The present invention generally relates to an apparatus and method for creating a database representing print and other information product vendor pools for one or more subscribing buyers, and for selecting the lowest bidder from the database""s represented vendor pool on a per-job basis and, more particularly, for creating and maintaining a database representing a vendor pool for each subscribing buyer of printing and other customized print information product goods and services, the database further representing capabilities of said vendors, receiving invitations-for-bid from buyers, extracting vendor qualification criteria data from said invitations-for-bid, transmitting invitations to bid on said invitations-for-bid to qualified ones of said vendors, based on said vendor qualification criteria data, and selecting from among the responding vendors based on the response price and other factors.
Purchase of print and other customized information product goods and services, such as business cards and forms, envelopes, other packaging, labels, pamphlets, CD ROMS, notepads, transparencies, brochures, and bound books differs from non-custom manufactured goods or services in that print and other information product goods and services are generally not pre-stocked as xe2x80x9coff-the-shelfxe2x80x9d items but, instead, must be specifically manufactured or provided to meet the buyer""s particular requirements. Consequently, print and other information product goods and services frequently cannot be purchased xe2x80x9coff-the-shelfxe2x80x9d at fixed prices appearing on standard price lists. Instead, most print and other information product goods and services are customized to some extent and, accordingly, their prices are established when the specific goods or services are themselves identified, either by an actual order, invitation-for-bid (xe2x80x9cIFBxe2x80x9d), request-for-quote (xe2x80x9cRFQxe2x80x9d), or request-for-proposal (xe2x80x9cRFPxe2x80x9d); only then can the manufacturer or service provider assess the precise quality and manufacturing or service specifications required to perform the job.
The general procedure used in the prior art of procurement of print and other customized information product goods and services is that the buyer provides the actual order, or the IFB, RFQ, or RFP to one or more printers with whom, in general, the buyer has had sufficient previous experience to know what type of product or level of service can be provided. For purposes of this description, the terms xe2x80x9cprinterxe2x80x9d and xe2x80x9cprint vendorxe2x80x9d are interchangeable and are defined as an entity which manufactures or sells traditional forms of printing or other non-traditional types of information product goods or services, which are or which consist of any tangible medium for communicating or displaying text, images, or other graphical or pictorial information, including, but not limited to, business forms, labels, pamphlets, books, flyers, brochures, transparencies, CD ROMs, stickers, business cards, envelopes, other packaging, and note pads. For purposes of this description the terms xe2x80x9cprint information productxe2x80x9d and xe2x80x9cprint information goodsxe2x80x9d are interchangeable and defined to include all of the above-identified goods and services. The printer then reviews the buyer""s product manufacturing and delivery specifications or requirements contained in the order, IFB, RFQ, or RFP including physical specifications, characteristics of style, quantities, mode of shipment, delivery schedule, and quality level required to perform individual jobs or estimated job requirements over a given period of time and, based on or extrapolating from previous experiences, provides an estimated price or bid to the buyer. Generally the buyer will provide the order, invitation-for-bid, request-for-quote, or request-for-proposal to a single or very limited number of print vendors, and award the contract co the single or lowest bidder.
In following this general procedure in the prior art, however, buyers of printing and other customized information product goods or services confront the so-called xe2x80x9ciron trianglexe2x80x9d of quality, timeliness, and cost. Buyers want a product or service that is good, fast, and cheap, but what they discover is that traditional procurements methods will, at best, only achieve two of these three ideals on any given job. Thus, a buyer might demand and receive top quality on a xe2x80x9crushxe2x80x9d order, but only at a high cost. Conversely, negotiating a lower price may achieve cost savings, but also compromise quality and timeliness.
This problem is heightened by great elasticity in the so-called xe2x80x9cmarketxe2x80x9d price of printing or other customized information product goods or services, which can vary widely from vendor to vendor and from week to week. This elasticity results from the fact that pricing of such customized goods or services greatly depends on (1) the level of service and quality desired, (2) the labor and equipment required to produce the job or provide the service; (3) the amount of time involved in producing the job or providing the service; (4) whether the job or service can be engineered or designed in a cost-effective way; and (5) whether the customer order can be included in the print vendor""s production schedule to comply with the required delivery date.
