1 Field of the Invention [001] This invention relates to a system and process for providing incentives to participants in a supply chain. Background [002] The following discussion of the background art is intended to facilitate an understanding of the present invention only. The discussion is not an acknowledgement or admission that any of the material referred to is or was part of the common general knowledge as at the priority date of the application. [003] There is a global need for goods producers and service providers across supply chains to remain competitive by reducing the cost of inputs, maximise the revenue for their production or service and lessen the impact of operational, financial and climate risks. To this end, numerous insurance, financial products, mutual societies, cooperatives, buying groups and loyalty programs have been implemented to provide incentives to goods producers and service providers who participate across various supply chains and industries for this purpose. [004] A supply chain describes a network of goods and service providers including related service providers such as financiers, insurers, including collectives such as clubs, groups, associations, cooperatives and mutuals. Such supply chains include business to business and business to consumer transactions and can be involved at one end of the supply chain in the production of commodities or generic services and extends to retail consumers who consume value added retail goods and services. [005] Due to the relative size of individual participants in a supply chain they may lack relative purchasing power or marketing power in comparison to other participants in the supply chain. Often there exists economies of scale and buying or marketing power when those participants are coordinated so that they can buy like commodities, goods or services together to obtain financial benefits. This can be provided through an incentive scheme such as a buying group, a loyalty program, a cooperative or some collective means of 2 providing incentives in return for the commitment to coordinating their buying or selling activities in some respect. Often those incentives are provided by discounts, credits, rebates, payments or points based incentive systems. [006] More commonly incentive schemes will be provided by entities who wish to promote sales of their goods or services for the purpose of increasing their trade and business. Loyalty programs are often used to provide incentives to identified customers who demonstrate desirable consumer behaviour such as loyalty. Less common are loyalty programs that span across a plurality of providers such as a credit card loyalty program but they are aimed at ensuring loyalty to the credit card issuer rather than the various goods or service providers. Points based loyalty programs often provide incentives across a network of purveyors of goods and services who offer complementary rather than competitive goods and services. Loyalty programs are often focused on the retail end of the supply chain across various industries. [007] Alternatively participants in various industries have cooperated to form collective groups such as buying groups and cooperatives, commonly found in agricultural industries to use their collective power to obtain lower costs for their inputs or to maximise the return from their outputs in a supply chain. In this context inputs means the goods and services used by a participant in the supply chain for the production or sale of outputs which means goods and/or services which are provided by the participant for sale or use by a consumer which may be another participant in a supply chain or full final consumption. [008] In Australia, for example, there exists a range of loyalty programs and buying groups which aim to provide incentives to participants in those programs to reward them for their loyal custom in buying products or services. Common examples include frequent flyer programs, supermarket loyalty cards or credit card programs. Most often these programs focus on one product provider or occasionally will assist a particular industry with the business requirements of its members which is to promote sales of its outputs. Loyalty programs also exist throughout the supply chain such as business to business programs such as those provided by the cooperative Capricorn Limited (which is a buying group for the automotive industry in Australia). It provides a reward point program for purchases made 3 with preferred suppliers of automotive parts but also includes a range of services such as financial services, travel services and business protection. [009] Furthermore collective schemes which seek tax concessions exist such as mutual societies and cooperatives. Mutual societies provide services to members mostly for financial products at some reduced cost as service delivery to members rather than profit motivates those organisations. Cooperatives are more common where tangible goods such as agricultural products are involved but tend to attempt to provide shared services in the productive aspects for their members such as storage, handling, processing, marketing of produce and seek to reduce the cost of services provided by relying on government support either in the form of reduced taxation or from endowment with public assets or concessions. Larger cooperatives can tend to become conservative as they respond to the demands of their membership who often wish for them to remain consistent with their core activities for which they were founded or have customarily provided. [010] Efforts to reduce risk in supply chains have been more limited to traditional insurance products or a limited number of financial products such as derivatives. Beyond self insurance or traditional insurance there are limited options for combining supply chain networks to provide mechanisms to reduce risk to producers who are exposed to a range of financial, operational and climate related risks. Often insurance and like financial products remain cost prohibitive and insurance related schemes which are unsuccessful in some countries remain in others only where government support is available. One such example is multi peril crop insurance which has been either unsuccessful or enjoyed limited success in a country like Australia where