WO2002101603A1 - Wool tender selling system - Google Patents

Abstract

A method and system for tendering a lot of a commodity in large volume. The method provides a two-stage process in which the results of a first bid round are displayed to participants of the tender, who then revise their first bids in accordance with the results of the first bid round. The method may be implemented via a computer network, and can also accommodate for processing delays induced by participants' computers.

Description

WOOL TENDER SELLING SYSTEM

TECHNICAL FIELD

This invention relates to a tender system.

BACKGROUND

It is of assistance for an understanding of this invention to know that there are three commonly used systems for the sale of goods and services by way of tender or auction.

The 'Open Cry" auction system involves, in its most basic form, the seller of goods, typically a commodity, e.g. wool, tobacco or livestock, etc. offering for sale, a quantity of that commodity to potential buyers, wherein the highest "called out" bid unconditionally buys the offered commodity. The quantity of the commodity offered, commonly called a "lot", is wholly dependent on the type of commodity and the market place in which it is offered. For example, in a wool selling environment the lot typically comprises 6 or 7 bales (about 1 tonne) of wool.

The open cry system requires that each potential purchaser is proximate to the place of auction, which in a highly computerised and telecommunications rich world, includes an on-line presence or a presence by proxy. Most importantly, all the participants must be involved in the auction at the same time. Clearly there can be complications if the bidder is remote, especially if they are on-line, as there are delays in the communication of the last bid and receipt of that remote bid at the auction location. This delay may then create an unfair situation for the remote bidder.

Even when all the participants are on-line, which has been tried, it was not acceptable to the participants as it was too slow compared with the traditional open cry system described above. One of the problems identified was delay between bids made from different remote locations. Those delays created uncertainty, as no one bidder could be sure they were the fastest or last to bid. This problem has a technical solution that requires the use of a master clock that every bidder's computer is slaved from. However, even then, communications delays must be calculated for each bidder. Yet further there must be security of the seller's bid and the electronics that implement the security system must be especially set up and maintained. All these measures add cost and complexity to what is otherwise a simple arrangement when compared to conducting the auction in the one location where all buyers' bids can be heard.

It is a beneficial characteristic of the open cry system that all buyers and sellers (more particularly the brokers for multiple sellers) are able to gauge the market as each bid is heard and the winning bid for each lot becomes known. Thus, for example, if the winning bid over time shows a downward trend, a seller may withdraw one or more of the lots they have on offer. Alternatively, as the price rises, buyers can gauge when they might decide to stop bidding for the lots offered. Furthermore, both buyers and sellers are well aware over time, what quantity of the commodity they have purchased and sold, respectively.

In the Australian wool industry the number of lots typically offered and dealt with in a working day using the open cry system can be as much as 6,000 in a five- hour working day. These lots are offered in three separate auction locations at which there would be two rooms operating at the same time. This translates into 300 lots per hour, a cracking pace - an average of one lot every 12 seconds.

Tendering is another way of selling or offering a good or service, but is not typically used for commodities like wool, etc. A tender comprises a written offer by one party to buy "goods or services" or offer "goods or services". One or more other parties respond to the tender offer in writing with the highest or lowest tender winning as required.

To ensure the fairness of the process, the tender responses are kept sealed until after a predetermined time. The tender responses are thus not opened until after the predetermined deadline has passed. The lowest or highest tender wins respectively the right to provide the goods or service or purchase the goods or service on offer.

This process is time consuming and should have the highest propriety so as to ensure fairness to all the participants. It is thus expensive and impractical in a high volume commodity market but very suitable for one-off transactions of high value goods or services.

A common example of the use of a tender system is the offer by a local government to accept bids for the supply of a service such as garbage collection. The tender process requires that the local government specify certain conditions relating to timeliness, disposal practices and other requirements that must be responded to in any tender bid document submitted before the end of a tender bid period. For example, one or more garbage collection companies may place a written and sealed bid in a box or like receptacle located in the council chambers that remains locked until after the close of the tender period. All the sealed bids are then, and only then, opened and the lowest complying bid is awarded the tender.

A variant of the tender process is the progressive tender, which attempts to simulate the auction process in a non-real time environment. Firstly, there is the written offer (bid) to a written tender. The highest bidder is then informed that they provided the highest bid. Other bidders are told that they did not provide the highest bid. The highest bidder then pays the amount of the second highest bidder plus one unit of the bid unit used. Thus, for example if the bid unit was $1 and the highest bid was $100 and the second highest bid was $82, the highest bidder would pay $83.

This scheme protects the bidders from over inflating the market but is not always popular with the sellers.

