Abstract:
A method and system is disclosed for procuring goods and services through a computer based system accessible by a plurality of entities having a common relationship. An arrangement is made with a plurality of suppliers to participate in offering goods and services to the entities through the computer based system. A price for the respective goods and services provided by at least subset of the suppliers at which the entities can purchase those goods and services is negotiated with those suppliers. The entities can, via the computer based system, obtain prices directly from the suppliers. The entities can place orders with any of the suppliers via the computer based system. Information on the transactions made via the computer based system is tracked and used to determine if more favorable prices are available for a good or service than the negotiated price.

Description:
FIELD OF THE INVENTION  
         [0001]    The present invention relates generally to a system and method for procurement of goods and services. More specifically, the present invention relates to a system and method for an Electronic Market Center for procuring goods and services by entities that have a common relationship.  
         BACKGROUND OF THE INVENTION  
         [0002]    Certain organizations such as franchises pose special problems and opportunities in the procurement of goods and services that differ from other organizations. A franchise, for example an Original Equipment Manufacturer (OEM) as a franchiser may have several franchisee dealerships numbering in the thousands. Each of these dealerships together with the OEM have requirements for the purchase of goods and services common to each other. However, in many instances the OEM and its dealerships do not share their purchasing knowledge, resources or aggregate their purchases of goods and services to take advantage of the more favorable terms that may be available in the marketplace for large orders, such as volume discounts. A dealership will usually rely upon an individual within its organization to perform the purchasing function. This burdens the assigned individual with the time consuming and difficult task of choosing among many suppliers available for the many different goods and services that the dealership purchases and then negotiating price and other terms for the purchase of those goods and services.  
           [0003]    At the same time the much larger OEM carries on its own purchasing function. An OEM may have a purchasing department with several individuals dedicated to the purchasing function. This allows the OEM&#39;s purchasing department to develop more extensive knowledge and expertise in purchasing the goods and services that the OEM purchases than smaller organizations are typically able to develop. This knowledge and expertise may allow the OEM to obtain favorable terms for the purchase of goods and services. This can be particularly true for the purchase of commodities where the OEM&#39;s purchasing department&#39;s knowledge, expertise and resources allows it to seek out suppliers that will sell the commodities on the best terms.  
           [0004]    There are known electronic purchasing systems, including “Electronic Commerce” purchasing systems. For example, U.S. Pat. No. 5,970,475 discloses an Electronic Procurement System and Method for Trading Partners. This system is directed to a corporate environment where individual employees are allowed limited access to the purchasing system to procure products or services. A supplier catalog server is accessed by the corporate employees in order to select and enter into transactions. This supplier catalog server is said to interface with the suppliers legacy systems. The primary objective of this patent is to provide different levels of authorization so that different users within the same organization can be limited in their access to different products or services and limited in amounts available for spending. However, this system and other “Electronic Commerce” systems, do not offer the benefits and functionality of a “Market Center” system and method in accordance with the present invention.  
         SUMMARY OF THE INVENTION  
         [0005]    A purchasing method and system in accordance with the invention provides an electronic purchasing system for access by distinct entities that have a common relationship to use to purchase goods and services from suppliers of goods and services. Purchasing terms, such as price, based upon the aggregate buying requirements of the entities for specific goods and services are negotiated and the entities can purchase such goods and/or services at the negotiated terms via the purchasing system. The purchasing system also allows an individual entity to go to the suppliers and see if a better price or other terms are available for a good or service and if so, to purchase that good or service from the supplier that offers the better price or other terms. Information concerning more favorable prices or other terms available in the marketplace than the negotiated price or other terms is used to validate the negotiated price or other terms, and renegotiate them as appropriate. Also, this information is accessible to the entities who have access to the purchasing system so that they can, if they so choose, take advantage of such a more favorable price or other term available in the marketplace. In an embodiment, the electronic purchasing system is an Internet World Wide Web site, referred as the “Market Center” web site, that the entities can access via the Internet and that is hyperlinked to web sites of suppliers that are configured to interact with the Market Center web site.  
           [0006]    Further areas of applicability of the present invention will become apparent from the detailed description provided hereinafter. It should be understood that the detailed description and specific examples, while indicating the preferred embodiment of the invention, are intended for purposes of illustration only and are not intended to limit the scope of the invention. 
