what is an integrated business plan

What Is Integrated Business Planning and Why Is It Important?

Think of modern integrated business planning, or IBP, as a mashup of supply chain optimization, financial planning and analysis (FP&A) and operational best practices, powered by a companywide culture that’s all about delivering the speed, savings and responsiveness today’s consumers demand while managing risk.

Note that IBP as a fuzzy, buzzword-laden process methodology has been around for years. It’s usually implemented by expensive consultants in sprawling, global corporations that know they need to unify siloed sales, supply, financial and operational resources — before more nimble competitors relegate them to the former Fortune 500 list.

We’re here to argue that IBP deserves a second look for any company that wants to maximize profits and minimize the risks associated with growth. No six-figure consultant required.

What Is Integrated Business Planning?

On paper, IBP is a process for aligning a company’s business goals with its finance, supply chain, product development, marketing and other operational functions. Think parts suppliers that work with automakers and need to constantly retool to accommodate design changes, or food producers operating on razor-thin margins that must manage both uncertain supply chains and fickle customer tastes.

Lag, and a competitor is standing by to take that business. Move quickly but in a disjointed manner and you may keep customers, but at the expense of higher cost of goods sold (COGS) and lower profitability.

For example, consider PickerBots, a fictional maker of custom machinery for manufacturing and warehouse operations. When the company launched in 2017, it found a niche in restaurant supply, but when that business slowed significantly in 2020 the founders decided to retool. Rather than simply changing up its marketing, the firm set out to revamp its business strategy. A top-down scenario planning exercise led to realigning its R&D, demand forecasting, profitability and revenue analysis, supply chain planning and marketing and sales strategy.

The company culture was already strong on innovative thinking, but the founders realized that the link between strategic planning and day-to-day operations could use improvement. Enter a new COO with the chops to align operations with product demand planning and sales and marketing while weighing in on financial targets and budgets.

Key Takeaways

• In a company that embraces IBP, there’s a direct line from purchasing, production and inventory to sales and marketing to financial targets and budgets.
• A key IBP benefit is that materials are bought at the right price, at the right time and in just the right quantity to fulfill market demand.
• Successful IBP delivers closer collaboration and more trust among departments, leading to improved decision-making.
• IBP may require significant cultural change and cannot be successful without unwavering commitment from the executive team.

Integrated Business Planning Explained

Many organizations mistake IBP for a supply-chain-centric exercise. While linking supply chain planning with other departments, from sales and operations through finance, is important, that’s just one element.

IBP aligns business g oals and financial t argets with decisions and execution across the entire business.

There is overlap with financial planning and analysis (FP&A). Because an IBP initiative gathers data from across the enterprise, companies get better at predictive analysis. Now, when purchasing forecasts a parts shortage, supply and operations can adjust before customers are affected.

It’s also not a one-and-done exercise. PickerBots’ new COO advises looking a minimum of 36 months out. Leaders will need to keep their eyes on that long-range plan while continually reviewing, revising and communicating financial and operating results. What supply chain gaps have opened up, and how can we close them? Do we need to update our scenario planning? Are we tracking the right financial KPIs?

A crucial element of IBP is that it integrates financials with operations. Here’s a structure that PickerBots plans to follow.

Why Is Integrated Business Planning Important?

Companies that undertake IBP realize a number of practical benefits, including reduced holding costs, more responsive customer service and demand fulfillment, shorter time to market for new products and an improved correlation between demand planning and fulfillment.

After PickerBot’s scenario planning and strategy session, the company decided to jump into the emerging collaborative robot, or cobot, market. A collaborative robot is designed to safely interact with human workers. PickerBot’s leaders believe demand will increase for “pick and place” cobots with fine motor skills for use on manufacturing lines as well as in agricultural settings.

Now that the company has its strategic direction, the COO wants to focus on three higher-level concepts before delving into more practical areas, like financial planning and analysis and supply chain optimization. That’s because without goal-setting, PickerBots won’t be able to define success.