A progressive tender system can be implemented electronically. It does however maintain the problem of how to fairly determine a common deadline, but is gaining in popularity as is evident with its current use on the Internet, with small variation, as a bidding model that allows remotely located bidders to be involved.

There is however another problem when dealing with commodities in the progressive bid model in the sale of commodities such as wool, etc., in that it is not possible for any one buyer to properly handle the possibly hundreds of individual lots on offer within all the relevant deadlines. Hence, the buyer, and the seller, has no real time control over how much they buy or sell. Only after the tender (which may comprise several hundred lots) has been concluded can they discover their success rate. Furthermore, the number of trades that can be handled in the time available is relatively small compared with the open cry system.

The present invention provides a method for conducting high-volume tenders in an alternative and more efficient manner.

BRIEF DESCRIPTION OF THE INVENTION

According to a first aspect of the present invention, there is provided a method of tendering a lot of a commodity comprising the steps of: opening the tender by offering at least a lot for sale; displaying the results of a first bid round to one or more potential buyers and seller of a said lot; providing a predetermined period of time equally to all buyers and seller within which to revise their bid or reserve respectively;

awarding to the buyer offering the highest bid over the reserve the sale of the lot, following the lapse of said period of time.

According to a second aspect of the present invention, there is provided a method of tendering a lot of a commodity comprising the steps of: opening the tender by offering at least one lot for sale; transmitting data causing the results of a first bid round to be displayed to one or more potential buyers and seller of a said lot; providing a predetermined period of time equally to all buyers and seller within which to revise their bid or reserve respectively; receiving said revised bids and/or revised reserve sent within said period of time; and awarding to the buyer offering the highest bid over the reserve the sale of the lot following the lapse of said period of time.

According to a third aspect of the present invention, there is provided a method of tendering a lot of a commodity comprising the steps of: receiving the results of a first bid round; transmitting a revised bid within a predetermined period of time; and being awarded the sale of the lot if the revised bid is the highest bid over the reserve.

BRIEF DESCRIPTION OF THE FIGURES

In order that the invention may be more clearly understood and readily carried into effect a preferred form of the two stage progressive tender method will now be described by way of example only with reference to the accompanying figures in which: Fig. 1 depicts a visual presentation including information relevant to the potential buyer of a lot before any bid is made in the form of a page of a computer screen representative of a page in a catalogue of lots of wool for sale;

Fig.2 depicts a Fig. 1 screen after bids by a potential buyer have been made;

Fig.3 depicts a Fig. 2 screen plus information relevant to the seller of a lot after a first round of bids is complete;

Fig.4 depicts a revised Fig 3 screen showing MICH's revised bids;

Fig.5 depicts a revised Fig. 3 screen showing the result of the reviewed bid process for the lots; and

Fig.6 depicts the components of a system that implements a bidding system in accordance with that disclosed herein.

DETAILED DESCRIPTION OF AN EMBODIMENT OF THE SYSTEM

In this specification a volume trading system is described that uses the selling of wool as an example of the commodity being traded between buyers and sellers.

It however does not matter what commodity is being traded as long as the unit of that commodity is predetermined between the buyers and seller and the minimum unit of bid is also known to all involved. In the case of wool the units of wool offered are bales of known weight typically 180 kilograms per bale and an example of a lot would be 10 bales of wool having certain characteristics. The characteristics of the wool in each bale are marked thereon in an agreed manner according to an independent wool testing facility. The minimum unit of bid is, for example, a cent so an example of a bid would be 300 cents per kilogram for the lot on offer.

Sellers or their agents would make catalogues available to buyers a minirnum prescribed time before the tender opens, say for example and preferably 24 hours. In a system that is to use electronic computer means to facilitate the interaction of buyer(s) and seller the catalogue is made available to all potential buyers (possibly hundreds) by way of electronic mail or the catalogue is made available on a computer system accessible to all potential buyers. It is preferable that the number of lots offered at any one time is the number that will best fit within the screen of the

users of the system. This may be 10 lots in one example but more or less could be agreed upon by the participants. It is likely that 10-12 lots will be displayed on each screen.

At the same time the seller must provide to the system their reserve in bid units. This is the quantity of bid units that must be exceeded before the seller will sell the lot.

Bids may be submitted by a buyer or their representative, but must be submitted to a predetermined electronic system adapted to receive such bids. Typically the system to be used is determined by the operator of the two stage progressive tender arrangement. Such a system may be one or more computers suitably arranged to cooperate with each other in achieving the requirements of the system. Such arrangements are not disclosed in detail herein as the team of persons responsible for such matter will find it well within their skill to do so.

