WO2001097109A2

WO2001097109A2 - An electronic procurement system and method

Info

Publication number: WO2001097109A2
Application number: PCT/IE2001/000080
Authority: WO
Inventors: Kelly Murphy
Original assignee: Marrakech Limited
Priority date: 2000-06-15
Filing date: 2001-06-12
Publication date: 2001-12-20
Also published as: AU2001274432A1; GB0229173D0; GB2379308A

Abstract

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Description

An Electronic Procurement System and Method

Field of the Invention

This invention relates to a system and method for electronic procurement via the Internet.

Background of the Invention

Procurement is the process by which a purchaser searches for, orders, receives, and pays for needed commodities from a supplier. This process has proved a source of frustration and costly inefficiency for many companies because of the mundane administration associated with the process. The procurement of "indirect" or "non- production" goods and services can account for more than 35% of annual expenditure in an organization. In very large organizations this can total many millions of pounds per year. Such organizations cite potentially huge savings in operating costs by making the procurement process more efficient and accurate.

For suppliers too, the costs and frustrations associated with the existing paper-based process are high. The supplier has to maintain and publish paper-based catalogue and price lists and has to provide a large administration function for the processing or orders by phone, fax and mail.

The general inefficiency of the procurement process often causes employees to use alternative means of requisitioning goods or services. This is known as "rogue purchasing" since the organization often ends up paying much higher (retail) prices for goods or services than would otherwise be available at discounted prices from a contracted supplier. It is estimated that 50% of all "non-production" goods purchased in an organization are rogue purchases. The activities of improving the overall efficiency of the procurement process and of reducing rogue purchasing by funneling purchasing through a single managed channel of the purchasing organization produces many benefits as follows. Firstly, the reduction in rogue purchasing means more goods and services are purchased at discounted prices and hence the organization reduces costs. Secondly, with much higher volumes of purchases now going to contracted suppliers (aggregated purchasing) the purchasing organization can negotiate better price discounts further reducing costs.

However, the greatest cost saving will result in improving the lengthy and inefficient approval processes and by reducing the number of errors made on requisitions and purchase orders. Reduced errors can produce direct cost savings for both the purchaser and the supplier since less time and effort is expended tracking erroneous orders and deliveries, in addition, there are fewer unnecessary returns.

Many organizations have attempted to improve their overall procurement processes to gain efficiencies and reduce costs by the implementation of an electronic procurement strategy. Electronic procurement (EP) uses computer systems to support the procurement process and such systems can accrue several benefits as follows: reduced errors (because of the validation of requisition forms), increased efficiency (due to the automation of the approval workflow), reduced costs (through the reduction in paperwork), shorter turn-around times and the provision of better overall management information.

If successful, the EP system enables purchasers to gain increased control of their purchasing through the enforcement of business processes, control over employees responsibilities, vastly improved purchasing analysis and the reduction in "rogue" and unapproved purchasing. However, to gain the full benefits of automation of the procurement process it is also necessary to support the payment process.

Existing EP systems require a computer system in both the purchaser and the supplier organisation to support the purchasing process from purchaser to supplier. Typically one of these computer systems holds the electronic form of the product catalogue. These two computer systems are connected using some networking solution and most commonly the Internet. In additions, many existing EP solutions support the purchasing process but do not address the payment process.

Whilst such solutions, do provide substantial benefits they still have a number of problems. Existing EP systems are costly to implement since dedicated hardware is often required and certainly significant systems integration consultancy is always needed.

Existing EP systems must then be interconnected. Normally this requires integrating the system in the purchaser organisation to the system in each of the supplier organisations. Furthermore, the system in the supplier organisation must also be integrated into the existing order processing systems. The significant level of integration required, often causes implementations to be simplified as far is possible resulting in inadequate support for the procurement process, which runs contrary to the original objective of such systems. Instead existing EP systems require organisations to adopt new processes. Thereafter these systems require ongoing maintenance. Where the system requires an electronic product catalogue on the purchaser's system this adds to the maintenance load by requiring the purchaser to maintain not only the systems but also the data associated with his suppliers' catalogues.

All this cost and additional activity distracts from the real benefits of electronic procurement and may out-weigh the actual cost savings gained therefrom. Such systems are not sufficiently flexible to enable their use by many different buyers and suppliers with their own systems. Further, with increased number of users and volume of trade, the software and hardware systems require upgrading also the introduction of new organizations to the network of traders necessitates further system integration and subsequent ongoing maintenance. Such activities result in lengthy implementation cycles and slow growth of the network.

Hence existing EP solutions do not adequately address the fundamental need for simple procurement process improvement and error checking at minimum cost.

Summary of the Invention

According to the present invention there is provided an electronic procurement system allowing transactions between purchasers and suppliers via an internet web site, the system comprising means for receiving purchase orders from different purchasers at the web site, each purchase order identifying at least one item to be purchased and a supplier of the item, means for making each such purchase order available for viewing on the web site only by the relevant supplier, means for receiving acceptances of purchase orders from suppliers at the web site, and means for making each such acceptance available for viewing on the web site only by the relevant purchaser.

