Microsoft Business Solutions Continues to Innovate in Support of Emerging Needs Across Businesses' Supply Chain

Microsoft Business Solutions Unveils Pilot Project Demonstrating Opportunities For Future Supply Chain Management Solutions for Small and Midmarket Businesses

VEDBAEK, Denmark, Jan. 26, 2004 - Offering further evidence of the strength and ongoing innovation in its supply chain management (SCM) strategy, Microsoft(R) Business Solutions today unveiled a pilot project it developed in alliance with KiMs, a midsize Danish manufacturer that employs 270 people and ships approximately 100,000 pallets of snacks per year.

This pilot project involves elements critical to automating a company's supply chain, extending KiMs' existing business solution (Microsoft Business Solutions-Axapta(R)) in the areas of demand planning, event management, trading partner collaboration and hands-free warehouse management using Radio Frequency Identification (RFID) technology, which combines silicon chip and radio frequency technology. The project, which went live at KiMs in late December 2003, was conceptualized, developed and deployed in three months.

"This pilot project demonstrates how Microsoft Business Solutions continues to aggressively innovate in support of emerging needs and scenarios of our customers as they face new challenges in managing their supply chain," said Satya Nadella, corporate vice president of development for Microsoft Business Solutions. "The project we're unveiling today really demonstrates the potential that exists to further enhance the current generation of business solutions to meet customers' challenges across the management of their supply chain network."

"This pilot project is a significant step forward for small and midmarket businesses in the area of supply chain management," said Nigel Montgomery, European research director with AMR Research Inc. in London. "Microsoft Business Solutions will be offering a critical differentiator to small and midmarket manufacturers and distributors, enabling proactive control of key supply chain processes to increase business performance and enhance customer service. But it's also a practical pilot, addressing the myriad of implementation challenges that will face customers. This should greatly aid adoption."

The KiMs Pilot Project

KiMs, which has been in business for almost 40 years, has a product line that includes nine of the 10 best-selling crisps in Denmark. KiMs is considered one of the five strongest brands in that country and won Denmark Brand of the Year in 2002. It implemented Microsoft Axapta in June 2003 for manufacturing, raw-materials procurement, sales order management and warehouse management, but wanted greater visibility into its supply chain, from suppliers through distributors. KiMs wanted to monitor pallets of finished goods as they moved out of production and into a third-party warehouse and greater knowledge of the exact location of products at various points in the supply chain, to increase product availability.

"Our strong position and growth in the Danish market has been achieved through our ability to anticipate and meet our customers' demands in a wide variety of areas. Putting technologies of the future to the test is important to KiMs, and we are very pleased to have been involved in this pilot project with Microsoft Business Solutions," said Jorn Tolstrup Rohde, chief executive officer of KiMs. "The prospect that RFID can help us dramatically increase our ability to read and anticipate our inventory flow is compelling, and we are thrilled to be at the forefront of supply chain management innovation with the help of Microsoft Business Solutions."

RFID: The Future of Supply Chain Management

RFID, which can automate and streamline business processes in ways previously unimaginable, has been lauded by manufacturers and retailers for its potential to provide an unprecedented level of visibility across the supply chain and improve efficiency and profitability as a result. Together, these elements provide automation across the entire supply chain, giving the manufacturer or distributor greater visibility into the process and putting the power of automation in their hands.

With the goal of helping small and midmarket segment companies achieve their objectives of better visibility and insight into physical inventory flow while improving the data quality across the supply chain, Microsoft Business Solutions added RFID capabilities to its Microsoft Axapta Warehouse Management solution at KiMs to make it capable of capturing and managing data that is generated from the pilot. One of the partners involved, SAMSys Technologies Inc., had an engineering team on site to evaluate KiMs' production cycle and bar-code system, then designed and supervised the hardware installation of a UHF RFID pallet tracking system within the finished goods area of the KiMs factory. The data from the SAMSys reader feeds directly into Microsoft Axapta at KiMs.

KiMs produces crispy snacks that are bagged, cartoned and loaded on pallets, which are then moved to a staging area to be picked up by trucks for delivery to a distribution center. A unique identifier is written to the RFID tag on each pallet, thereby associating the pallet with comprehensive production data.

"We recognized that in real implementations our customers may need to utilize the capabilities of writeable tags," Nadella said. "Many companies today settle for easier, read-only tags during the pilot phase. It was an important inclusion in our pilot that we tested real-life usage requirements." Another innovative element of the RFID pilot project is its use of the metal foil of the chips' packaging as an element of the tag design. Typically, metal objects have been an impediment to the use of RFID. By treating the packaging as part of the RFID system, the tag could be made fairly simply, thereby keeping the cost down.