Such bids must be received from potential purchases /buyers by a predetermined time. This time is chosen by the system operator and imposed upon all potential buyers. The means to measure this time or put another way a time period following the issue of the information regarding lots on offer is by way of example provided by the computer or computer system used by the potential buyer. It is clearly in the buyer's interest to strictly comply with the time period set and any attempt to improperly extend the period can be detected by various means known to those skilled in the appropriate art.

Preferably, the catalogue or information relating to the lots available will be provided to the buyers well before the predetermined time, e.g. 24 hours before.

Preferably the time of receipt of each bid by a prospective buyer is recorded by the receiving system, its time system being strictly maintained by means known to

those skilled in the appropriate art. As an example only, it may be that reference is made to an atomic clock so as to maintain a suitable absolute time measure.

The time recording of the receipt of first bids, as they can be referred to herein, is a means of separating bids of equal value. Typically the first received bid will be the preferred bid.

After the lapse of the predetermined time, a first stage (also possibly referred to as a preliminary) result is corrununicated to all potential purchasers as well as the seller.

The screen of information provided to the participants is different for each of them. A potential buyer will preferably be shown those lots for which they are the leading bidder, the highest bid price for all other lots, and the quantity of bids received for each lot.

It may also be possible to show the identity of the second or other lesser bidders, the seller's reserve and/or the identity of the leading bidder. The amount and type of information provided in the first stage response, would be at the discretion of the operator of the system but may be predetermined by the participants as a condition of their involvement in the system.

As a result of the receipt of the information the recipient is provided a non- changeable period of time during which a potential buyer or the seller may make an adjustment to their stance, but only within that predetermined time period. It is envisaged that the time period for this will be monitored buy the seller's and buyers' respective computers such that each participant is not unfairly prejudiced by system delays. Each participant's computer will be allowed a set time which will be measured from the time of receipt of the first round bids.

For example only, as the means and processes to provide such a time related element are many and varied and known to those skilled in the art, the seller's own system can be used to accurately time the period.

The period is provided so that the participants can review and if they choose, revise their bid or reserve as the case may be for buyer and seller respectively.

The seller may, in light of the highest known bid for a lot, decide to increase the reserve so as to bet, in some respects, on the market showing a trend to higher prices for the commodity on offer. This new higher reserve of course incurs the risk that the revised bids of the potential bidders may not be reached and the lot will be passed in. If on the other hand the seller perceives a falling market and is still eager to see their lot sold, they may be willing to lower their reserve to attempt to ensure its sale. It is also possible for the seller to leave the reserve as it is or even to withdraw the lot. However, the latter option may not be possible dependant on the rules of the arrangement. A buyer may, in light of their perceived position in the bid decide to increase their bid so as to increase their chance of buying the lot or lots on offer. However, they may decide to lower their bid in the belief that their revised bid may still win out. It is also possible for the buyer to leave the bid as it is or even to withdraw its bid.

It should be noted however, that in a preferred arrangement the buyer providing the winning bid does not pay the amount of their bid, but rather pays one bid unit above the second highest bid. All participants keep this in mind and it will be accounted for accordingly. It may well be a condition of participation that this rule applies.

It is a referred feature of the system described that the review time provided is not dependant on the systems of each of the participants being synchronized which as discussed previously is a problem of prior systems.

In a preferred arrangement the period to elapse within which to revise a participants position is counted down from the time the preliminary result is received by the participant. The countdown of that period is displayed to the participant on their screen. In a preferred arrangement only, the countdown period is 60 seconds. The system operators select the length of this period but it may be that the participants select a more practical period after some interaction and experimentation with the system, to ensure a workable arrangement. Clearly, it is useful to work with participants in matters of this kind so as to ensure the system is useful but it is also important to all concerned to consider the need to keep the rate of lot offerings and possible sale at a reasonable pace for the good of the market.

The manner in which the countdown is displayed is again a matter of choice but in a preferable manner it comprises a reducing bar of length proportional to the time available within which to revise the bid or reserve quantity (such as display is not shown in the attached figures).

It is a matter of convenience and protocol that it may be preferable to have the buyers' or seller's system transmit at the end of the period, that it has submitted a revised bid or reserve or that it has been maintained and also preferably some token or indication that it maintained its own time to the best of its ability. Those skilled in the art will appreciate that there exist many ways in which this could be done.

It is not a feature of a preferred arrangement but it is possible that there is a further period during which the seller or its broker may decide to withdraw the lot from sale. However, this further period has the effect of slowing the total process down and may affect the acceptability of the arrangement to all the participants.