Preferably the system includes means for receiving each purchase order initially as a purchase request and for making that purchase request available for viewing on the web site only by personnel of the relevant purchaser, the system further including means for receiving an authorisation from the purchaser whereby the purchase request is made available for viewing by the supplier as a purchase order.

Preferably, too, the system further includes means for receiving invoices from different suppliers relating to goods and/or services supplied in response to accepted purchase orders, means for making each such invoice available for viewing on the web site only by the relevant purchaser, means for receiving approvals of such invoices from purchasers at the web site, and means for generating an electronic funds transaction in response to such approval.

According to the invention there is further provided a method for electronic procurement via an internet web site, the method comprising receiving a purchase order from a purchaser at the web site, the purchase order identifying at least one item to be purchased and a supplier of the item, making the purchase order available for viewing on the web site only by the relevant supplier, receiving an acceptance of the purchase order from the supplier at the web site, and making such acceptance available for viewing on the web site only by the purchaser.

The invention further provides a computer program product comprising a computer- readable medium containing code operable at an internet website to receive a purchase order from a purchaser at the web site, the purchase order identifying at least one item to be purchased and a supplier of the item, make the purchase order available for viewing on the web site only by the relevant supplier, receive an acceptance of the purchase order from the supplier at the web site, and make such acceptance available for viewing on the web site only by the purchaser.

The embodiment of the present invention provides a trading facility that integrates enterprise purchasing and payment processes into a single system, on a single global network for both purchasers and suppliers, without the necessity for software installation and integration into existing legacy systems.

The present embodiment provides an integrated EP system this is easy to adopt in either a purchaser or supplier organisation at minimal cost because there is no software or hardware required other than an Internet browser and because there is almost no disruption to existing business processes in the organisation.

The present embodiment explicitly precludes the need for organisations to install additional hardware or software since the system is accessible over a public network such as the Internet using common network access tools such as an Internet browser like Netscape Navigator® or Microsoft® Internet Explorer®.

The present embodiment also explicitly precludes changes to existing procurements processes in either the purchaser or supplier organisations.

The present embodiment is an Internet based electronic service that allows a closed set of purchasers to conduct business with a closed set of suppliers. The present embodiment provides an EP system that is available only to pre-registered users and organisation: all purchaser and supplier organisation are registered participants and only registered users in registered organisations can use the system. The present embodiment explicitly prohibits anonymous trading.

The present embodiment further provides an integrated EP system that can be maintained, corrected and enhanced without disruption or cost to the subscribing organisations. The integrated EP system can continuously deliver new capability to subscribers without software or hardware upgrades or changes to configurations.

The present embodiment provides an integrated EP system that enables an organisation to trade with many other organisations through a single system.

The present embodiment provides an integrated EP system that enforces the trading relationship between a purchaser and supplier by ensuring that each purchaser can access only the products of pre-defined suppliers and that each purchaser can create purchase orders and payment for those pre-defined suppliers. Similarly, suppliers can only respond to purchase orders received from purchasers with a pre-defined trading relationship and can only issue invoices to those same pre-defined purchasers. This means that a given organisation will only trade with a subset of the entire integrated EP community. The integrated EP provides a service that strengthens the existing relationships between purchasers.

The present embodiment also provides an integrated EP system that establishes a trading relationship between a purchaser and supplier organisation without the need for any software or hardware integration.

The present embodiment provides an integrated EP system that allows a new trading relationship between a purchaser and supplier organisation to be quickly and easily established, particularly if both organisations are already subscribers to the integrated EP system. The present embodiment provides an integrated EP system that enforces the responsibilities of each employee within either the purchaser or supplier organisation thereby giving the organisation strict adherence to business roles and approval controls.

The present embodiment further provides an integrated EP system that enforces the business process of the purchaser and supplier organisations giving the organisation strict control over those business processes.

The present embodiment additionally provides an integrated EP system that manages all correspondence between a purchaser organisation and a supplier organisation.

The present embodiment provides an integrated EP system that enables employees in a purchaser organisation that subscribes to the system to purchase goods or services from one or more nominated suppliers that also subscribes to the system.

The present embodiment further provides an integrated EP system that ensures that the proper approval process for the purchaser organisation is executed in respect of each purchase.

The present embodiment provides an integrated EP system that enables employees in a supplier organisation that subscribes to the system to receive purchase goods or services from one or more nominated purchasers that subscribe to the system.

The present embodiment further provides an integrated EP system that ensures that the proper approval process for the purchaser organisation is executed in respect of the fulfilment of each purchase order received.

The present embodiment provides an integrated EP system that enables employees in a supplier organisation that subscribes to the system to bill (or invoice) one or more nominated purchasers that subscribe to the system for goods or services delivered to those purchasers.

The present embodiment provides an integrated EP system that enables employees in a purchaser organisation that subscribes to the system to pay bills (or invoices) received from one or more nominated suppliers that subscribe to the system in respect of goods or services received from those suppliers.

The present embodiment further provides an integrated EP system that ensures that the proper approval process for the purchaser organisation is executed in respect of the payment of each bill (or invoice) received.

The present embodiment provides an integrated EP system that provides rich reports and data analysis in respect of all purchasing activity by a subscribing purchaser organisation and all sales activity by a subscribing supplier organisation.

