New Software for Supply Chains

Unilever (UL - Analyst Report) and Procter & Gamble (PG - Analyst Report) have announced that they are adopting a new technology to improve supply chain efficiency. Both companies have selected Terra Technology's real-time forecasting solutions to better sense consumer demand. Through Terra's software, these consumer products companies can further optimize inventory levels and manufacturing planning.

Terra's product uses pattern recognition mathematics that deciphers daily streams of order flow data and determines which information is truly predictive of actual demand. Specifically, the software reconciles daily demand signals along the supply chain, such as point-of-sale (POS) data, retailer warehouse inventories, outlet inventories, and retailer forecasts.

The software-based system then provides daily forecasts of expected orders. These forecasts are more accurate, cutting near-term forecast error by approximately 50% and allowing inventories to be reduced by about 20%. As a result, consumer products companies can better plan manufacturing schedules and reduce inventory levels in line with predicted demand.

Unilever is the latest major consumer company to sign on for Terra's inventory optimization solutions, which gives better visibility into real-time shifts in consumer demand. Unilever beta tested Terra's software in the U.S. Personal Care business for several months. Terra's solution cut Unilever's near-term forecast error by more than 25%.

By gaining supply chain visibility, Unilever should be able to improve manufacturing processes, lower costs, and enhance the company's product mix. In addition, Terra Technology's forecasting solution improves customer service. The rollout of Terra's system is expected to be completed by August 2009.

Procter & Gamble has also selected Terra Technology software solution to further improve its supply chain forecasting accuracy. In Proctor's beta tests, the software reduced forecast error by more than 50% in certain product categories. The software analyzes the daily demand information from key retailers and creates a more accurate, single forecast.

Campbell Soup (CPB - Analyst Report) implemented Terra Technology's software back in 2003 and reduced its forecast error by almost 50% (from 41% to 21%). As a result, not only did Campbell's improve its supply chain and reduce costs, the company was awarded the CGT (Consumer Goods Technology) Award in 2004.