Sales and Operations Planning was originated by Oliver Wight in the 1980s and evolved into Integrated Business Planning in the early 2000s to give organisations the ability to keep up with modern, rapidly changing markets and consumer behaviour. Yet, despite these advancements, many companies have still not progressed their S&OP progress to support them in meeting the challenges of today.
IBP represents the ‘coming-of-age’ of S&OP, maturing from its production planning roots into a fully integrated management and supply chain process. It allows organisations to deploy their strategy and constantly evolve and adapt plans, harnessing resources to meet customer demand in the most profitable way. However, identifying the differences between an S&OP and IBP process is where some businesses come unstuck, and in recent years, we have become increasingly concerned that companies are being sold Integrated Business Planning (IBP) when what is delivered is simply traditional S&OP under a different name. With that in mind, here are some of the fundamental elements you need to understand and embrace for IBP to work.
A successful IBP process requires the commitment of the Chief Executive and leadership team. It isn’t enough for them just to support the process, they must own it. This will ensure IBP is successfully integrated and aligned with the overall strategy and business objectives and can realise its true potential.
Formal Change Management
Managing change is a critical requirement of designing and implementing an IBP process. The people who work for the organisation are its biggest asset and they are the ones who will drive change forward. The best way to ensure this is with a formal change management process, led through education and knowledge. A successful IBP process will have engaged and enthusiastic employees, driving business integration and unlocking the potential of the business.
Encouraging the Right Behaviours
Even the best IBP processes can fail if the behaviours in the business do not meet the process requirements. If there is bias in any area of the business (e.g. a tendency to consistently underestimate or overestimate forecasts), then IBP will not deliver the value expected and there is a danger that it’ll fall into becoming just another ‘wishful thinking’ process.
Focus on Business Strategy
Unlike S&OP, IBP is not a supply chain planning process. The purpose is to focus on deploying the business strategy and providing the framework for effective decision-making. Ensuring there are clear, integrated and aligned strategic roadmaps is a key requirement.
Working to one set of Numbers
Without a collaborative structure, working in silos is inevitable, which leads to contrasting figures from different departments. We find too many organisations have several sets of numbers and spend time debating these, rather than having the empirical data they need to plan for the future. IBP creates a structure that produces ‘one version of the truth’; a set of data that can be used for effective decision-making.
Of course, these are just a few of the non-negotiables required to ensure your Integrated Business Planning process is a success. Whether you’re considering evolving your S&OP process or want to understand how to improve IBP in your business, join our Integrated Business Planning: An Executive Guide workshop for an expert-led comprehensive overview on best practice IBP.