The present embodiment provides an integrated EP system that enables third-party systems to import data into the system and to export data from the system in a variety of data formats. This facility can be used for the purpose of integrating existing systems within an organisation to the data available in the integrated EP system.

Brief Description of the Drawings

The features and advantages of the present invention will become apparent from the following description of a preferred embodiment of the invention, taken together with the accompanying drawings, in which:

Figure 1 is a schematic representation of the integrated EP system in accordance with the present embodiment, depicting the major participants and electronic transactions that flow in the use of the system.

Figure 2 is a schematic representation of the integrated EP system in accordance with the present embodiment, providing a broad overview of the system architecture. Figure 3 is a block diagram of the main structural/functional components of the EP system shown in figures 1 and 2.

Figure 4 is a flowchart depicting the steps involved in the process of including a new subscribing organisation into the system.

Figure 5 is a flow chart representing the steps involved in creating profiles, or roles, for employees in the organisation subscribing to the integrated EP system.

Figure 6 is a flow chart for the stages involved in the procurement of an item.

Figure 7 is a screenshot of a purchase requisition made by an employee of a purchasing organisation to be approved by the appropriate authorisation person.

Figure 8 is a flowchart of the purchase requisition approval process employed by the purchasing organisation.

Figure 9 is a flowchart of the purchase order approval process employed in the supplier organisation.

Figure 10 is a flow chart for the stages involved in the billing and settlement of a purchased item.

Figure 11 is a flow chart of the stages involved in the invoice approval process in the purchasing organisation.

Figure 12 is a flow chart of the stages involved in the payment instruction approval process in the purchasing organisation.

Description of Preferred Embodiment (I) System Overview

Referring to figure 1, the integrated EP system (1.3) is a comprehensive procurement solution that facilitates trading between a purchaser (1.1) and a supplier (1.4) and provides automated electronic funds transfer between the purchaser's bank (1.6) and the supplier's bank (1.7) using one or more banking partners (1.5).

The integrated EP system is provided and operated by an independent party, a commerce intermediary (1.2) who manages the system and information in this system on behalf of the purchasers, suppliers and banking partners who use it. The system is operated independently and can have many purchasers, suppliers. Therefore the integrated EP system forms around it a trading network of collaborating purchasers and suppliers.

The commerce facilitator may form relationships with as many banking partners as is necessary in order that the system can offer clearing services for electronic funds transfers between the banks used by each purchaser and each supplier that make up the trading network.

The commerce facilitator also controls which organisations can access the integrated EP system. Any organisation wanting to join the network of traders must make application to the commerce facilitator. A period of negotiation and analysis by the commerce facilitator follows before access to the system will be granted for that organisation. This is necessary to qualify the organisation for inclusion on the trading network but also to establish the specific trading relationship that must be put in place between the organisation and other organisations that are already part of the trading network.

(II) System Architecture Referring to figure 2, the trading network consists of a plurality of purchasing organisations (2.1) and a plurality of supplier organisations (2.2) interacting through the integrated EP system (2.3). Within each purchasing and each supplier organisation there are a plurality of employees (2.4). Each employee plays one or more roles in the procurement process that spans both the purchasing and supplier organisations.

The integrated procurement system (2.3) itself comprises four parts: the Purchasing system (2.5), the Payment system (2.6), the Business Intelligence system (2.7) and the Integration system (2.8). Each of these systems may reside on separate servers within the integrated EP system (2.3) but they may be otherwise shared on one or more servers.

The Purchasing system (2.5) and the Payment system (2.6) may be used independently whilst the Business Intelligence system (2.7) provides reporting functions on data collected from both the Purchasing (2.5) and Payment (2.6) systems. The Integration system (2.8) inputs and outputs data in a variety of formats and may be used to integrate external third-party systems into the integrated EP system.

Figure 3, shows a logical representation of the components that comprise the integrated EP system wherein it can be seen that the integrated EP system (3.1) contains two modules, namely the Purchaser module (3.2) and the Supplier module (3.3).

The Purchaser module (3.2) contains a number of sub-systems for the management and approval of purchase requisitions (3.4) and purchase orders (3.5), the receipt of orders (3.6) and the approval of invoices (3.7) and payments (3.8). These subsystems themselves consist of functions (3.4a, 3.5a, 3.6a, 3.7a, 3.8a) for manipulating the data in that sub-system and business rules (3.4b, 3.5b, 3.6b, 3.7b, 3.8b) for each user in each purchaser organisation that can access the system. The business rules controls the set of functions available to each user and the business processes for the different approval requirements of the organisation. The Supplier module (3.3) contains a number of sub-systems for the management and approval of purchase orders (3.8) and sales orders (3.9) and the notification of despatches (3.10) and invoices (3.11). These sub-systems themselves consist of functions (3.8a, 3.9a, 3.10a, 3.11a) for manipulating the data in that sub-system and business rules (3.8b, 3.9b, 3.10b, 3.1 lb) for each user in each supplier organisation that can access the system. The business rules controls the set of functions available to each user and the business processes for the different approval requirements of the organisation.

The Integrated EP System (3.1) also contains a Workflow Management system (3.13) that controls the approval workflows according to the business rules in each module. It additionally contains a Transaction Database (3.14) that stores data records for all recent transactions performed by all users of the system and a Database Warehouse (3.15) which stores data records from the Transaction Database for long term storage and for reporting and data analysis.