there has been little government support which should be contrasted against government assisted programs in countries such as the United States of America. [011] Another example of insurance type financial products involves parametric weather derivatives where an issuer contractually structures the derivative contract to pay out on the occurrence of weather related parameters. The issuer of the derivative includes in the price the probability of pay out with a sufficient margin for uncertainty and risk. These products are complex, limited to the parameters set by the derivative issuer and often result 4 in an expensive risk reduction mechanism when compared to the alternative of self insurance. [012] Enterprise value is often related to the maintainability of future earnings which often involves some calculation or estimation of the likely risks involved in the obtaining of those future earnings. Where risk can be reduced from an enterprise or combination of enterprises or participants in a supply chain it is likely that some increase in enterprise value or supply chain value can occur and this would be a desirable objective. For this reason an integrated incentive scheme which can effectively reduce risk is preferred. [013] Participants in supply chains are often faced with a great deal of complexity in their operations which may lead to reduced efficiency in their operations. An example of a small local farmer who sells an internationally priced commodity requires the allocation of resources to planning, budgeting, sourcing, purchasing, transporting and storing inputs, managing currency exposure and volatility in market prices on outputs without even considering all of the operational and agronomic activities. The benefits of a proficient program administrator who can achieve economies of scale for some of these resource consuming activities may be considerable. [014] However, the problem with present initiatives is that they have not been sufficiently integrated across a supply chain, rely on points systems with limited incentives, use price as the only incentive, require government support, consume too many resources, are not available to all producers, do not reduce risk or are overly onerous or restrictive. It is an object of the present invention to address some or all of the aforementioned limitations by means of an integrated incentive program. Summary of Invention [015] According to one aspect of the invention, there is provided a process for providing incentives to any number of participants in a supply chain network by coordinating their activities to obtain incentives, payments, discounts or rebates comprising: 5 [016] a step of combining a network of participants in a supply chain of input buyers and/or output sellers; [017] a step of a program administrator coordinating with input suppliers and/or output acquirers on behalf of program participants for obtaining incentives, payments, discounts or rebates; [018] a step of a program administrator coordinating the program participants actions between themselves and with input suppliers and/or output acquirers to obtain incentives, payments, discounts or rebates; [019] a step of enhancing those sums by acquiring financial products, investing, hedging or acquiring contracts of insurance; [020] and a step of redistributing a part or all of the incentives, payments, discounts, rebates or enhanced sums to participants of the program either in proportion to their level of participation in the incentive scheme and/or according to some criteria such as financial and/or operational performance and/or in a manner that reduces the risk of the participants' enterprise; [021] and/or a step of a program administrator determining the amount of variable incentives to be allocated to program participants in a discretionary manner. Brief Description of the Drawings [022] Embodiments of the invention will now be described, by way of example only, with reference to the accompanying drawings in which: [023] Figure 1: shows a diagram of the incentive scheme in accordance with an embodiment of the invention for a supply chain.
6 [024] Figure 2: shows a diagram of the incentive scheme incentive payments in accordance with an embodiment of the invention. Best Mode(s) for Carrying Out the Invention [025] The present invention provides a method for providing an integrated incentive program for a supply chain network. In an exemplary embodiment, an incentive program can be implemented that provides elements of an integrated incentive program administered by a program administrator for a supply chain network that contains suppliers of inputs such as goods and services, participants who sell, produce, combine or improve outputs such as goods and services and users or buyers of the outputs provided by the participants. [026] Figure 1 illustrates the main components of a system for providing an incentive scheme to participants in a supply chain network. The system 100 shows a program administrator coordinating any number of participants in a supply chain network. The program administrator obtains the right to enter into transactions on behalf of the participants with other parties in the supply chain including suppliers of inputs and/or buyers of outputs so that incentives, payments, discounts or rebates may be accumulated in the scheme for the benefit of the participants. To this end, where reference is made in this specification to an incentive, this should be construed as referring to either a benefit, payment, discount, rebate, an amount credited and/or value provided whether tangible or intangible. [027] In step 101 the program administrator negotiates with the suppliers of inputs to obtain incentives to be used in the incentive scheme. In particular the program administrator uses the purchasing power from the aggregation of the purchasing activities of the participants of inputs required by the participants. The program administrator may cooperate with the suppliers in step 101 to negotiate additional incentives where the purchasing behaviour of participants can be coordinated to; provide their purchasing intentions, meet deadlines for ordering, make prepayment for purchases, guarantee payment, accept delivery of goods or services at specified times such as "off peak", accept 7 variations in