System and Method for Multi-Enterprise Supply Chain Optimization

1 . A method of optimizing multi-enterprise supply chain agreements using an electronic scenario based option contract, the method comprising:

creating at a buyer computer a plurality of scenarios of forecasted demand for one or more products;

communicating from the buyer computer to a seller computer an offer to enter into an option contract for the supply of the one or more products, the option contract including an option corresponding to each of the plurality of scenarios of forecasted demand;

executing the option contract;

receiving at the buyer computer an indication of current buyer demand for at least one scenario associated with the one or more products;

automatically and without user input subsequent to receiving at the buyer computer the indication of current buyer demand for the one or more products, determining at the buyer computer whether the indicated current buyer demand exceeds the forecasted demand specified in the option contract; and

automatically and without user input subsequent to determining at the buyer computer whether the indicated current buyer demand exceeds the forecasted demand specified in the option contract, if the indicated current buyer demand does not exceed the forecasted demand specified in the option contract, communicating from the buyer computer to the seller computer a request to exercise at least a portion of the option based at least in part on the indicated current buyer demand.

2 . The method of claim 1 , further comprising, at the buyer computer:

monitoring an exercised portion of the option;

comparing the exercised portion of the option with the forecasted demand specified in the option contract to determine whether a buyer obligation under the option contract has been met;

determining whether an option period specified in the option contract has ended; and

if the buyer obligation has not been met and the option period has ended, determining an applicable buyer penalty based at least in part on a penalty specified in the option contract.

3 . The method of claim 1 , wherein the plurality of scenarios of forecasted demand for one or more products comprises at least one alternate scenario of forecasted demand.

4 . The method of claim 1 , wherein at least one scenario of the plurality of scenarios of forecasted demand for one or more products comprises option parameters selected from a group consisting of:

a specified quantity of the one or more products that a buyer associated with the buyer computer is obligated to purchase, and a specified quantity of the one or more products that the seller is obligated to supply;

a specified number of product types that the buyer is obligated to purchase, and a specified number of product types that a seller associated with the seller computer is obligated to supply; and

a specified number of locations where the one or more products must be delivered.

5 . The method of claim 1 , wherein the option contract includes an exercise period comprising a period of time after the execution of the option contract during which a buyer associated with the buyer computer must exercise its option for at least one scenario of the plurality of scenarios.

6 . The method of claim 5 , wherein exercising the option for at least one scenario of the plurality of scenarios comprises:

specifying a first quantity of product desired at a first time during the exercise period;

specifying a second quantity of product desired at a second time during the exercise period;

and wherein updating forecasted demand comprises the sum of the first and second quantities of product desired.

7 . The method of claim 1 , further comprising:

receiving from the seller computer a modified plurality of scenarios of forecasted demand comprising at least one scenario of the plurality of scenarios of forecasted demand modified by an optimization model at the seller computer; and

accepting the modified plurality of scenarios of forecasted demand as a term to the option contract.

8 . The method of claim 1 , further comprising:

receiving a proposed contract term, for at least one scenario of the plurality of scenarios, from the seller computer;

accessing a memory comprising a range of acceptable contract terms for each of the plurality of scenarios; and

comparing the proposed contract term to the range of acceptable contract terms.

9 . The method of claim 8 , further comprising:

determining that the proposed contract term is within the range of acceptable contract terms; and

accepting the proposed contract term, for at least one scenario of the plurality of scenarios, without user input.

10 . The method of claim 8 , further comprising:

determining that the proposed contract term is not within the range of acceptable contract terms; and

identifying the proposed contract term as a term requiring user input prior to acceptance.

11 . The method of claim 1 , further comprising:

determining at the buyer computer a proposed option price, for at least one scenario of the plurality of scenarios, comprising a value of the option to a buyer associated with the buyer computer;

communicating from the buyer computer to the seller computer the proposed option price; and

negotiating with the seller computer an agreed option price based on the value of the option to the buyer and a cost of the option to a seller associated with the seller's computer.

12 . The method of claim 11 , wherein negotiating an agreed option price comprises:

receiving from the seller computer a modified proposed plurality of scenarios of forecasted demand comprising at least one proposed scenario of the plurality of scenarios of forecasted demand modified by an optimization model at the seller computer;

determining a modified proposed option price, for at least one scenario of the plurality of scenarios, based on at least one modified proposed scenario of the plurality of scenarios of forecasted demand; and

communicating the modified proposed option price to the seller computer.

