P&G, Microsoft Tackling The Supply Chain

The Procter & Gamble Co. has teamed up with Microsoft in an effort to streamline the supply chain. The two companies have embarked on a pilot program that takes point-of-sale information from stores, analyzes it for clues about what products may be out of stock, and alerts stores in as little as 10 minutes.

Eventually, P&G would like to help create a system that captures real-time data at the point of sale and that automatically triggers various stages of the supply chain. But for now, it's content to let retailers get comfortable with the program. Already, the effort has reduced the frequency with which items are out of stock, and it's saving retailers the expense of having staff walk store aisles and manually check shelves.

"The way we build our brand is clearly by bringing great technology to market," says Jake Barr, associate director of supply-chain innovation at P&G. "It doesn't matter much if, at the moment of truth with the consumer in the store, our products are not available to them. We know how many units of Tide you should be selling at [a particular] point in the day. When you're not, we go to the retailer and say there is likely a problem they should check out."

In the pilot program, which includes four North American retailers of food, mass merchandise, and drugs, P&G itself does not have access to data from other manufacturers. Microsoft BizTalk Server 2000 adapters connect to various point-of-sale systems, and an undisclosed company analyzes the data before sending it back to the retailers. The program will be expanded this fall and then again on a broader scale in about a year.