Alignment and accountability 

All executives must agree on three things: What are our corporate goals? What does success look like for each? How will I and my team contribute and be accountable?

The company’s goals are grouped into four areas: industry-focused, operations and supply chain, financial and marketing and sales. The management team will review all goals to make sure they align with strategy and are both actionable and achievable.

Industry-focused goal: Offer the most innovative cobots on the market

What success looks like: Develop a product that can match or exceed a human worker in its ability to pick fragile crops without damage.

Who will execute: The R&D team

Financial goal: Diversify revenue streams

What success looks like: Minimize dependence on one market/industry. Add a services arm to generate recurring revenue from maintenance contracts, powered by sensors built in to all new products.

Who will execute: Cross-functional led by CEO and finance

Other goals might be “control costs at each step and deliver cobots to customers on time and to specifications” with an expectation to lower COGS by 10% and raise the company’s Net Promoter Score by 25% within one year. Or for sales, “find 10 new customers for the company’s agricultural cobots and bundle maintenance contracts with each sale.” That ties back to revenue diversification.

An important point: Every manager is accountable for every goal, not just those that lie within their purviews.

Informed decisions and actions 

Planning across PickerBots’ supply chain was disjointed, with engineers purchasing materials direct and little central planning or cost control. As part of the IBP process, the company will adopt sales and operations planning (S&OP) principles to improve its supply chain and logistics.

Actionable goals here include building visibility into how each department is working and tying the impact of decisions to financial goals. For example, by having R&D build in sensors that can automatically collect and transmit data on a cobot’s operational status, PickerBots can proactively perform preventative maintenance so the devices are almost never down — an important selling point and a way to contribute to maintenance income.

Organizationwide, divisions need to focus less on their own needs and view actions through the lens of all goals. That means the company needs to collect a lot of timely data and use it to issue reports so managers can make better decisions, more quickly. That may require an investment in ERP and other software.

Transparency/visibility 

All department heads will take part in a monthly business review, where the group will assess progress in achieving the company’s objectives. The strategic plan is also available to all staff members, and quarterly all-hands meetings will be held to gather ideas and insights and walk through KPIs.

Four success metrics for the IBP process include:

1. Getting all stakeholders to buy in to corporate goals so that everyone agrees and understands what the business wants to achieve and how it will get there. There are clear responsibilities for each function in the pursuit of goals.

2. Basing business decisions on data. The integration of finance into product, demand and supply functions is key here, as are selecting the right KPIs.

3. Tying decision-making to outcomes and improving accountability. Because every department is responsible for providing accurate numbers and projections, there’s less risk that the CFO and finance team are left holding the bag if revenues fall short.

4. Shifting the culture to embrace cross-functional collaboration. An IBP process encourages openness and trust, and as a result more deeply engages and empowers employees. As an action item, each R&D and manufacturing team member will spend a week annually accompanying sales reps on customer calls.

What Is the Difference Between S&OP and IBP?

The term “IBP” was coined by management consultancy Oliver Wight to describe the next iteration of the sales and operations planning (S&OP) process Wight developed in the early 1980s.

The big difference between IBP and S&OP is that the latter has become the domain of supply chain and logistics specialists, particularly those involved in supply-and-demand balancing and planning. S&OP is execution-focused and involves a traditional budgeting process.

In contrast, IBP takes a more cross-functional and holistic approach to weaving business goals through every function. As a result, in theory, supply chain management is proactive and optimized.

IBP includes S&OP processes but because it involves cultural change, without executive buy-in, IBP will not be successful.

Some major differences between S&OP and IBP are:

6 Steps in the Integrated Business Planning Process

Now that its goals are set, PickerBots can take the next steps in its IBP journey.

1. Determine what is holding the company back. Is it a lack or growth or profitability? Is the product portfolio too complex? Has the business lost competitiveness in its space? For our manufacturing firm, the main problem was overfocus on one niche market.