In addition, the Integrated EP System (3.1) contains data records for the products (3.13) that each purchaser may purchase through the system. To provide automated electronic funds transfer the integrated EP system (3.1) also has a Banking Systems Integration component (3.14) that may be configured to provide access to a bank with clearing facilities for the transfer of electronic funds transfer (EFT) messages. Such EFT messages effect payment from a purchaser to a supplier by transferring funds directly from the nominated account at the purchaser's bank to the nominated account at the supplier' s bank.

In order that external third-party systems (such as Enterprise Resource Planning (ERP) systems or accounts payable systems) might interact with the integrated EP system (3.1) a Third Party Systems Integration component (3.15) provides a mechanism for inputting and outputting data in formats that may be imported and exported from those third party systems. (III) Procurement System Initialisation

The embodiment as described does not represent a website openly available for anonymous buyers and suppliers to execute deals. The embodiment is a closed extranet (the extension of a company's intranet out onto the internet, to allow selected customers, suppliers and mobile workers to access the company's private data and applications via the World-Wide Web), in which a company must subscribe to become a member and can trade only with other nominated subscribing companies.

When a company subscribes to the integrated EP system, its designated employees are given rights to access and use parts of the system appropriate to their responsibility. If the organisation is a supplier, descriptions of the commodities it supplies are added to the system for selection. It is not necessary for these subscribers to install software, or adapt their existing trading relationships, computer systems or procurement processes in order to use the integrated EP system. Similarly, if the subscriber has an existing procurement procedure and wants to maintain it, the rules of the procedure are added to the integrated EP system for use by its employees. Therefore, when their employees access the system, they can follow a procurement process with which they are familiar.

Figure 4 shows the processes involved in adding a new subscriber to the integrated EP system. Following successful contractual negotiations between the subscribing organisation and the commerce facilitator, the organisation is analysed to determine its existing procurement system and trading partners (4.1). A data record is created

(4.2) in a database in the integrated EP system, which contains all the information that the system requires to govern its relationship with the new subscriber.

For each new organisation, its way of doing business and its trading partners, including those companies it wishes its employees to order goods from, and/or those companies it wants its employees to include in the payment process is loaded into an organisation record in the integrated EP system. The organisation record is configured with details of access rights to trading partners (4.3) and the individual purchasing process and/or payment process (4.4).

In a particular but non-limiting, embodiment of the invention, a new subscribing company is configured in an isolated testing environment in order to prevent accidental damage to existing subscribers. Following successful quality assurance testing of all the configuration settings for the new subscriber (4.5), the organisation record and related settings are deployed to the production environment for the integrated EP system (4.6).

Buyer and supplier organisations subscribing to the integrated EP system can allocate roles to particular employees in dealing with the system. Such roles are represented by user profiles in the Integrated EP system. A user profile and its associated login determine the access rights, functionality and tasks that can be performed by a user. Typical roles and their associated capabilities include:

(i) Purchasing employee - this user can create and modify requisitions and acknowledge receipt of goods. (ii) Purchasing approver - this user can authorise or decline requisitions created by a purchaser employee. (iii) Purchasing goods inwards employee - this user can acknowledge receipt of goods (iv) Purchasing manager - this user can perform the same tasks as the approver and can access additional reporting functionality

(v) Supplier employee - this user accepts or declines incoming purchase orders (vi) Invoice Approver - this user can approve an invoice for payment.

(vii) Accounts Payable Clerk - this user can create a payment instruction and review account statements. (viii) Payment Approver - this user can authorise a payment and review account statements, (ix) Accounts Receivable Clerk - this user can create and modify invoices and issue account statements.

I

The integrated EP system provides the ability to establish these roles and to associate one or more role with each user account.

Figure 5 shows the steps involved in establishing user roles. In a particular but non- limiting, embodiment of the invention, a business analyst examines that company's existing procurement system, and the tasks performed by the individuals working there when a company subscribes to the Integrated EP system (5.1).

These tasks are then mapped to sets of functions provided in the Integrated EP system (5.2). Such functions represent the business capabilities of the subscribed organisation in the Integrated EP system. Both steps (5.1) and (5.2) in the role creation process for a subscribing organisation are performed by a Business Analyst, whereas the further steps in the process are performed by an operator for the Integrated EP system.

Following the completion of the business responsibility/capability mapping process described above, an operator can create new user roles to enable individuals working for the subscriber company to use the integrated EP system (5.3). The operator can examine the list of possible business capabilities for the company (which are stored in a database within the integrated EP system (5.4)) and then select (5.5) and assign (5.6) whichever capabilities are appropriate to the new user, saving (5.7) the result in a database of user roles (5.8) in the integrated EP system.

(IV) Purchasing and Payment Processes In figures 6, 8, and 9, which are flowcharts describing different stages in the procurement process, members of a purchasing organisation are designated by figures surrounded by a triangle and members of the supplier organisation are designated by figures surrounded by a circle. Similar designations are employed in figures 10-12 which are flowcharts depicting different stages in the billing and settlement process.

