Roles and responsibilities in IBP: Remembering the basics

Effective decision-making is a prerequisite for succeeding with Integrated Business Planning (IBP). Companies should strive for clarity and accountability – and focus on the basics of getting decision rights “right”.

For most of us working with Integrated Business Planning, it is easy to dream big: Creating an end-to-end data model, increasing cross-functional collaboration, providing the executive team with a transparent overview of the company’s situation – and of course using the latest technology to integrate tactical planning all the way through Marketing, Sales, Supply Chain and Finance.

However, to achieve big dreams one must also master the basics. And for Integrated Business Planning an important part of the foundation is to ensure that there is 100 per cent clarity about what decisions need to be made, who is responsible for making them, and how the decision-making process should proceed.

Is it easy? Experience shows no! In many organisations, ambiguity surrounding who is responsible for making key planning and value chain decisions is in fact the number one cause of delay in the planning process. Such delays cause the organisation to lose valuable time in the planning cycle. Perhaps even worse, confusion about who makes which decisions and how they are made can effectively short-circuit the whole IBP setup, simply by making it impossible for the organisation to work together effectively.

Clarity more important than reporting lines
In my daily work, I often get asked: where in the organisation should the S&OP or IBP manager report? I understand this question. Traditionally, the S&OP/IBP journey has often been started in Supply Chain, driven by the Supply Chain manager, based on a need to establish a view on future demand, in order to plan supply. This is still the case in most companies. In a recent quick poll on LinkedIn, for example, 62 per cent responded that their S&OP/IBP Manager reports to Supply Chain/Operations.

As companies mature their S&OP process towards IBP, some move the role to Finance or directly under the CEO. After all, the IBP Manager role does not represent a specific function with targets for budget and KPIs, and from that logic it is best placed under an “independent” function like Finance or directly under the CEO. On the other hand, if it is clear for all that the IBP manager ONLY has responsibility as process owner and facilitator, and is not measured on meeting functional targets, you could argue that there is no conflict of interest by having the IBP manager reporting into either Sales or Supply Chain.

However, in my view, the question of reporting is not that important, because both the “independent” and the “dependent” model can work. However, what IS important – and the real question that should be asked – is if the company has defined the IBP roles and responsibilities in a way that supports its business governance and value chain structure? In other words, has your company deliberately set out to establish the structures and procedures to enable decision-making empowerment, influence and transparency in the IBP cycle? Does your decision-making support accountability and collaboration? And have you aligned the roles, decision mandates, policies and incentives to motivate the entire organisation to stand behind a single optimised plan?

Those are the questions that need to be answered.

Start with the basics
Sure, improving decision-making to facilitate IBP is a challenge; however, it is also my experience that most organisations do have the power to get it right if they are willing to give it enough attention and focus.