2. Engage and educate employees. Once leadership buys in to goals, that enthusiasm must trickle down through the ranks. Unless everyone is committed to integrated business planning, success will be elusive. The COO recognizes that a formal employee engagement program will keep workers invested in the success of the business and actively working to meet strategic goals.

3. Set up a tiger team. IBP success comes from tight coordination, constant communication and accountability for KPIs. It’s a cultural shift that will take time to propagate throughout the business. To jumpstart things, PickerBots identified engaged employees within each functional area and assigned them to a daily 20-minute standup call. Now, say a shipment of RFID readers needed by manufacturing will be two weeks late. The purchasing team member shares that information promptly so that sales can manage customer expectations and finance can account for delayed revenue. If the problem recurs, the company can seek out new suppliers. No more surprises.

4. Establish a project/product prioritization process. IBP takes discipline. Only projects that forward the company’s strategic goals get resources. Same for products. That might mean sunsetting a line that’s still selling but lacks growth potential. All managers who require resources or have a product or service launch idea fill out a cost-benefit analysis template that is tailored to reveal whether expected benefits and costs align with goals. Leadership prioritizes using this process. No more sacred cows.

5. Expand the finance team’s influence. Finance needs to sit in on product planning, supply chain optimization and sales strategy meetings. Specifically, choose a finance team member well-versed in FP&A functions. FP&A professionals inform major decisions made by the executive team and collect and analyze financial data from across the organization to create reports that reveal whether goals are being met — and if not, why not? How do we fix the problem? Like many smaller firms, PickerBots doesn’t have a dedicated FP&A staffer, so the head of finance assigns an accounting team member who knows the business and has an aptitude for data collection and number crunching.

6. Adopt technology and tools to support IBP. If the forecasting process is seen as a quarterly or annual exercise imposed by finance and yielding little benefit to departments, IBP can’t succeed. Companies with static, point-in-time budgets need to adopt rolling forecasts to make sure the business stays on track. And, finance teams need to be able to easily access the data they need from each operational area. Both rolling forecasts and better use of data require technology and a commitment to transparency. You can’t manage what you can’t measure.

Traditional vs. Rolling Forecasts

5 tips to succeed at integrated business planning.

Some ways the COO plans to set PickerBots up for success include:

1. Sell IBP as a way to bring order from chaos. For example, large companies, especially those that have engaged in a number of mergers and acquisitions, may have thousands of SKUs and product codes. One big manufacturer Oliver Wight worked with used IBP to whittle 120,000 item numbers down to about 10,000 and reduce inventories by 50% while improving on-time, in-full delivery by up to 20%. For a smaller company, IBP can prevent ever getting in a situation where it needs to slash 90% of SKUs.

2. Adopt a continuous improvement mindset. All parts of any production or service system, particularly people, are interconnected, inform one another and are mutually dependent on generating successful outcomes. This practice’s origin comes from Kaizen, a Japanese term meaning “change for the better.” Originating in Japan, the business philosophy looks to continuously improve operations and involve all employees, from assembly line workers to the CEO. It’s a way to reinforce IBP.

3. Get buy-in from the CIO. PickerBots’ CIO came up through the ranks of manufacturing IT and is familiar with the concept of Total Quality Management (TQM), which has overlap with IBP. That went a long way in communicating the benefits of IBP and freeing up budget for technologies that can make IBP work, like ERP, enterprise performance management (EPM), supply chain management and real-time-capable accounting and finance software — especially important to realize the “one set of numbers” value proposition.

4. Apply risk management principles. Disasters large and small happen. While the zen of IBP skews toward positive and upbeat, make sure department heads are doing scenario planning and what-if analyses to model operational risk — like overdependence on one market. Consider assigning your tiger team a secondary function as a crisis management strike force.

5. Don’t forget HR. Labor is likely your company’s biggest operating expense, so ensure that it’s working for your IBP effort, not against it. A human resources professional can identify traits in applicants — like team players who are data driven and comfortable with transparency — that predict whether they will be contributors to IBP success.

