest bic upfront, rather than hold bac:~c their lowest bid in the expectation than the buyeY w=II
"shop" the bid around o. otherwise engage in post-big opening price negotiations. Similarly, having the ability to review a ce.::plete set of detailed objQctive 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 o:E 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 taker advantage of an inherent "ratcheting doww" 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 WO 00/33223 PCTIUS99/28~7 management; (2) job estimating, specification writing, review, and approval; (3) solicitation distribution, bidding, and award; (~) job production management, quality control, and contract com~~li.ance; and (5) invoicing, payment, and cost allocation -- the buyer can create and manage lance multiple vendor pools to obtain the benefits of competitive bidding based on contribution.
pricing, while enhancinc administrative productivity, production quality, and contract compliance. In this way, the invention enables the buyer to overcome the limitations of prior art systems amd methods in escaping the "iron triangle" of cuality, 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 f-or 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 rea<3ing this specification, as defined by the broadest scope of the appended claims.
~8

Claims (24)

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 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-sources 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 claims 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 vender 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 paid 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.