This last factor is particularly crucial. Most print vendors are xe2x80x9chard-ironxe2x80x9d manufacturers with high overhead and labor costs. As a result, idle equipment and labor can be devastating to a print vendor""s profit margin. At the same time, print vendors must be ready to service their regular customers on short notice, which means planning for downtime in the production schedule to ensure that their machinery is available for xe2x80x9crushxe2x80x9d orders. Managing customer job orders in a way that minimizes these xe2x80x9cholesxe2x80x9d in the production schedule is frequently what distinguishes the profitable print 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, print vendors are constantly seeking short-turnaround jobs to fill their production xe2x80x9cholesxe2x80x9d when their regular orders do not materialize. To obtain these short-turnaround jobs, many print vendors will resort to extremely low pricing, provided that they can do so without undermining their regular customer relations. This pricing strategy is called xe2x80x9ccontribution pricingxe2x80x9d. xe2x80x9cContributionxe2x80x9d pricing is the practice of bidding out work at below normal profit margins because any income above out-of-pocket costs xe2x80x9ccontributesxe2x80x9d, 100%, to the print vendor""s bottom line in comparison to the cost of letting its labor and machinery remain idle. In current printing markets, xe2x80x9ccontributionxe2x80x9d pricing on a regular basis is found only in federal and state government procurements of print information products.
In both public and private sector print information product markets, however, traditional procurement methods and prior art devices have failed to solve this xe2x80x9ciron trianglexe2x80x9d because of their inability to take advantage of xe2x80x9ccontributionxe2x80x9d pricing without incurring prohibitive administrative costs or sacrificing quality or timeliness. There are many reasons for this failure. First, the purchase or procurement of printing and other customized information product goods and services frequently requires specialized knowledge and expertise in finding the right print vendor for each job. Most businesses, however, hire purchasing officials with general procurement knowledge who are then given responsibility for a wide range of purchases. As a result, the purchasing official is forced to rely on the print vendor""s expertise in designing or engineering a print job, which too often results in the most expensive (and most profitable for the print vendor) design, engineering, or production process.
Second, in order to find the manufacturer or service provider who is willing to offer the lowest xe2x80x9ccontributionxe2x80x9d pricing on any given job, the buyer must often request price quotations from dozens or even hundreds of vendors. In the actual business environment, however, there are difficulties which make selection of a print vendor willing to offer xe2x80x9ccontributionxe2x80x9d pricing difficult for the buyer. There are also difficulties and tradeoffs which make preparation of responding bids difficult for the print vendors. For example, from the buyers perspective, a first difficulty is identifying the pool of print vendors to whom it should send its IFB or RFQ. A larger vendor pool would, in theory, be desirable because it usually means a lower bid can be received. This is well-known in the general business world. However, identifying such a large vendor pool is generally not practical. A main reason is that gathering and maintaining information about a large number of current and potential print vendors is time consuming and expensive. Few companies have the time, money, or inclination to maintain a large, up-to-date database on such potential vendors, particularly when soliciting dozens of bids or quotations will itself require staff and administrative time that costs more than the savings generated from competitive bidding. This disparity is heightened by the fact that most print jobs involve relatively low dollar purchases or procurements.
In addition, even if a buyer were willing to absorb the administrative costs associated with keeping a large database of vendors to improve the competitive bidding, the buyer is often reluctant to do so because quality control becomes more difficult as the vendor pool increases. Part of quality control is to monitor the quality and dependability of goods and services output by each vendor in the vendor pool. This is difficult not due only to the volume of the information, but also to the fact that the buyer must generally obtain such information from its own dealings with the vendor. The reason is that reliability, price history, and quality of a print vendor""s work for other buyers may not be obtainable. This is another reason that buyers will not seek goods or services from new vendors because negative information on their reliability or quality may then be learned first hand.
In the pubic sector, where federal and state agencies are often required by law to make bid opportunities available to large numbers of vendors, procurements of print information products typically result in poor quality control and relatively high administrative costs that must be subsidized by the taxpayer. In contrast, traditional procurement methods and prior art devices in the private sector have emphasized quality control by limiting the vendor pool for print information goods and services to a small number of reliable vendors with which it has previously done business. However, as the present inventor has discovered, there is a significant cost problem associated with limiting of the vendor pool to a small number. The problem is that the limited competition results in vendors offering, and charging, higher prices, being undisciplined by a more competitive market. Such prior art methods are typically based on direct negotiation with preferred vendors in established commercial relationships, often resulting in controlled term pricing that lumps procurements together in the hope of enhancing the print buyer""s buying power within a narrow pool of vendors; and xe2x80x9cbest buyxe2x80x9d or xe2x80x9cbest valuexe2x80x9d procurement practices (which are now being adopted increasingly in the public sector) that are largely creative user or quality control driven.