Once all transmissions from bidders have been received the bids are compared and the winning bid determined. In the case of non-receipt of a confirmation of the finalization of a bid or reserve from a relevant party, there can be rules that determine what happens. For example, it may be that for the sake of keeping the rate of lot offerings consistent, the last received information applies if no bid is received within a revised bid period plus some relatively small added margin. Alternatively, in the case of a certain percentage of the expected responses not being received the screen of lots being offered or a portion thereof is not processed and may be withdrawn and used in a future offering. The revised bid period is timed by the administrative system as well as by all the participants so the system is asynchronous but the degree of period a participant can be out of sync has to have some limits just as there are limits on the accuracy of any synchronous clock system. No system is perfect or absolute.

Final results, once the above criteria are met, are immediately made available to or transmitted to each participant. Thus the seller /broker is aware of the various selling prices (as calculated in the manner described previously). The various buyers are also aware of the current market price as well as their immediate commitment to purchases as a result of their success or otherwise in the two stage bidding process.

It may be a further rule of the determination process that the seller reserve is treated as a vendor bid, and assumed to have been entered first. Therefore, if the highest bid is equal to the reserve the lot is passed in.

However, a variation of the above rule could be that if the highest bid is equal to the reserve then the lot is sold. However, this requires that the system identify a vendor bid differently from a potential buyer's bid.

It may be useful if final bids are tied for any lot that the winning bid can be determined by comparing which of the tied bids was first received by the system. If

those bids are also tied, the bids in the first round can be compared to determine the highest bid during that round and thus the winner determined.

Following the display of results for say a few seconds, that information can be saved for further processing and/or be printed out.

The processing sequence for the next tranche of lots (screen of lots) can then begin.

It is a matter of collective user choice that there be 10, 12 or other numbers of lots per screen. The configuration of information on the screen can be fixed for all users of the system with different screens for the buyers and sellers. However, it is also possible to mandate that predetermined information be included on respective screens in predetermined locations on the screen and allow the respective users to arrange other information on the screen as they choose.

A period of review may for example be 45 seconds when 10 lots are displayed on a screen or 55 seconds when 12 lots are displayed on a screen. It is desirable that the minimum number of lots handled by the system be 500 per hour with 600 being ideal. This would then more than favorably compare with the current system in terms of throughput and have the advantages disclosed.

After the winning bids are determined the payment and bills of sale can be automatically exchanged via electronic means.

With experience it will be possible to vary the rate of lot offerings, or predetermine the time periods described above.

The scalability of the system provides great flexibility and economies of scale.

As the selling rate of lots is known it becomes possible for all participants to know or reasonably accurately estimate the time when a particular lot will be offered or indeed when a catalogue will be completed. Both sellers and potential purchasers will likely think of this certainty as an advantage.

Fig 1 depicts a visual presentation of information relevant to the potential buyer of a lot before any bid is made, in the form of a computer screen representative of a page in a catalogue of lots of wool for sale.

The upper lines are the headings that identify the technical description of the lots for sale. The abbreviations and acronyms used are well known in the trade and correlate to the information in the upper two rows in the 10 larger rows of information representative of each of the 10 lots on this page. On the left hand side of the each of the larger rows the third row of information shows the source farm name of the lot and its brand (eg FOWLERS GAP AAAM).

The column headed LOT is a unique identifying lot number and the column headed B/S is the number of bales (units) being offered in that lot.

The column headed MY BID is available for use as is the column headed HIGHEST BID & BUYER.

Fig. 2 depicts Fig. 1 after bids have been made by the prospective buyer and before the closing of the bids. The bids shown are in cents per kilogram and represent the highest price the buyer is prepared to pay at that time. The MY BID Column is filled in by the potential buyer.

Fig. 3 depicts Fig. 2 plus information relevant to the buyers of a lot after a first round of bids is complete and is an example of the screen that would be displayed to a particular buyer, in this case, the buyer identified as MICH (bold text is used to identify MICH). The column for the HIGHEST BID & BUYER is filled in according to the result of the bidding. In practice, if the buyer is MICH then their name or code is provided in a predetermined colour (eg blue). Without colour to discriminate that information the font may be varied in a predetermined way as in the figures or some such other distinguishing feature can be added to assist the identification of that buyer's winning bids.

The winning buyer is able to buy the lot at the price of the second buyer's bid plus one bidding unit. Thus in respect of lot 5066 MICH bid 437 but the second highest bidder obviously bid 420 and the amount to be paid if successful would be 421 cents per kilogram. MtCH can see therefore that his bids for lots 5066 and 5080 are well above the second highest bidders and may be unnecessarily high to secure the lot.

