BOSTON - Tire manufacturer Michelin carries about $1 billion in inventory at all times. Consumer packaged goods company Procter & Gamble spends between $50 million and $100 million per year reprocessing orders that contain inaccurate information. Executives at both companies say wireless inventory-control systems can help minimize these supply-chain inefficiencies.

"If we could get a 10% improvement, that's $100 million in inventory," James Micali, chairman and president of Michelin North America, told an audience of IT executives last week at a Forrester Research event in Boston.

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Michelin has been working on ways to embed radio frequency identification (RFID) tags - which combine a wireless chip and antenna - in its tires for passenger vehicles and small trucks. It's been a challenge to find tags that can survive the high-temperature tire manufacturing process, but the French company is making progress, Micali said.

At P&G, RFID is part of a broad effort to reengineer the Cincinnati company's supply-chain operations. Expanding markets, retailer consolidation and product customization requirements are complicating the supply chain and making it difficult to forecast demand, said R. Kerry Clark, president of global market development and business operations at P&G, at the Forrester event.

"We have probably twice as much inventory in the system as we really need," Clark said. In addition, if P&G can cut its out-of-stock rate in half, that's worth $1 billion in revenue, Clark said.

Outfitting product cases and pallets with RFID tags is part of P&G's makeover plans. Each tag will be programmed with an electronic product code (ePC) identifier, which acts like a bar code, but is unique to a single item rather than a type of product.

For Michelin, there are internal and external factors behind its pursuit of RFID. The tire maker wants to improve its supply-chain operations to reduce the level of inventory it maintains. In addition, government regulations and customer edicts are compelling the company to change its processes.