Microsoft and Procter & Gamble Team to Create Tools For Real-Time Supply Chain

REDMOND, Wash., and CINCINNATI, June 26, 2001 — Microsoft Corp. and Procter & Gamble Co. today announced that they have successfully piloted the first phase of a supply chain solution that can contribute up to a 50 percent reduction in inventory while delivering a 25 percent improvement in retail out-of-stock conditions. Combining the strength and supply chain experience of Procter & Gamble with the technical reach and experience of Microsoft, this highly collaborative process delivers seamless integration of disparate systems and processes within and outside the retailer’s organization. The end result is an offering that leverages intelligent information delivery to increase the speed of the supply chain — all through the use of standards-based solutions that benefit retailers of any size.

With demand data as the catalyst and the key to the solution, the ultimate aim is to create a system that captures real-time data at the point of sale and that is able to automatically trigger the necessary restocking, resupply and manufacture responses in the supply chain. From an implementation standpoint, the solution will deliver value for all members of the supply chain, with an easily supportable installation that is seamless and compatible with existing infrastructure investments, requires little or no management, and is cost effective and able to deliver data throughout the supply chain continuously and in a customized manner.

“Together with Microsoft we are bringing a leg of our broader vision of a dynamic supply chain into reality,”
said Dick Antoine, global human resource and product supply officer at Procter & Gamble.
“This pilot program will ultimately help retailers and supply chain participants of all sizes realize substantial savings and, most important, increase consumer satisfaction by ensuring that the products they want are on the shelves.”

“Out of stocks in the industry have been a problem for years and are only getting worse as we all try to run our supply chains faster with less inventory. If we don’t address the issue of how to connect the partners more efficiently using the same data stream, the industry average of 10 percent to 20 percent out of stocks will not improve,”
said Steve David, chief information and business to business officer at Procter & Gamble.

“Microsoft provides the technology framework for retailers to implement solutions that extend the boundaries of their business by integrating suppliers, customers and partners into a single business process,”
said Ralph Young, vice president of the Enterprise Sales and Industry Group at Microsoft.
“We are excited about the bottom-line business benefit our collaboration with Procter & Gamble will deliver to the retail industry.”

As part of its collaboration with Procter & Gamble, Microsoft has delivered a set of Microsoft® BizTalk™
Server 2000 adapters that enable connection to the various point-of-sale systems used by grocery, drug and mass merchant retailers to collect near-real-time transaction data. The data is aggregated and transmitted for processing by a set of intelligent algorithms that identify potential out-of-stock items on a store-by-store basis. The detected out-of-stock information is transmitted back to store personnel using customized content rules. This approach offers significant flexibility by enabling notification via wireless communication devices, Pocket PC-based devices or existing retailer mediums.

Utilizing BizTalk Server 2000 enables the interoperability and integration necessary to accomplish business objectives across a variety of retailer platforms. In addition, BizTalk can manage the point-of-sale data feed as well as the customized retailer notification process.

“These proof-of-concept pilots are demonstrating the viability of the first phase of the project, which involves the packaging and intelligent evaluation of demand data at a store level to deliver a consumer demand signal (CDS) service. We’ve proved that both the technique for acquiring data and the delivery of it within the store works,”
said Jake Barr, associate director of Supply Chain Innovation at Procter & Gamble.
“We’ve achieved an accuracy rate exceeding our expectations, and store personnel have beaten our targets for reducing out-of-stock conditions by active use of the near-real-time information flow. You know you’ve been successful when the pilot is over, but the retailer participating in the pilot doesn’t want you to take the solution out of the stores.”

The pilot program, built on BizTalk Server 2000 not only helps to enable P & G’s supply chain vision, it provides a structure for integrating sales data with core operational systems such as merchandising and financials as well as business intelligence solutions such as loyalty, shrink and loss prevention. This extends retailer benefits without increasing the cost or intrusiveness of the system.

Pilots linking additional partners in the supply chain are under way in the United States and will expand internationally later this year or early next year.

About Procter & Gamble

Procter & Gamble markets approximately 300 brands to nearly 5 billion consumers in over 140 countries. These brands include Tide® , Ariel® , Crest® , Pantene Pro-V® , Always® , Whisper® , Pringles® , Pampers® , Olay® , Iams® and Vicks® . Based in Cincinnati, Ohio, P & G has on-the-ground operations in over 70 countries. For more information on P & G and its products, visit their worldwide Web site at .

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

Microsoft and BizTalk are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at on Microsoft’s corporate information pages.

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