quality or quantity of the goods or services, meet volume or price targets for quantity of purchases, attract new customers and/or retain existing customers. Further at step 101 the program administrator may seek additional incentives from a supplier by coordinating, optimising or altering the purchasing behaviour of the participants or the activities of any party in the supply chain network such as in the steps relating to production, storage and transport of inputs. [028] In step 101 the incentives arise from agreements between the program administrator, the input supplier and the participant. In a particular embodiment of the incentive program those incentives will most often be referable to the price paid for the inputs by the participant and will use some price discovery mechanism for the calculation of the incentive amount. The incentives will be used predominantly to provide benefits to the participants and to meet the costs of the incentive program. [029] At step 102 the participants will purchase inputs from a supplier or from multiple suppliers in the incentive scheme and under the terms of step 101 incentives will be paid to the program administrator of the incentive scheme or directly to the participants. In this specification the terms payment or paid refers to a payment in cash or in kind, a crediting, offsetting, forgiveness, discount, rebate, prepayment or any method of exchange of value. [030] At step 103 in a particular embodiment of the program the program administrator negotiates with the buyers of goods and services of the participants to obtain incentives to be used in the incentive scheme to provide benefits to the participants. In particular the program administrator uses the selling or marketing power from the aggregation of the selling activities of the participants of goods and/or services provided by the participants. The program administrator may cooperate with the buyers in step 103 to negotiate additional incentives where the behaviour of participants can be coordinated, optimised or altered to meet the requirements of the buyers. [031] At step 104 the participants will sell their outputs such as goods or services to a buyer or buyers and as a result under the terms of step 103 incentives, payments, discounts or rebates will be paid into the incentive scheme administered by the program administrator or directly to the participants.
8 [032] In Figure 2 the collection of the incentives which are paid in step 200 from the suppliers of inputs and in step 201 payment of the incentives from buyers of outputs in the supply chain network in accordance with the agreement between the suppliers in step 200 and the buyers in step 201 with the program administrator. [033] At step 202 the program administrator coordinates the receipt of the incentives and at step 203 the program administrator uses a portion or all of the incentives for enhancement by acquiring financial products, investing, hedging or acquiring contracts of insurance. In the present specification the term enhance or enhancement incudes an action taken to increase the total incentives available to the program for the ultimate benefit of the participants. The proceeds of the enhancement undertaken at step 203 are then made available under step 204 to the program administrator for use in the incentive scheme. The incentives derived under step 203 combined with any additional sums available from step 204 are then available to the program administrator for use in the incentive program especially for the benefit of the participants. In step 205 the program administrator determines the eligibility for each of the participants in accordance with the incentive program and the agreement between the participants and the program administrator. The incentives paid under step 205 can be paid in whole or in part in proportion to their level of participation in the incentive scheme and/or according to some criteria such as financial and/or operational performance and/or a step of the program administrator determining the amount of variable incentives to be allocated to program participants in a discretionary manner. It is possible for the terms of the incentive program to pay a greater portion of incentives to a participant who has suffered an event similar to an insurable event so that the incentive program is a proxy for or an addition to insurance type cover. [034] In one example of the invention an incentive program operated by a program administrator in Figure 1 coordinates separate grain farming businesses as the participants as marked Participants 1 to 4 in Figure 1 at 100 in an agricultural supply chain comprised of the suppliers, participants and the buyers shown in Figure 1. By agreement between the program administrator and the participants the program administrator buys supplies such as fertiliser from Supplier 1, chemicals from Supplier 2 and fuel from Supplier 3 as marked in 9 Figure 1 upon the request of and on behalf of the Participants 1 to 4 in Figure 100. The Suppliers 1 to 3 have agreed to pay a rebate to the program administrator at step 101 on behalf of the participants and calculated as a percentage of the purchase price of the supplies being the fertiliser, chemicals and fuel purchased by the program administrator but delivered to the participants at step 102. The Buyers 1 to 3 as marked in Figure 1 have agreed to pay a rebate to the program administrator at step 103 calculated as a percentage of the purchase price paid by the Buyers 1 to 3 to the Participants 1 to 4 at step 104 for the purchase of the grain output produced by the grain farming businesses as delivered to the Buyers 1 to 3 at step 104. In Figure 2 the program administrator has at step 202 aggregated the incentives paid in the form of rebates as agreed at step 200 and 201 and has reinvested those sums at step 203 thereby enhancing those incentives. The return from the investment at step 204 is paid back to the program administrator for use in conjunction with the incentives accumulated at step 202. By prior agreement and subject to the terms of the incentive program, the program administrator at step 205 pays the incentives to the Participants 1 to 4 in proportion to the purchases of inputs and sale of outputs within the incentive program attributable to each of the participants.