Benefits of Integrated Business Planning

Research shows that the main benefit of implementing IBP is increased revenue, followed by forecast accuracy and improved Perfect Order Delivery rates.

Three additional key benefits:

Real-time insights: Once companies have instituted rolling forecasts, for example, finance can more quickly and accurately answer questions on spending and cash flow. Expect more accurate KPIs across the board.

Ownership: The flip side of accountability is that in a company fully embracing IBP, all employees assume responsibility for meeting all goals. So you’d better make sure that authority to make decisions is decentralized and tied to responsibility for outcomes, because there are few bigger morale killers than accountability without the power to effect success. Companies can further nurture a culture of ownership by tying rewards to meeting or exceeding goals.

Improved customer satisfaction: While more on-time, in-full deliveries make customers happy, that’s not the only way IBP improves Net Promoter Scores. Better planning yields better insights into what customers want, and a strong company culture often leads to improved customer empathy and its associated benefits.

Integrated Business Planning Adoption Challenges

Where a business starts with IBP depends on its maturity. Companies with dog-eat-dog cultures and highly siloed processes have a lot of work to do. These tend to be firms with traditional top-down management structures, static annual budgeting with little ability to generate forward-looking projections and dated business plans that are misaligned with current customer needs.

While all are thorny structural challenges, a leadership team that’s averse to placing trust and decision-making authority at lower levels of the organization is in even worse shape. Companies with autocratic, command-and-control styles must be willing to decentralize authority if they hope to realize IPB’s benefits.

Even businesses with mature, integrated processes and egalitarian cultures often get tripped up by “top down” versus “bottom up” KPI reporting and budgeting. IBP requires businesses to focus less on finance developing a top-line budget and then handing departmental budgets down from on high. Rather, they need to become comfortable with a bottom-up process, where departments start with a plan of what they want to achieve, calculate what it will cost and then feed a number up to the finance team, which uses that input to calculate the total budget.

Companies not already using at least a somewhat flexible budgeting process are likely to find this shift difficult. One way to jump-start the transformation might be a modern form of zero-based budgeting.

Steps of Zero-Based Budgeting for 2021

• Create a strategic vision for ZBB: Identify cost targets, relevant KPIs and goals.
• Evaluate business units to select ZBB candidates (also referred to as “decision units,” or any organ of the business that operates independently with its own budget).
• Start selected budgets from scratch (i.e., from zero).
• Each decision unit provides “decision packages,” which break down each activity in terms of its objective, funding needs, justification in the context of company goals, technical viability and alternative courses of action.
• Evaluate each proposed item to determine its value-add to the company and whether the entire cost is justified. What does the expenditure bring back to the company?
• Prioritize costs based on company goals. Reduce or cut expenses in areas that no longer produce significant value.
• Allocate funds among areas that are productive and aligned with the business’s growth drivers.

Elements of Integrated Business Planning

Integrated business planning takes place at a regular cadence; every month is most common, so we’ll use that in our example.

These steps are standard for IBP consultants, adaptable to most industries and bake in the PickerBots COO’s virtuous cycle of market research and strategic planning, R&D and manufacturing, demand forecasting and predictive analysis, profitability analysis, supply chain optimization and marketing and sales strategy.

1. Product management review. This includes all elements of product portfolio management. A cross-functional team meets monthly to review the overall status of all of product-related projects: Are they on track? Have we identified new risks and opportunities? Are the most high-value products or services prioritized? The goal is aligning the product portfolio with business goals and making sure needed raw materials and manufacturing floor capacity are lined up. Product managers revise as needed and publish an updated master plan, along with the resources it’ll take to deliver any changes.

