Volkswagen Selects ILOG to Enable Custom Car Production in Spain

ILOG's Optimization Adds Customization Options and Improves Production Efficiency

MADRID, Spain, June 2 -- ILOG(R) , a leading supplier of enterprise-class software components and services, today announced that ILOG's optimization software has been deployed by the Volkswagen (VW) Group of Spain allowing them to offer customers more customized products and optimize production planning. These new car sequencing and production planning systems have been implemented by leading Spanish system integrator Gedas Iberia in two plants of the VW Group -- the SEAT Martorell and the Volkswagen Navarra locations, which produce 2,000 and 1,200 cars per day, respectively. Using the new system, VW and its Spanish subsidiary, Seat, expect to both fulfill the rising demand for customizable cars and boost sales.

Faster time-to-market requirements and demand for custom products create more complex challenges for car manufacturers. For VW, these challenges drove the need for a more flexible planning system. Using the new Gedas-ILOG solution, VW can optimize assembly line resources to better meet customer and dealer specifications, and eliminate costly excess inventory because, through better planning, the plants only stock the parts needed based on current orders.

Prior to implementing the ILOG-Gedas solution, planning was a manual, labor-intensive process based on an inflexible, custom-built solution. The introduction of ILOG optimization into the planning system enabled VW to leverage its existing host client server and Oracle(R) server environment, extending the value of its legacy applications. ILOG CPLEX(R) optimization software has reduced the time it takes to build a schedule from an hour-and-a-half to 15 minutes. Overall, only a half-day is now required to generate a production plan for the next day when a full day was necessary prior to using ILOG CPLEX.

In the Volkswagen Navarra facility, in addition to using ILOG CPLEX for planning, Volkswagen relies on ILOG Solver(TM) for car sequencing, reducing the time needed to create a sequence from six hours when it was done manually to a couple of minutes currently. Time gains related to re-sequencing nicely complement the agility and flexibility acquired through the new planning system. ILOG's real time optimization solution enables the car maker to meet both planning and sequencing specific time constraints and needs.

The new production planning system also enables the car maker to respond very swiftly to incidents, events and changing needs and to create new plans in real-time. This ensures that any unexpected event -- such as car engine delivery delays due to transporter's strikes, production machine breakdown -- will have a minimal impact on the production. The car maker is able to re-plan very rapidly, taking into account the new constraints, ensuring the highest operational efficiency and maximizing resource utilization.

The Martorell car production site of SEAT is one of the most advanced facilities in Europe due to its logistics system as well as its production process' flexibility. Currently, six different car models are being produced on its assembly lines.

About ILOG

For more than 10 years, ILOG's innovative enterprise-class software components and services have helped companies maximize their business agility and improve operating efficiency. Over 1,000 global corporations and more than 300 leading software vendors rely on ILOG's business rules, optimization and visualization technologies to achieve dramatic returns on investment, create market-defining products and services, and sharpen their competitive edge. For more details, please visit www.ilog.com

Forward-Looking Information

This release contains "forward-looking" information within the meaning of the United States Securities laws that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, without limitation, current business conditions, successful execution of the stated business strategies, the timing and seasonality of product demands, and those risks and uncertainties mentioned under "Risk Factors" in the company's form 20-F for the year ended June 30, 2003, which is on file with the United States Securities and Exchange Commission.

NOTE: ILOG and CPLEX are registered trademarks, and ILOG Solver is a trademark, of ILOG. All other trademarks are the property of their respective owners.