It should be noted that the buyer and supplier organisation designations used in this description are not static or fixed roles, but that such roles can be interchangeable depending on a given activity being conducted by an organisation. For example a business supplier may itself have to purchase items for its own business purposes, and as such, itself becomes a purchasing organisation.

(V) A. Purchasing Process

The process of logging into the integrated EP system can be achieved through a common communications network such as the World Wide Web (WWW) by means of a standard web browser such as Microsoft Internet Explorer or Netscape Communicator. The connection between the user's web-browser and the integrated EP system is a secure communications channel that uses SSL (Secure Sockets Layer) or other security protocols to encrypt all the information exchanged. Secure communications such as HTTPS (HTTP over SSL) are supplied with most common Web browsers.

When a user logs into the integrated EP system, the user's login credentials, that uniquely identify him and the organisation for which he works (normally a user name, a password and an organisation code) are received by the integrated EP system and used to identify the user by searching for those credentials in its database of users. When the user is correctly identified, the integrated EP system establishes a session by firstly checking its user database to discover the user's predefined roles. Next the integrated EP system uses the role to decide which information the user can see on the pages that the will be delivered on his web browser. In completing the login process, the integrated EP system uses the role information to decide which commands that user is entitled to issue to the system and the data he is entitled to access.

Figure 6 is a flow chart of the stages involved in the procurement of an item. When a person (henceforth known as an employee of the purchasing organisation) wishes to procure an item, he firstly logs into the integrated EP system as described above (6.1). The employee of the purchasing organisation can then use the functions presented to him, on his web browser by the integrated EP system, to search for the required item (6.2) in supplier catalogues (seen as component 3.13 in figure 3) using a variety of text searching and list navigation techniques. The integrated EP system will only present the commodities from those suppliers to which the employee of the purchasing organisation has been granted access by his employers.

When the employee of the purchasing organisation chooses an item he can add this to a purchase requisition (6.3). The purchase requisition is a data record managed by the software systems in the integrated EP system and it contains details about the proposed purchase such as the individual items comprising the requisition, the name of the employee of the purchasing organisation, the total value of the purchase etc. The data record remains within the integrated EP system, stored in a database and is available for review or editing/modification by the appropriately empowered personnel.

Figure 7 is a screenshot of a current purchase requisition. It will be seen that this display includes a number of fields including the product code (7.1), the description (7.2) and the unit price of the quantity required of the desired item. As the status of the requisition changes during the purchasing process, the fields of the requisition record may be updated.

In addition to facilities for reviewing and modifying a purchase requisition, it is also possible for the person who created the requisition (employee of the purchasing organisation) or other individuals with access to the requisition to act on it. Referring back to figure 3, it can be seen that the integrated EP system (3.1) maintains a set of approval business rules (3.4b, 3.5b) in the Purchaser module (3.2) for each subscribing organisation that controls the purchasing process for employees of the organisations that use the system. The Buyer module (3.2) also contains a set of functions (3.4a) that allow the business module to apply the business rules to the record containing the requisition. These rules ensure that the requisition proceeds according to the procurement process requested by the buying organisation. The precise actions possible are dependent on the business rules defined for each organisation but typical actions include:

(i) Amend Requisition

Enabling an individual with the required level of access to amend the requisition.

(ii) Submit Requisition For Fulfilment Enabling the individual who created the requisition (employee of the purchasing organisation) to indicate that he wants the requisition in its present state to be fulfilled. The system uses the business rules for the organisation to which the individual belongs to determine whether a purchase order may be created immediately or whether another individual must explicitly authorise the fulfilment of the requisition.

(iii) Hold Requisition

Enabling an individual with the required level of access to indicate that he wants to defer any further action on the requisition.

(iv) Release Held Requisition Enabling an individual with the required level of access to indicate that he now wants to release a held requisition so that the requisition can be fulfilled. (v) Cancel Requisition

Enabling an individual with the required level of access to indicate that he wants to abandon the requisition entirely. No further action may be taken on a cancelled requisition. (vi) Authorise Fulfilment of Requisition

Enabling an individual with the required level of access to indicate that he authorises the fulfilment of the requisition. The business rules for the organisation will determine whether multiple authorisations are required. When all the required authorisations have been given the system creates one or more purchase orders for the requisition. (vii) Decline Fulfilment of Requisition

Enabling an individual with the required level of access to indicate that he declines the fulfilment of the requisition. In general, once a requisition is declined it will not be fulfilled without modification; however, the precise process followed depends on the business rules for the organisation.

Returning to figure 6, after a user (the employee of the purchasing organisation) has submitted a requisition for fulfilment (6.3), the systems that comprise the integrated EP system use the business rules defined for the organisation to determine how the requisition should progress (6.4). For example, in a particular purchasing organisation, a purchase requisition with a total value in excess of $1000 might require approval by a manager.