Fig.4 depicts a revised Fig 3 screen showing MICH's revised bids in bold in the MY BID column which is the same column as the MY BID column in the previous screen but possibly displayed in a different way (colour or perceived texture) during the revised bid period.

MICH has re-bid on 3 lots to improve his chances of buying and reduced his bid in lot 5080.

At the same time other potential buyers are able to revise their own bids while knowledgeable of the information provided in the Fig.3 screen.

The revised bid must be finalised within the predetermined review period as discussed earlier in this specification.

The periods applicable for each stage of the process are displayable on the computer screen as discussed earlier in the specification.

Fig.5 depicts a revised Fig. 3 screen showing the result of the revised bid process for the lots. MICH has ended up with a purchase of lots 5066, 5068, 5080, 6886 and 7539 as a result of the adjustments made by the sellers and the other potential buyers.

Fig. 6 depicts the components of a system that implements a bidding system in accordance with that disclosed herein. It is possible for there to be a central computer 10 that serves the needs of the programme to send out all the pages of information to each participating potential buyer and seller and receive bid and revised bid or reserve information. It would also compare the incoming information and compile the revised screens or the relevant parts thereof and keep overall timing to the predetermined rate of lot offerings etc. As described it is not necessary to maintain a master clock to which other computers are slaved in the bidding process described herein, so communications to and from one or more external users 14, 16 and 18 can be via the asynchronous network of computers known as the internet 12. Some users 20 and 22 of the system may prefer to use dedicated lines but that is a matter of choice since it makes no difference to the fundamental working of the system.

It will be appreciated by those skilled in the art that the invention is not restricted in its use to the particular application described. Neither is the present invention restricted in its preferred embodiment with regard to the particular elements and/or features described or depicted herein. It will be appreciated that various modifications can be made without departing from the principle of the invention. Therefore, the invention described herein should be understood to include all such modifications within its scope.

Claims

THE CLAIMS DEFINING THE INVENTION ARE AS FOLLOWS:

1. A method of tendering a lot of a commodity comprising the steps of: opening the tender by offering at least one lot of sale; displaying the results of a first bid round to one or more potential buyers and seller of a said lot; providing a predetermined period of time equally to all buyers and seller within which to revise their bid or reserve respectively; awarding to the buyer offering the highest bid over the reserve the sale of the lot, following the lapse of said period of time.

2. A method according to claim 1 wherein the sale of the lot is awarded to the buyer offering the highest bid for the price at least one bid unit over the next highest bidder.

3. A method according to any one of claims 1 or 2 wherein details of the lot are sent to buyers a predetermined time before the tender opens.

4. A method according to claim 3 wherein the predetermined time is 24 hours.

5. A method according to any one of claims 1 to 4 wherein the buyers are informed of the seller's reserve before the tender opens.

6. A method according to any one of claims 1 to 5 wherein buyers must place their respective first bids within a first predetermined period of time from the opening of the tender.

7. A method according to any one of claims 1 to 6 wherein the time of receipt of each buyers' respective first bids is recorded.

8. A method according to claim 7 wherein in the event of two or more highest equal revised bids, the lot is awarded to the buyer with the highest equal revised bid whose first bid is received first.

9. A method of tendering a lot of a commodity comprising the steps of: opening the tender by offering at least one lot for sale; transmitting data causing the results of a first bid round to be displayed to one or more potential buyers and seller of a said lot; providing a predetermined period of time equally to all buyers and seller within which to revise their bid or reserve respectively; receiving said revised bids and/or revised reserve sent within said period of time; and awarding to the buyer offering the highest bid over the reserve the sale of the lot following the lapse of said period of time.

10. A method according to claim 9 wherein the sale of the lot is awarded to the buyer offering the highest bid for the price at least one bid unit over the next highest bid.

11. A method according to any one of claims 9 or 10 wherein details of the lot are sent to buyers a predetermined time before the tender opens.

12. A method according to claim 11 wherein the predetermined time is 24 hours.

13. A method according to any one of claims 9 to 12 wherein the seller's reserve is sent to the buyers before the tender opens.

14. A method according to any one of claims 9 to 13 wherein buyers' respective first bids are received within a first predetermined period of the opening of the tender.

15. A method according to any one of claims 9 to 14 wherein the time of receipt of each buyers' respective first bids is recorded.

16. A method according to claim 15 wherein in the event of two or more highest equal revised bids, the lot is awarded to the buyer with the highest equal revised bid whose first bid was received first.

17. A method of tendering a lot of a commodity comprising the steps of: receiving the results of a first bid round; transmitting a revised bid within a predetermined period of time; and being awarded the sale of the lot if the revised bid is the highest bid over the reserve.