7 December 2017
Here at Oliver Wight we have worked with many organisations embracing Integrated Business Planning (IBP) both in the Asia Pacific region and those that work on a global scale, and we’ve witnessed their challenges and results in transforming their businesses. With this in mind our Partners in Asia Pacific offer their IBP predictions for 2018 and insights into changes for the year ahead.
Throughout 2017 we have seen an increase in the number of small and mid-size organisations embracing IBP. This will continue in 2018 however these organisations will face the dual challenges of moving from having informal processes in place and being dependent on key people. IBP requires organisations to elect different people for different roles (i.e demand planner, supply planner etc) and in smaller companies this becomes more difficult. Smaller companies generally do not have the resources to assign to different roles and therefore one person often becomes a ‘jack of all trades’. We recently worked with a company who had a single person handling everything from portfolio planning and supplier selection to demand and supply planning through to purchasing.
Most importantly for small and mid-size organisations, the key to successful IBP is adapting the core principles of the process to your organisation so you end up with a tailored solution right for you rather than an ‘off the shelf’ approach.
Insights provided by Mike Reed and Stuart Harman
There will be an increasing realisation that IBP is not simply S&OP with a longer horizon and the ability to produce a reliable financial forecast. Companies that have operated IBP for some time will look to see how they can more effectively use it to deploy strategy. This will place more emphasis on the Product Management Review (PMR) and the Demand Review requiring a clear connection with Strategic Business Objectives and Critical Success Factors. Insights provided by Mike Reed
More and more companies are adapting ‘category teams’ as the management model of choice. This requires a review of their IBP models to ensure that these are not sub-optimised and disconnected from the company leadership. There is also a danger that category teams running sub-optimised IBP models could end up focusing on the short-term rather than long-term horizon. For companies that recognise IBP as the mechanism for deploying strategy, the design of the model is carefully reviewed to ensure that linkages remain robust and that both short-term and long-term processes are well identified and executed – integrated yet separated.
Insights provided by Mike Reed
Like continental drift, the world’s manufacturing footprint is continuing to move, imperceptivity slow, but it is happening. Japan is buying and running foreign companies, China is outsourcing many of its traditional manufacturing locations to other nearby low-cost countries, and the supplier-customer demand is struggling to keep pace with the speed of learning through Internet communications. Because of this, there is an increasing need for a common language for global integrations, which transcends countries, languages and cultures. To build the bridges across multi-site, multi-supply matrix style organisations, the common language has to be IBP.
Insights provided by Rod Hozack
More organisations will come to realise that small data will outweigh big data – the buzz word for companies so inundated with data which they can’t see the wood for the trees. Small data is all about real insights to be gained from analysing and extracting the data and is essentially where competitive advantage can be gained.
Insights provided by Peter Metcalfe
Asian companies will focus on the medium and long-term planning horizons to optimise their supply networks, with the understanding that excess capacity does not translate into increased sales. Historically, Asian companies, particularly in China, have invested in capacity ahead of demand which has resulted in a large gap between demand and supply with prolific excess capacity. By taking a more strategic view of business growth, companies will eventually see a reduction or adjustment in overall capacity or capacity location.
Insights provided by Peter Metcalfe
Organisations, irrespective of industry or geography that ignore the fundamentals required to establish and maintain an effective IBP process will miss out on the significant benefits that integrated planning can bring. The fundamentals for success include the following:
Business leaders should use the IBP process and lead its continuing development
Understand the key IBP concepts and how to apply them to meet the requirements and environment of your organisation
Allocate sufficient resources to the process and get it established. This incudes people as well as systems and tools as the IBP process matures to make the task of turning data into information as efficient as possible
Use the IBP process as the way we do things around here’ across policy, procedures, induction and ongoing education and training
Get this right and you’ll reap the benefits in 2018
Insights provided by Don Harding and Stuart Harman