Because of the limitations of traditional procurement methods, print vendors are often left not only with unscheduled holes in their production schedules, but also unable to fill downtime purposefully set aside for last minute xe2x80x9crushxe2x80x9d orders from regular customers. Moreover, even those print vendors who would gain, in an immediate sense, from contribution pricing are frequently unwilling to offer that pricing to their regular customers. The reason is that the regular customer, after once receiving a contribution pricing from its vendor due to the vendor then facing idle machine time, would expect to pay the same low prices for its future print jobs. The regular customer would even expect the vendor to give contribution pricing at times when the vendor lacks idle production capacity. As a result, the vendor would have to displace more profitable work to accept the lower paying work, in order maintain the goodwill of its customer.
The printing industry addresses the problem of maximizing machine utilization without compromising its relationship with preferred customers through sales and marketing efforts which, in turn, increase the cost of each print job and which, ultimately, the print vendor passes to the print buyer through higher prices. The need to maximize factory floor and machine utilization is in no way unique to the printing industry. It is a major concern in many other customized manufacturing operations.
As a consequence of the foregoing, there has been a long felt need for a system and method of competitive pricing for custom printed goods and printing services that: (1) identifies and manages a large vendor pool to obtain the benefit of enhanced pricing competition, without imposing relatively high administrative costs or causing a loss of quality control; (2) offers vendors an inexpensive, cost effective and reliable system for obtaining access to print jobs and specifications without added marketing costs and sales commissions; and (3) does not rely on the vendors"" product expertise to establish price, but rather allows each vendor to bid high, bid low, or not bid at all based, strictly, on their production capabilities and need to fill available time in their production schedules.
The present invention provides a system and method for selecting a printing vendor from a plurality of printing vendors, comprising steps of receiving, at a central, conventional database server termed herein as xe2x80x9cthe PrintProSysSM serverxe2x80x9d, an initial vendor pool data set from each of a plurality of buyers, the initial vendor data set identifying an initial vendor pool for that buyer, entering the initial vendor pool data set into a vendor database within the xe2x80x9cPrintProSysSM serverxe2x80x9d, transmitting an invitation to subscribe to each vendor in the initial vendor pool, receiving a vendor capability data from a sub-plurality of the vendors in the initial vendor pool, the vendor capability data describing each vendor""s print capabilities, entering the vendor capability data into the vendor database, receiving at the PrintProSysSM server a buyer""s invitation-for-bid describing a customized print or other information product or service that the buyer wishes to procure or obtain bids for, calculating or extracting a vendor selection criteria data from the buyer""s invitation-for-bid, the vendor selection criteria data defining the values that a vendor""s capability data must meet to qualify for, and to receive, a vendor""s invitation-for-bid requesting a bid response corresponding to the buyer""s invitation-for-bid.
The method of the present invention then compares and correlates the vendor selection criteria data to the vendor capability data field of each vendor data record in the buyer""s vendor pool database. The PrintProSysSM server then transmits a vendor""s invitation-for-bid data to each vendor in the buyer""s vendor pool whose vendor capability data field meets the vendor selection criteria data extracted from the buyer""s invitation-for-bid data. Next, the PrintProSysSM server receives a plurality of responding bid data, each being from a corresponding one of the plurality of vendors to whom a vendor invitation-for-bid data was transmitted, and each representing the transmitting vendor""s price for the particular print information goods or services requested. The PrintProSysSM server then selects the responding bid data having the lowest represented vendor price and generates information identifying the buyer of the identity of the selected vendor.
Upon the PrintProSysSM server""s receipt of an approval data from the buyer, it issues an order to the selected vendor for the purchase of the at least one printed item. In addition, the PrintProSysSM server""s transmits to the remaining non-selected vendors in the vendor pool a bidding result data representing the identity of the selected vendor, and the rank order value of the bid data submitted by all other selection pool vendors.
The PrintProSysSM server of the invention has the further ability to maintain multiple vendor pools for each of a plurality of buyers, the multiple vendor pools for a particular buyer corresponding to multiple print product or service types that the buyer procures.
A still further embodiment transmits a data representing the bid price of all received bids, to all vendors who submitted bids.
A further embodiment of the invention assigns a preferred vendor flag to each vendor record and then selects vendors for receiving vendors"" invitation-for-bid based on the flag value.
A still further embodiment of the invention automatically generates a set of project milestone data for use in monitoring the winning vendor""s progress on the buyer""s requested print job or service.
A still further embodiment of the invention receives an invoice data from the winning print vendor upon completion of the job, and generates a corresponding buyer""s invoice in response. The system then receives a fund transfer from the buyer based on the buyer""s invoice and deposits the fund into an escrow account. Next, the system subtracts a system fee from the deposited amount, transfers that system fee to a system administration account, and transmits the remainder from the escrow to the winning print vendor. This embodiment provides a single source accounting for buyers dealing with a plurality of vendors.