Referring to figure 8, if the requisition requires explicit authorisation (8.1) then the requisition data record is added with the appropriate authorisation workflow (8.2). When an individual with the appropriate level of access to authorise the requisition logs into the integrated EP system (8.3), he can browse a list of requisitions awaiting approval (8.4). This individual may act to authorise or decline the requisition for fulfilment (8.5). These actions update the requisition data record in the integrated EP system. If further authorisation is required by the purchasing organisation (e.g. the purchase approved by the manager in the previous example requires further approval by a purchasing manager) then such is reflected in the business rules of the organisation. In such cases, the requisition is simply added to the appropriate workflows of any additional authorisation persons. When a purchase requisition is authorised or declined, the integrated EP system may create a notification (8.7) for the attention of the individual who originally created the requisition. This notification informs the individual who created the purchase requisition whether or not his requisition was authorised. This notification may take many forms depending on the particular embodiment of the system. In one implementation the notification could take the form of an email message. In another implementation the notification would appear as a message on the user's browser when the user next uses the integrated EP system (6.4b).

Once a purchase requisition is fully authorised, the system creates one or more purchase order data records (8.8) for the attention of the specific suppliers who can supply the required commodities. Once again, the purchase order data records remain within the integrated EP system, but their details can now be viewed and acted upon by individuals in both the buyer and supplier organisations with the appropriate level of access when they log into the integrated EP system.

On inspection of figure 3, it can be seen that in addition to the purchase requisition approval business rules (3.4b) and functions (3.4a) in the Purchaser's module (3.2), the integrated EP system (3.1) maintains business rules (3.5b and 3.9b) and functions (3.5a and 3.9a) relating to the purchase order in both the purchaser (3.2) and supplier

(3.3) modules. These components ensure that the purchase order proceeds according to the procurement process requested by the purchasing and supplying organisations. The precise actions possible are dependent on the business rules defined for each organisation but typical actions for individuals in the supplier organisation include:

(i) Accept Purchase Order

Enabling an individual in the supplier organisation with the required level of access to indicate that he accepts the purchase order and will initiate its fulfilment. The business rules for the supplier organisation will determine whether multiple authorisations are required. When all the required authorisations have been given the system creates one or more sales orders for the purchase order, (ii) Decline the Purchase Order

Enabling an individual in the supplier organisation with the required level of access to indicate that he declines the purchase order. In general, once a purchase order is declined it will not be fulfilled, however, the precise process followed depends on the business rules for the supplier organisation.

The process of approving a purchase order is seen in figure 6 as block (6.5) and examined in greater detail in figure 9. An individual within the supplier organisation with the appropriate level of access can log into the integrated EP system (9.1) and examine a list of purchase orders (9.2) that have been allocated to his organisation. Typically a sales clerk would perform this action, and, in accordance with the business rules of the supplier organisation (as described above) (3.9) can act to accept or decline (9.4) any of those purchase orders.

If the sales operator (6.5b) declines the purchase order, the integrated EP system provides notification of this (9.5) to the employee of the purchasing organisation. This notification may take many forms depending on the particular embodiment of the system but include an email message or a message that appears on his browser when he next uses the system.

In addition to the approval mechanism of the purchase order in the supplier's organisation, the integrated EP system facilitates a similar approval mechanism for the purchasing organisation (6.5a) (i.e. the purchasing organisation can perform multi-level authorisation of both requisition orders (8.5- 8.7 in figure 8) and of the purchase orders (9.7 in figure 9). The precise actions available to the purchasing organisation during the approval of the purchasing order are dependent on the business rules defined for the organisation, but typical actions include:

(i) Amend Purchase Order Enabling an individual in the purchasing organisation with the required level of access to amend the purchase order, (ii) Hold Purchase Order

Enabling an individual in the purchasing organisation with the required level of access to indicate that he wants to defer any further action on the purchase order. (iii) Release Held Purchase Order

Enabling an individual in the purchasing organisation with the required level of access to indicate that he now wants release a held purchase order so that the purchase order can be fulfilled.

(iv) Cancel Purchase Order

Enabling an individual in the purchasing organisation with the required level of access to indicate that he wants to abandon the purchase order entirely. No further action may be taken on a cancelled purchase order.

If the sales operator in the supplier organisation (6.5b) accepts the purchase order and the approval person in the purchasing organisation agrees to approve the purchase order, a sales order is created for the goods involved. (9.9)

Returning to figure 6, when the sales order is first created, the sales order data record describes the same commodities as the purchase order. However, an individual with the appropriate level of access within the supplier organisation (6.6b) may amend the sales order (6.6) as required in order to fulfil the purchase order (e.g. if the supplier does not have in stock the specific item, or variety of item, requested by the purchasing organisation, but can supply a viable alternative).

The sales order describes the actual commodities that the supplier can supply and the dates on which they can be supplied. However depending on the availability of the requested items, as described in the above scenario, the details in the sales order may differ from the details in the purchase order. The amendment of the sales order is enabled by a set of functions (3.10a) and business rules (3.10b) in the supplier module (3.3) depicted in figure 3, which relate specifically to activities conducted on the sales order. These rules ensure that the sales order proceeds according to the fulfilment process requested by the supplier organisation. The precise actions possible are dependent on the business rules defined for the supplier organisation but typical actions include:

(i) Amend Sales Order

Enables an individual in the supplier organisation with the required level of access to amend the sales order,

(ii) Hold Sales Order

Enables an individual in the supplier organisation with the required level of access to indicate that he wants to defer any further action on the sales order. (iii) Release Held Sales Order

Enables an individual in the supplier organisation with the required level of access to indicate that he now wants release a held sales order so that the sales order can be fulfilled. (iv) Cancel Sales Order Enables an individual in the supplier organisation with the required level of access to indicate that he wants to abandon the sales order entirely. No further action may be taken on a cancelled sales order.

