What is the biggest change when implementing integrated business planning (IBP)?
This is a question I have often been asked in connection with IBP projects. ‘We already have S&OP, so what is the difficult part?’
It depends on how integrated the current cross-functional planning processes are already. The integration between the marketing, sales, supply chain and finance functions is the exact advantage of IBP – but it is also what can make it difficult.
Instead of the functions having their own plans, they have a common plan. They work and cooperate according to the same plan on different elements and dimensions and at different levels. Simply put: The marketing function typically owns the portfolio and plans product categories, whereas the sales function owns the customers and plans according to channels. The supply chain function owns the production and plans capacity groups, and the finance function needs to translate all these plans into money terms in the value chain to establish a rolling financial forecast (as well as a realistic budget).
This is possible in IBP systems, in which hierarchies are built that allow the functions to work on different elements and dimensions as well as at different levels. This results in a common plan that can be seen from different perspectives and be converted from volume to value and vice versa.
But of course, it is critical that you agree who plans which element or level of the hierarchy and over which horizon. If not, it ends in failure.
In an integrated system, things are connected, and changing one thing in the marketing function will have consequences for all other functions and vice versa. You also have to time the activities according to other activities in the other functions for the process to make sense. Those able to remember what happened 25 years ago when integrated ERP systems were implemented in earnest will also remember how difficult it was to make it work in the beginning if the organisation had not been properly prepared.
Therefore, it is important to prepare the IBP process players for this exact problem. You should spend time defining the future integrated processes and agree who owns which figures of which element, dimension and level and over which horizon.
In return, as a company, you will experience that you will react quicker, become more effective and efficient, more transparent and more accurate in your plans – in short: a strong team and a system performing smoothly.
Integration = dependence =>>> competitive advantage!
Please contact me if you want to discuss integrated business planning: email@example.com