2. Demand planning picks it up. This is a cross-functional process that helps businesses meet customer demand for products while minimizing excess inventory and avoiding supply chain disruptions. Demand planning can increase profitability and customer satisfaction and lead to efficiency gains. This team brings together members of sales, marketing and finance to determine whether they’re targeting the right markets, the right way. They work up an optimized demand plan. Relevant KPIs include sales forecast accuracy, inventory turns, fill rates and order fulfillment lead times.

3. Then, the ball goes to the supply planning team. These supply chain experts work out the optimal way to meet projected demand in a cost-effective way. The key is to have visibility into complex supply chains; a formal supply chain visibility (SCV) project helps spot and fix weaknesses, such as inventory shortfalls or order fulfillment issues, before they become major problems. Lower cost of goods sold (COGS) is the North star.

4. The integrated reconciliation team pulls together the initial product, demand and supply plans and consolidates them into one holistic business plan based on a 24- or 36-month projection; for iterative updates, teams highlight material changes. Decisions that could not be made by individual teams are prepared for executive review.

5. The executive team resolves conflicts and rolls the updated plan out to the entire company.

Integrated Business Planning Components

The components of integrated business planning comprise three buckets: Plan, execute and monitor and adjust.

Specific actions falling into each bucket vary depending on the consultancy or technology supplier. Some are more aligned with supply chain planning, while others center on S&OP or financial planning with plug-ins to other functional areas. Others are very industry-specific.

Let’s look at Oracle’s IBPX (Integrated Business Planning and Execution) for Manufacturing solution as an example. Key components include:

• Top-down and bottom-up, driver-based planning and forecasting
• Risk modeling for M&A and strategic initiatives
• Full financial statement structure for strategic and operational planning
• Predictive and prescriptive analytics and planning
• A preseeded S&OP process
• Near-real-time demand and supply balancing
• Real-time backlog management
• Automation of predictions and correction actions based on actuals
• AI-enabled operational planning, such as for sales territories and quotas
• IoT and sensor data flows integrated with automated decisions

Items like backlog management and enhanced support for IoT and sensor data are important to manufacturers like PickerBots. A retailer might be more interested in advanced inventory management. What’s important is that any solution, whether purchased as a suite or pulled together by an integrator or in-house team, supports the ability to do long- and medium-range and short-term planning based on a single, up-to-date data set that’s accessible to all authorized stakeholders.

Also look for the ability to easily model “what-if” scenarios, robust budgeting and costing and a roadmap to advanced technologies like AI and predictive analytics.

Integrated Business Planning Examples

We mentioned the Oliver Wight customer that whittled 120,000 SKUs down to about 10,000. That firm, Uponor Group, looked to IBP after a string of acquisitions left it with swelling inventories, an extremely complex portfolio and a lack of communication between siloed functions and far-flung locations. The Finnish company sells products for drinking water delivery as well as radiant heating and cooling equipment and has 3,900 employees in 30 countries. Uponor had a hard time getting a singular view of financial information across its subsidiaries, and each unit had its own practices for inventory management. Small events, such as holidays, would drive some sites to build up “just in case” inventory, and double-stocking in warehouses was common. Subsidiaries in different countries had different SKUs for the same items, and R&D was localized, with no collaboration across the company.

Upinor focused first on its supply chain and implemented S&OP processes, then advanced to IBP the following year. The results have been an increase in net sales of $1.1 billion euros, a 30% improvement in on-time in-full deliveries, a 50% reduction in inventories and increased visibility.

U.S.-based technology provider Juniper Networks also undertook an IBP project focused on implementing a digital supply chain with IBP, where the business planning process would extend S&OP throughout the supply chain, product and customer portfolios, customer demand and strategic planning.

Since undertaking the project, Juniper’s lead-time attainment is up 55%. and its inventory costs are down by 15%, allowing it to realize a positive ROI on the IBC project.

History of Integrated Business Planning

Oliver Wight developed S&OP in the 1980s as a methodology for a client that wanted to balance supply-and-demand volume. In the years since, the process evolved to integrate financials, inventory and new-product introductions.