13 . A system of procurement management, comprising:

a buyer computer comprising one or more processing units and one or more memory units, the buyer computer comprising:

a forecast module configured to create a plurality of scenarios of forecasted demand for one or more products;

a negotiation module configured to communicate to a seller computer an offer to enter into an option contract for the supply of the one or more products, the option contract including a proposed option corresponding to each of the plurality of scenarios of forecasted demand, the negotiation module further configured to receive from the seller computer a modified plurality of scenarios of forecasted demand, to communicate the modified plurality of scenarios of forecasted demand to the forecast module, and to receive from the forecast module a compromised plurality of scenarios of forecasted demand;

a scenario analyzer module configured to create multiple scenarios of demand including alternate scenarios of demand based on the forecasted demand;

an execution module configured to execute an option contract including an option corresponding to the compromised plurality of scenarios of forecasted demand;

an exercise module configured to:

receive from the forecast module an indication of current buyer demand for the one or more products;

determine whether the indicated current buyer demand exceeds a maximum option quantity specified in the option contract; and

if the indicated current buyer demand does not exceed the maximum option quantity specified in the option contract, communicate to the seller computer a request to exercise at least a portion of the option based at least in part on the indicated current buyer demand.

14 . The system of claim 13 , wherein at least one scenario of the plurality of scenarios of forecasted demand for one or more products comprises option parameters selected from a group consisting of:

a specified quantity of the one or more products that a buyer associated with the buyer computer is obligated to purchase, and a specified quantity of the one or more products that a seller associated with the seller computer is obligated to supply;

a specified number of product types that the buyer is obligated to purchase, and a specified number of product types that the seller is obligated to supply; and

a specified number of locations where the one or more products must be delivered.

15 . The system of claim 13 , wherein at least one scenario of the plurality of scenarios of forecasted demand for one or more products comprises option parameters selected from a group consisting of:

a specified quantity of the one or more products that a buyer associated with the buyer computer is obligated to purchase, and a specified quantity of the one or more products that a seller associated with the seller computer is obligated to supply;

a specified number of product types that the buyer is obligated to purchase, and a specified number of product types that the seller is obligated to supply; and

a specified number of locations where the one or more products must be delivered.

16 . The system of claim 13 , wherein the option contract includes an exercise period comprising a period of time after the execution of the option contract during which a buyer associated with the buyer computer must exercise its option for at least one scenario of the plurality of scenarios, and wherein the exercise module is further configured to specify a first quantity of product desired at a first time during the exercise period and to specify a second quantity of product desired at a second time during the exercise period, the buyer's obligation under the option contract comprising the sum of the first and second quantities of product desired.

17 . The system of claim 13 , wherein the negotiating module is further configured to receive a proposed contract term, for at least one scenario of the plurality of scenarios, from the seller computer, access a memory comprising a range of acceptable contract terms for each of the plurality of scenarios, determine that the proposed contract term is within the range of acceptable contract terms, and to accept the proposed contract term, for at least one scenario of the plurality of scenarios, without user input.

18 . The system of claim 13 , wherein the negotiating module is further configured to receive a proposed contract term from the seller computer, access a memory comprising a range of acceptable contract terms for each of the plurality of scenarios, determine that the proposed contract term is not within the range of acceptable contract terms, and to identify the proposed contract term, for at least one scenario of the plurality of scenarios, as a term requiring user input prior to acceptance.

19 . The system of claim 13 , wherein the buyer computer further comprises an aggregation module configured to compare a buyer's aggregation of parameters with a seller's aggregation of parameters, and to transform at least one scenario of the aggregations of parameters to conform with a common aggregation of parameters.

20 . The system of claim 13 , wherein the buyer computer further comprises an option price module configured to determine a proposed option price, for at least one scenario of the plurality of scenarios, comprising a value of the option to a buyer associated with the buyer computer and to communicate the proposed option price to a seller computer, and wherein the negotiation module is configured to negotiate with the seller computer an agreed option price based on the value of the option to the buyer and a cost of the option to a seller associated with the seller's computer.