       
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0007]    The present invention will become more fully understood from the detailed description and the accompanying drawings, wherein:  
         [0008]    [0008]FIG. 1 is a block diagram showing the components of the Market Center based purchasing system of the present invention;  
         [0009]    [0009]FIG. 2 is a diagram illustrating the functions assigned to the various components of the Market Center purchasing system;  
         [0010]    [0010]FIG. 3 a  is a flowchart showing a preferred embodiment of the Market Center based purchasing system and purchasing process;  
         [0011]    [0011]FIG. 3 b  is a flowchart showing a continuation of the purchasing process as detailed in FIG. 3 a;    
         [0012]    [0012]FIG. 4 is a flowchart illustrating the process of evaluating the purchasing patterns of Franchisee/Members; and  
         [0013]    [0013]FIG. 5 is a flowchart illustrating the request for quotation option and process of the Market Center based purchasing system.  
     
    
     DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS  
       [0014]    The following description of the preferred embodiment(s) is merely exemplary in nature and is in no way intended to limit the invention, its application, or uses.  
         [0015]    [0015]FIG. 1 illustrates the primary modules of the Market Center based purchasing system including a user interface module  110 , a Market Center module  112  and a supplier module  114 . Each of these three primary modules are connected and may interact through a network  116 . The user interface module  110  is a computer or workstation with a browser application present in its memory so that it may connect to a network  116 , such as the Internet. The supplier module  114  includes a computer with resident in its memory, a supplier application for displaying goods and/or services offered by a particular supplier. The supplier module  114  is capable of displaying the supplier&#39;s goods and/or services with associated pricing in a form that is accessible and readable by the user interface module  110 . In one embodiment, the supplier module  114  will display goods and/or services information and associated prices as web pages readable by the browser application that is incorporated in the user interface module  110 . The supplier module  114  may also include a supplier database  115  for maintaining the supplier&#39;s information about its goods and/or services with associated pricing. In the Market Center based purchasing system a particular supplier will provide and maintain its own supplier module  114  and supplier database  115 .  
         [0016]    The Market Center module  112  includes a computer with memory, storage and a Market Center application for providing information about various suppliers and their associated goods and/or services available through the Market Center. The Market Center module  112  may also include a transaction database  113  for storing information about transactions entered into through the Market Center. The Market Center module  112  application will display the information about the various suppliers in a form readable by the user interface module  110  and displayable on a monitor. In an embodiment, the Market Center module  112  will display the information about suppliers and their associated products/services as web pages viewable through a browser application. The network  116  connecting the user interface module  110 , the Market Center module  112 , and the supplier module  114 , will typically be the Internet. The network  116  may also include local area networks, intranets and internets. For example, the network  116  could be a company wide intranet connected to the Internet.  
         [0017]    In FIG. 2, the Market Center based purchasing system has an organizer/franchiser  212 , multiple franchisee/members  214 , and multiple suppliers  222  all linked to a centralized Market Center  220 . The organizer/franchiser  212  is responsible for performing the centralized purchasing function for the Market Center  220 . This includes negotiating with various suppliers  222 , a value added price, such as a discounted price available only to franchisee/members  214  and the organizer/franchiser  212 . A value added price can be achieved by offering the suppliers  222  an opportunity to promote their goods/services on the Market Center  220  and offer their goods/services to a group of interested buyers, including the franchisee/members  214 .  
         [0018]    The organizer/franchiser  212  is also responsible for paying suppliers  222  for any purchasers made by any franchisee/member  214 . This provides value to the supplier  222  in that the supplier  222  need issue only one invoice for purchases made by the various franchisee/members  214  in a given time period, such as month, as opposed to issuing separate invoices to each entity that made a purchase. This function of the Market Center  220  based purchasing system also provides the suppliers  222  the consistency and reliability of payment by the large organizer/franchiser  212  while providing the franchisee/members  214  with consolidated invoices for purchases made through the Market Center  220 .  
         [0019]    The organizer/franchiser  212  may be compensated for providing the consolidated billing and payment services to the suppliers  222  and to the franchisee/members  214  such as by assessing a surcharge on the purchases made by the franchisee/member  214 . The organizer/franchiser  212  will pay the supplier invoice and in turn invoice the franchisee/member  214  for any purchases made through the Market Center  220  purchasing system.  
         [0020]    The organizer/franchiser  212  together with any individual franchisee/member  214  may recruit suppliers to offer their goods/services through the Market Center  220 . Suppliers  222  may be recruited based on their price and/or terms and/or quality of goods/services offered. The Market Center  220  based purchasing system allows any franchisee/member  214  to seek out a better deal with a supplier  222  than available through the Market Center  220 . The franchisee/member  214  can induce a supplier  222  into participating in the Market Center  220 , by offering the supplier  222  the opportunity to offer their goods/services to a limited group of franchisee/members  214  and the organizer/franchiser  212 . Suppliers  222  may also be recruited to compete in offering a product or services that better fits the needs of the organizer/franchiser  212 , and franchisee/members  214 , or a better price than offered by other available suppliers.  
