The Project: Develop a wireless tracking system that monitors everything from paper towels to toothpaste from factory to store shelves.

The Payoff: More accurate tracking of inventory and demand will cut inventories and boost sales by keeping store shelves stocked.

It sounded like a wild-eyed dot-com fantasy. But Procter & Gamble's (PG ) 1999 idea to package thousands of products with tiny radio-powered computer chips is catching on, from Gillette (G ) to Wal-Mart Stores (WMT ). P&G, an early investor in the technology, is leading the charge. It sees the radio-frequency ID chips ultimately tracking nearly every item it makes, from Crest to Pampers. The idea is to tie production to real-time sales at the store, cutting time and inventory out of the supply chain while keeping store shelves stocked 24/7. The first step: P&G will have radio chips on cartons and pallets of goods by 2005.

By Robert Berner

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