Returning to figure 6, an individual within the supplier organisation with the appropriate level of access can log into the integrated EP system (6.7) and create a despatch note describing the despatch of the commodities (6.8). Typically a despatch operator performs this action. When an individual creates a despatch note in the integrated EP system a data record for the despatch note is created within the integrated EP system.

An individual within the supplier organisation with the appropriate level of access can log into the integrated EP system (6.7) and review or amend a despatch note (6.9). Similarly, an individual within the buyer organisation with the appropriate level of access can log into the integrated EP system and review despatch notes relevant to him.

When a consignment of commodities are delivered to the purchasing organisation (6.11), an individual from that organisation with the appropriate level of access can log into the integrated EP system (6.12) and create a goods-received note (6.13) describing the goods received. Typically a receiving clerk or the employee to whom the commodities are delivered would perform this action. When an individual creates a goods-received note in the integrated EP system a data record for the goods- received note is created. An individual with the appropriate level of access can log into the integrated EP system and review or amend goods-received notes (3.14).

With the creation of the goods-received note the purchasing cycle is completed. All the data records that relate to a specific purchase are held within the integrated EP system as well as the audit records that tracks all changes by all users to those data records.

(V) B. Payment Process

Any individual whose organisation subscribes to the integrated EP system and who has a valid log in credential can issue invoices through the integrated EP system (e.g. an accounts clerk). He logs into the integrated EP system (10.1), reviews the items that his company has delivered to buyers (10.2), selects those deliveries that must now be paid for (10.3), and creates an invoice (a bill) (10.4). This invoice is maintained as a data record in a database within the systems that provide the functionality of the Integrated EP system. He may also create a blank invoice and enter the items onto that invoice using his web browser.

Once an invoice has been created the individual who created it or other individuals with access to the invoice may act on it. Turning to figure 2, it can be seen that in addition to the business rules and functions relating to the procurement process, the integrated EP system contains business rules and functions relating to billing and invoicing (namely 3.12a and 3.12b). The business rules ensure that the invoice proceeds according to the payment process requested by the buying organisation. The precise actions possible are dependent on the business rules defined for each organisation. Typical actions for a supplier organisation include:

(i) Amend Invoice

This enables an individual with the required level of access to amend the invoice.

(ii) Submit Invoice For Payment

This enables the invoice to be sent onto the buyer for payment. (iii) Hold Invoice

This enables an individual with the required level of access to indicate that he wants to defer any further action on the invoice.

(iv) Release Held Invoice

This enables an individual with the required level of access to indicate that he now wants release a held invoice so that the invoice can be fulfilled. v) Cancel Invoice

This enables an individual with the required level of access to indicate that he wants to abandon the invoice entirely. No further action may be taken on a cancelled invoice. (vi) Review Invoice This enables an individual with the required level of access to review the status of an invoice.

Returning to figure 10, after an individual in the supplier company has submitted an invoice for fulfilment (10.6), the systems that comprise the integrated EP system use the business rules defined for the buyer organisation (3.12b) to determine how the invoice should progress (10.7). Typical actions for a buyer organisation include: (i) Review Invoice

This enables an individual with the required level of access to review the status of an invoice.

(ii) Authorise Invoice

This enables an individual with the required level of access to authorise or decline an invoice for payment. (iii) Create Payment Instruction This enables an individual with the required level of access to create a payment instruction.

Figure 11 show the approval process for the invoice in the purchasing organisation in greater detail.

If the invoice requires explicit authorisation (11.1) then the invoice data record is added with the appropriate authorisation workflow (11.2). When an individual with the appropriate level of access to authorise the invoice logs into the integrated EP system (11.3), he can browse a list of invoices awaiting approval (11.4). This individual may act to authorise or decline (11.5) the invoice for payment in accordance with the above mentioned business rules. These actions update the invoice data record in the integrated EP system. In addition, the systems that comprise the integrated EP system use the business rules for the organisation to determine whether further authorisation is required (11.1) and if so the invoice data record is added to the appropriate authorisation workflow (11.2).

Returning to figure 10, an authorised user working in the accounts payable department of the buyer company can log into the integrated EP system (10.9) and review (10.10) a list of authorised invoices for his attention. He can create (10.11) or amend (10.12) payment instructions before submitting them for approval by his managers (10.13). He can also create a blank payment instruction and complete it from his web browser. The approval of payment instruction (10.14) proceeds according to the business rules (3.8b in figure 3) for the buyer organisation for such activities, typical activities in this regard include :

(i) Authorise Payment Instruction

This enables an individual with the required level of access to authorise or decline a payment instruction. (ii) Hold Payment Instruction

This enables an individual with the required level of access to indicate that he wants to defer any further action on the payment instruction.

(iii) Release Payment Instruction

This enables an individual with the required level of access to indicate that he now wants release a held payment instruction so that the payment instruction can progress. (iv) Cancel Payment Instruction

This enables an individual with the required level of access to indicate that he wants to abandon the payment instruction entirely. No further action may be taken on a cancelled payment instruction.