         [0021]    The organizer/franchiser  212  may also analyze purchasing data received as a result of transactions entered into through the Market Center  220  including transactions at the value added prices and transactions at other prices. The purchasing data will be analyzed to determine areas where substantial purchases are made by the franchisee/members  214  and where the franchisee/members  214  have achieved better pricing than offered through the Market Center  220 . Access to this data allows the organizer/franchiser  212 , to determine which suppliers  222  are favored by the franchisee/members  214  and which suppliers  222  are offering the best price for the available goods/services. This information can be used to negotiate (or renegotiate) with a particular supplier  222  the value added price offered to the franchisee/members  214 .  
         [0022]    The franchisee/members  214  access suppliers  222  via the Market Center  220 . By connecting to the Market Center  220 , each franchisee/member  214  is given the option of reviewing detailed information about available goods/services and suppliers  222 . Through the Market Center  220 , a franchisee/member  214  may access the web site of a supplier  222 . In an embodiment, the web site of the supplier  222  will be specific to the Market Center  220  and will display pricing only available to the Market Center  220  participants. Once the franchisee/member  214  accesses the supplier  222  web site, the franchisee/member  214  can view the value added price entered into between the supplier  222  and the organizer/franchiser  212 . Through the Market Center  220  transactions are entered into between a franchisee/member  214  or organizer/franchiser  212  and the supplier  222 . Information about the transaction is passed through the Market Center  220  to the organizer/franchiser  212 . The organizer/franchiser  212  then pays the supplier  222  for the purchases made by the franchisee/member  214 .  
         [0023]    The suppliers  222  display their goods/services and associated pricing at a supplier web site accessible by participants in the Market Center  220  based purchasing system. Through the supplier  222  web site a supplier  222  may allow any franchisee/member  214  or organizer/franchiser  212  to search through available goods/services including goods/services that are not offered with a value added price. Typically, a supplier  222  through its web site will offer its goods/services and list the value added price as agreed upon with the organizer/franchiser  212 . This price changes as the terms of an agreement between the organizer/franchiser  212  and supplier  222  changes over time. Through the supplier  222  web site the supplier  222  enters into a transaction directly with any franchisee/member  214  including the organizer/franchiser  212 . This allows the franchisee/member  214  to establish independently of the organizer/franchiser  212 , any terms for delivery and receipt of the goods/services.  
         [0024]    In FIG. 3 a , a purchaser including a franchisee/member  214  or organizer/franchiser  212  starts the purchasing process at step  312  and accesses the Market Center  220  web site in step  314 . In step  316 , the Market Center  220  application will request the purchaser to enter a valid user I.D. and password. If the I.D. and password are validated in step  318 , the purchaser is taken to the Market Center  220  web page in step  320  where options are displayed including links to suppliers  222  and information about goods/services offered by various suppliers  222 . A purchaser may review information specific to a supplier  222  and/or goods/services before selecting a specific supplier  222  to connect to the supplier&#39;s web site for entering into a transaction and/or reviewing more detailed information about the goods/services offered by that supplier  222 . After reviewing the Market Center  220  web page in  320  and the information contained therein, the purchaser may in step  322  select a hyperlink to a specific supplier  222 . The hyperlink will connect the purchaser directly to a web site provided by the supplier  222 .  
         [0025]    In steps  324  and  326 , the supplier web site requires an input of a user I.D. and password. This user I.D. and password may be different from the user I.D. and password entered into in steps  316  and  318  in order to access the Market Center  220  web site. In a preferred embodiment, the Market Center  220  would be linked to the web sites of suppliers  222  so as to eliminate the need for entering user I.D.s and passwords specific to the web sites of suppliers  222  once a purchaser has successfully accessed the Market Center  220 .  
         [0026]    Next, in step  328 , the supplier  222  web site displays the goods/services and associated value added pricing to the purchaser. If a value added pricing agreement does not exist between the supplier  222  and the organizer/franchiser  212 , then non-value added pricing will be displayed. The supplier  222  web site will also offer an ability to search for available goods/services and provide additional information about the supplier  222  and the specific goods/services offered. Further, the purchaser may take advantage of other features and capabilities offered by the supplier  222  web site including any functionality for providing information about the goods/services offered.  
         [0027]    In step  330 , the purchaser may select among the available goods/services or search for goods/services if that function is offered by the supplier  222  web site. In step  332 , the purchaser makes a decision to purchase any of the goods/services offered by the supplier  222 .  
