First let’s start with the Sales and Operations Planning (S&OP) process that is focused on internal processes aligning business objectives with operations. It has been around since the 80’s however Supply Chains using S&OP have experienced gaps, recognising the growing need for more collaborative planning practices aimed at better influencing and managing demand. S&OP has evolved into Integrated Business Planning (IBP) driven by the development of more scenario planning and what-if capabilities, to allow visibility of the impact of supply and demand changes so that plans may be adjusted accordingly.
IBP offers a solution to working multi-functionally within a company rather than in silos. Using IBP a company is able to service customers more efficiently and profitably with people, processes and tools that are integrated and aligned. People in any organisation are key drivers for business success so managing their behaviours is vital to cultivate an environment for change. When people are trained and working to a common set of goals then an organisation may be fully aligned to execute their strategy more successfully a truly positive outcome from IBP.
Benefits driving the development and use of IBP are better control of costs, higher customer satisfaction and short-term changes have less impact. The result is that the actual need for changes can be effectively planned for and proposed to those customers who have fluctuating demands, in a controlled cost-effective way.
The IBP process involves plans being developed medium term, from 18 to 24 months, allowing organisations to model
alternative scenarios and determine the impact. These future scenarios may be planned for across the supply chain functions and departments. Meaning the organisation has time to prepare and communicate alternative plans internally and externally developing agility in the business.
The frequency of IBP as a management process offers a monthly ’check, correct and communicate’ procedure for an organisation. During each monthly planning cycle, the focus is on what has changed since the last cycle and the effect on the different functional plans along with the delivery of annual and strategic objectives. Fact based decisions may be taken and changes communicated in a timely fashion to the rest of the organisation.
Integrated Reconciliation a key part of this monthly cycle. It forces the middle management to be responsible for identifying issues and opportunities as well as analysis and proposing any recommendation for action at the appropriate level in the company. Engaging the middle management level in this way harnesses their talent and entails only the big issues are elevated to the executive team for decision-making. Meaning the executive team can see clearly where rectification is required between the latest plans and the annual and strategic commitments of the organisation.
In summary IBP is a 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.