Figure 12 shows the approval process for the payment instruction in the purchasing organisation in greater detail.

If the payment instruction requires explicit authorisation (12.1) then the payment instruction data record is added to the appropriate authorisation workflow (12.2). When an individual with the appropriate level of access to authorise the payment instruction logs into the integrated EP system (12.3), he can browse a list of payment instruction awaiting approval (12.4). This individual may act to authorise or decline the payment instruction for payment (12.5). These actions update the payment instruction data record in the integrated EP system. In addition, the systems that comprise the integrated EP system use the business rules for the organisation to determine whether further authorisation (12.1) is required and if so the payment instruction data record is added with the appropriate authorisation workflow (12.2).

When an invoice or payment is authorised or declined, the integrated EP system may create a notification (12.7) for the attention of the Accounts Payable department. This notification informs the individual responsible for dealing with the invoice or payment whether or not the invoice or payment was authorised.

Returning to figure 10, if a subscribing organisation uses the automated electronic funds transfer function of the system, once a payment is fully authorised, the integrated EP system creates an Electronic Fund Transfer (10.15) data record. Once the EFT data record is created the integrated EP system sends the EFT to the bank (10.16). If a subscribing organisation does not use the automated electronic funds transfer function the process effectively ends when the payment instruction is authorised (10.15). In this scenario, the organisation uses an alternative mechanism outside the system to transfer funds to the supplier such as writing and despatching a cheque. With the transfer of funds to the supplier the payment cycle is completed. All the data records that relate to a specific purchase are held within the integrated EP system as well as the audit records that tracks all changes by all users to those data records.

The invention is not limited to the embodiment described herein which may be modified or varied without departing from the scope of the invention.

Claims

1. An electronic procurement system allowing transactions between purchasers and suppliers via an internet web site, the system comprising means for receiving purchase orders from different purchasers at the web site, each purchase order identifying at least one item to be purchased and a supplier of the item, means for making each such purchase order available for viewing on the web site only by the relevant supplier, means for receiving acceptances of purchase orders from suppliers at the web site, and means for making each such acceptance available for viewing on the web site only by the relevant purchaser.

2. A system as claimed in claim 1 , further including a database of purchasers and suppliers registered to use the system.

3. A system as claimed in claim 2, further including an online catalogue of products and services available from each registered supplier.

4. A system as claimed in claim 2 or 3, further including means for establishing for each registered purchaser a respective subset of registered suppliers which are the only suppliers available to that purchaser on the system.

5. A system as claimed in any one of claims 1 to 4, including means for receiving each purchase order initially as a purchase request and for making that purchase request available for viewing on the web site only by personnel of the relevant purchaser, the system further including means for receiving an authorisation from the purchaser whereby the purchase request is made available for viewing by the supplier as a purchase order.

6. A system as claimed in claim 5, further including means for establishing for each purchaser a database of purchaser personnel having different levels of authority with respect to a purchase request.

7. A system as claimed in claim 6, wherein the different levels of authority include the right to originate, modify and/or authorise a purchase request.

8. A system as claimed in claim 5, 6 or 7, further including means for establishing for each supplier a database of supplier personnel having different levels of authority with respect to a purchase order.

9. A system as claimed in claim 8, wherein the different levels of authority include the right to accept a purchase order and/or pay an invoice with respect to a fulfilled purchase order.

10. A system as claimed in any preceding claim, further including means for receiving invoices from different suppliers relating to goods and/or services supplied in response to accepted purchase orders, means for making each such invoice available for viewing on the web site only by the relevant purchaser, means for receiving approvals of such invoices from purchasers at the web site, and means for generating an electronic funds transaction in response to such approval.

11. A method for electronic procurement via an internet web site, the method comprising receiving a purchase order from a purchaser at the web site, the purchase order identifying at least one item to be purchased and a supplier of the item, making the purchase order available for viewing on the web site only by the relevant supplier, receiving an acceptance of the purchase order from the supplier at the web site, and making such acceptance available for viewing on the web site only by the purchaser.

12. A method as claimed in claim 11, wherein the purchaser and supplier are pre- registered to use the website for the procurement.

13. A method as claimed in claim 12, wherein the supplier is one of a subset of registered suppliers which are the only suppliers available to that purchaser at the website.

14. A method as claimed in any one of claims 11 to 13, wherein the purchase order is received initially as a purchase request which is made available for viewing on the web site only by personnel of the relevant purchaser, the method further including receiving an authorisation from the purchaser whereby the purchase request is made available for viewing by the supplier as a purchase order.

15. A method as claimed in any one of claims 11 to 14, further including receiving an invoice from the supplier relating to the goods and/or services supplied in response to the accepted purchase order, making such invoice available for viewing on the web site only by the purchaser, receiving an approval of such invoice from the purchaser at the web site, and generating an electronic funds transaction in response to such approval.

16. A computer program product comprising a computer-readable medium containing code operable at an internet website to receive a purchase order from a purchaser at the web site, the purchase order identifying at least one item to be purchased and a supplier of the item, make the purchase order available for viewing on the web site only by the relevant supplier, receive an acceptance of the purchase order from the supplier at the web site, and make such acceptance available for viewing on the web site only by the purchaser.