         [0028]    Referring now to FIG. 3 b  in step  336 , the purchaser enters into a transaction for the goods/services offered by the specific supplier  222  through the supplier&#39;s web site. By entering into a transaction the purchaser agrees to pay and the supplier  222  agrees to accept the price for the goods/services offered by the supplier  222 . In step  338 , the information regarding the transaction entered into is recorded in a transaction database  113  connected to the Market Center module  112 .  
         [0029]    Referring briefly to FIG. 4, the organizer/franchiser  212  can advantageously use the information stored in the transaction database  113 . In step  412 , the organizer/franchiser can query the transaction database  113  and print reports based on the transactional information entered into the transaction database  113 . In step  414 , the franchiser/organizer  212  uses the data in the transaction database  113  to determine price trends and purchasing metrics of franchisee/members  214  and their own purchasing habits. In step  416 , the information provided by the transaction database  113  is used to determine if a more favorable price can be negotiated with the specific supplier for particular goods/services offered.  
         [0030]    Returning to FIG. 3 b  in step  340 , the supplier  222  will ship the goods or provide the service directly to the purchaser. This allows the purchaser to dictate the terms and location for delivery and to remove this process from the organizer/franchiser  212 . If there is a problem with the goods or services as checked in step  342 , then the goods are returned or issues are otherwise resolved with the supplier  222  in step  344 . This again advantageously removes the organizer/franchisee  212  from resolving issues that may arise between the purchaser and supplier  222  such as the possibility of damaged goods.  
         [0031]    Assuming the goods and/or services meet the specifications of the purchaser, then in step  346  the supplier  222  will invoice the organizer/franchiser  212  for the goods/services purchased by the purchaser. Next, in step  348 , the organizer/franchiser  212  submits an invoice to the purchaser for the goods/services purchased from the supplier  222 . Typically, the invoice will be submitted in a consolidated format allowing the purchaser to review all transactions entered into through the Market Center  220 . The purchaser pays against the invoice directly to the organizer/franchiser  212  in step  350 . Finally, in step  352 , the organizer/franchiser  212  pays the supplier  222  for the goods/services purchased by the purchaser. The process ends in step  354 . Alternatively, the organizer/franchiser may pay suppliers,  222  prior to receiving payment from the purchaser depending on the payment terms in the agreement negotiated with the supplier  222 . Also, if the purchaser maintains an account with the organizer/franchiser  212 , such as accounts that franchisees often have with their franchises, the organizer/franchiser  212  can debit the purchaser&#39;s account for purchased goods/services and including a surcharge.  
         [0032]    Referring to FIG. 5, the request for quotation process is described. The request for quotation (RFQ) process allows the purchaser to submit a request to one or more suppliers  222  for a specific good/service offered by the supplier  222 . The purchaser may attempt to improve upon the price offered by the supplier  222  for a particular good/service. The purchaser may also attempt to improve upon the value added price agreed upon between the supplier  222  and the organizer/franchiser  212 . In step  512 , the purchaser accesses the Market Center  220  web site RFQ option. In step  514 , the purchaser fills out the RFQ form or otherwise complies with the supplier&#39;s  222  requirements for submission of the request for quotation. Then, in step  516 , the purchaser selects the suppliers  222  to receive the RFQ form. The RFQ form will be submitted directly to the supplier  222  or submitted via E-mail as identified in step  518 . Alternatively, the RFQ information will be directly communicated to the supplier by telephone or facsimile.  
         [0033]    In step  520 , the supplier  222  receives and then responds to the RFQ. The supplier&#39;s  222  options in response are to provide a quotation at a price or to deny the request for a quotation. The response of the supplier  222  may be submitted as a return E-mail message to the Market Center  220  web site. In step  522 , the purchaser reviews the responses to the request for quotation. If the terms are acceptable to the purchaser, then in step  524 , the purchaser transacts with the supplier  222  for the goods/services requested. In order to improve upon pricing for goods/services for all franchisee/members  214  the information provided in the request for quotation and response is shared with the franchise/organizer  212  in step  526 . As discussed above this allows the franchiser/organizer  212  to monitor the transactions entered into via the Market Center  220  and determine whether the value added price is the best price available. The organizer/franchiser  212  can then determine whether it should negotiate (or renegotiate) with the supplier  222  and achieve an improved price available to all participants in the Market Center  220 . This is represented in step  528  where the franchise/organizer  212  enters into an agreement with the supplier  222  or renegotiates with an existing value added supplier  222  for a new price for the particular good/service transacted through the request for quotation process. This process concludes in step  530 .  
         [0034]    The description of the invention is merely exemplary in nature and, thus, variations that do not depart from the gist of the invention are intended to be within the scope of the invention. Such variations are not to be regarded as a departure from the spirit and scope of the invention.