19 Aug 2016
Integrated Business Planning (IBP) is the business planning process that extends the principles of S&OP throughout the supply chain, product and customer portfolios, customer demand and strategic planning, to deliver one seamless management process.
The process ensures early focus on any potential gaps in business performance, allowing organisations to predict and respond positively to changing conditions over the next 24-36 months. Furthermore, it allows business leaders to allocate critical resources - people, equipment, inventory and materials - in the most profitable way.
But how do you know if your company needs IBP, or if your business is ready to implement it? If any of the following strike a chord, IBP could be the answer to enhancing your business performance.
The IBP process brings people together to make decisions. If your company is missing alignment between different departments, IBP will help synthesise ideas and improve communication. With a series of monthly meetings for product, demand and supply, held on a regular schedule, issues can be raised, tracked and resolved. The key department heads are present so the entire company can be aligned behind a single plan.
Lacking a shared vision? The IBP process provides team members with visibility in several ways. First, the IBP plan will look two to three years into the future. For businesses accustomed to thinking only in terms of the next month or so, this level of visibility opens the door to a different way of running the business. Next, the IBP plan brings together data from different departments and presents as a single set of numbers to the leadership team. Operations will have visibility into Sales and Marketing’s demand plans. Sales and Marketing will see the supply plan clearly. Finance now has a concrete vision into expected revenues and costs. A joint vision is crucial to long term IBP implementation.
Any successful IBP process must include Finance to ensure the financial plan and the operational plan are in alignment. IBP allows you to monetise volume plans, so if your company struggles to monitor planned revenues, cost and margin, whilst ensuring you have the resources to implement the proposed plan, then IBP could really help.
Identifying risks, compiling a strategy and then walking away feeling accomplished is not an efficient enough risk management system. Risks are continually changing, determined by world politics, outsourcing strategies, product design, to name but a few. Risk management is incorporated into IBP requiring regular reviews to evaluate your company’s strategy in light of new demand and supply plans.
First and foremost in the IBP process, people are fundamental to a successful long term implementation. If a united energy is missing from your teams’ work ethic, then IBP will help to focus on the people who drive your business. As teams work together, they will learn they can trust one another and will head in the same direction. This improvement in teamwork will manifest itself outside of IBP meetings and you will see your company’s work culture begin to change. Paths of communication will open, problems will be resolved and your business will work more efficiently.
Unless your business is truly ready to effectively deploy and support IBP, it is likely the benefits will be short-term and your organisation will revert to its previous state, with only significant cost and disillusionment to show for your efforts. For greater insight, The Oliver Wight Maturity Model will tell if the time is right for your company to implement IBP.