The tags are monitored at storage, loading and shipment, and the data is fed back into Microsoft Axapta. "We expect this solution will offer users near-real-time visibility into the location of products in the supply chain," Nadella said. The RFID tags are used for tracking the movement of pallets during shipment, providing KiMs with greater visibility into its supply chain. Another anticipated benefit of the RFID tags is the trimming of inventory levels at the distribution center, due to increased data accuracy.

Challenge: trading partner collaboration. Solution: Microsoft Business Network, a combination of on-premise and hosted Web services, helps businesses more easily and effectively work with their trading partners by enabling a fully automated collaboration network for customers and suppliers. Microsoft Business Network enables KiMs, its suppliers and distributors to seamlessly send business documents electronically, helping ensure consistently updated data. The Microsoft Business Network solution offers KiMs a cost-effective purchase and sales order management process with its trading partners while giving suppliers and customers better visibility into document status and history.

Challenge: sales forecasting. Solution: The Microsoft Business Solutions Demand Planner solution was implemented to help improve customer satisfaction, maintain optimal levels of inventory and reduce operating costs. At KiMs, all key account managers and brand managers use Demand Planner to make strategic, tactical and operational demand-related decisions collaboratively. This streamlines the workflow and improves the visibility and quality of forecast data, sales history and campaign information. Improved forecast accuracy will positively affect the production and purchasing plans for KiMs.

Challenge: monitoring for exceptions in an environment of change. Solution: To help KiMs respond quickly and effectively to unplanned changes in its supply chain, Categoric Software Corp., an independent software vendor specializing in event management solutions for Microsoft Axapta, worked with Microsoft Business Solutions to develop a set of exception templates utilizing the Categoric platform. These templates automate the business processes in a number of critical areas, including purchase order confirmation monitoring, supplier delivery reminders and inbound supplier delivery monitoring, which, for example, automatically notifies suppliers that are due to deliver a shipment within a specified number of days and confirms the quantity and date of the delivery. The solution proactively notifies the purchasers at KiMs and the suppliers if an exception occurs in delivery processes -- for instance, if a supplier's order confirmation is missing or if raw materials have not arrived on schedule. The goal is to reduce the risk of running out of stock of raw materials, incomplete shipments, and manual time spent checking for exceptions and calling suppliers. The templates also will create notification messages for necessary staff and trading partners when exceptions occur.

Microsoft (Nasdaq: MSFT) partner Aston Business Solutions, which had done the initial implementation of Microsoft Axapta at KiMs in June 2003, played an integral role in this pilot, ensuring that several advanced SCM functionalities were properly integrated with the Microsoft Axapta platform and KiMs' business processes. Other Microsoft partners involved in the KiMs project include Philips Semiconductors, providing the RFID chip solutions; Avery Dennison Corp., producing RFID tags; and SAMSys Technologies Inc., delivering hardware and consultancy for RFID.

KiMs is pleased with the pilot project results to date. "Constantly we aim to create even higher efficiency in our management of production and inventory, allowing for further improvements in the high standard of delivery enjoyed by our customers," Rohde said. "The demand planning pilot helps us do that. And the event management pilot -- about data monitoring -- means that we are able to manage the business even more efficiently. That is of course valuable for us."

Microsoft Business Solutions and SCM: A Strategy for a Winning Future Anticipating the prediction of a dramatic increase in the adoption of RFID-enabled technology, Microsoft Business Solutions has a strategy in place that will help customers leverage the technology using new and existing Microsoft Business Solutions ERP solutions for manufacturing and distribution companies. Currently, plans are under way to expand the pilot work in 2004 and to RFID-enable upcoming releases of Microsoft Axapta and Microsoft Business Solutions-Navision(R) in fiscal year 2005. In fiscal year 2006, Microsoft Business Solutions plans to release a version of Microsoft Retail Management System that is RFID-enabled.

About Microsoft Business Solutions

Microsoft Business Solutions, a business group of Microsoft, offers a wide range of integrated, end-to-end business applications and services designed to help small, midmarket segment and corporate businesses become more connected with customers, employees, partners and suppliers. Microsoft Business Solutions' applications optimize strategic business processes across financial management, analytics, human resources management, project management, customer relationship management, field service management, supply chain management, e-commerce, manufacturing and retail management. The applications are designed to provide insight to help customers achieve business success. More information about Microsoft Business Solutions can be found at .

About Microsoft

Founded in 1975, Microsoft 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.

NOTE: Microsoft, Axapta and Navision are either registered trademarks or trademarks of Microsoft Corp., Microsoft Business Solutions ApS or their affiliates in the United States and/or other countries.

Microsoft Business Solutions ApS is a subsidiary of Microsoft Corp. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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