The consultancy renamed S&OP as integrated business planning in the late 1990s to reflect the process of integrating all functions of the business behind one optimized plan. Since then, a newer term, “enterprise integrated business planning,” has emerged. EIBP includes scenario planning and extended supply chain collaboration and discusses how large companies will adopt new technologies, such as AI, big data and advanced analytics.

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Applications of Integrated Business Planning

IBP makes planning and operations much more transparent, so it’s ideal for companies moving to “just in time” manufacturing. It’s also predictive, once a company builds up some data. That can help with customer satisfaction.

PickerBots, as an example, found that it typically sees constrained supply chain capacity for motherboards in Q3. With that insight, sales and marketing can work to encourage customers to take delivery of systems in Q2 or Q4, manufacturing can prebuild products and supply chain leaders can work on alternate sources for parts that pose challenges.

Looking ahead to the future of IBP, we expect it to help companies:

• Work on ever-longer-range strategy planning, modeling and M&A activities with a higher degree of confidence.
• Detect and notify stakeholders of unanticipated events before they impact the business by using advanced technologies, including real-time sensor information and machine learning (ML) pattern recognition.

As companies build comfort with automation, advanced IBP systems can be set to take action based on analysis without human intervention. Consider a chain of bakeries; a system plugged into a long-range weather forecast system might detect a tropical storm that could raise the price of vanilla and automatically order extra.

Cloud-based technology such as ERP underpins all these advances. For example, PickerBots always set its sales goals monthly. But often these plans were delayed to let the executive team review and approve any changes, meaning operations was caught unawares. A tool like NetSuite Planning and Budgeting automates planning processes and centralizes company financial and operational data, so finance teams can disseminate updates quickly.

The next frontier? Expending IBP to business partners and suppliers, even customers. But first, companies need to get their own cultural and technology houses in order.

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A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of five essential building blocks: a business-backed design; high-quality process management, including inputs and outputs; accountability and performance management; the effective use of data, analytics, and technology; and specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

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In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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What is IBP? Process, Strategy & Benefits

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Integrated business planning (IBP) continues to grow in popularity and adoption. And no wonder—when implemented, it provides a solid foundation to meet key goals. But with many stakeholders and processes involved, it’s not always easy. Where should you start in order to succeed on your journey to true IBP?

What is Integrated Business Planning (IBP)

Integrated business planning — the subject of a new report from the Association for Finance Professionals (AFP) — is a single holistic plan that seamlessly connects strategic plans with sales plans, operational plans, and financial plans while balancing practical constraints about the availability of resources and funding with the business’s financial objectives.

Benefits of Integrated Business Planning

When you’re looking for IBP best practices, a great place to begin is by taking advice from experts like Ken Caron and Ken Olsen of Deloitte. In a webinar (now available on demand), they shared their definition of IBP, discussed some core ideas behind it , and described how you can kick-start your efforts to incorporate IBP into your enterprise. We’ve recapped some of their message here, starting with an important question: Why should a company do IBP? They offered three reasons:

• Alignment and accountability. Instead of spending time and energy debating which plan to follow, all stakeholders agree on one plan—and understand their role in accomplishing the goals of that plan.
• Better decisions and actions. The structured process that comes from a well-built IBP approach enables companies to focus on making better-informed decisions and taking the best action based on those decisions.
• Increased visibility. IBP enables companies to incorporate insights from supply chain projections, financial projects, and strategic plans. And the more insights incorporated into projects, the better informed a company’s decisions will be, which, in turn, will be more likely to contribute to business goals like profitability and efficiency.

So now that you know the potential benefits of IBP, where should you begin?

6 Tips to Succeed at Integrated Business Planning

You need executive alignment and a clear vision before starting anything else. Find an executive willing to sponsor your efforts, “sell” the process, align stakeholders, and consult on change management. When you have a champion in high places, you’re on the right track.

IBP is a journey, so you need a roadmap of prioritized actions that drive quick wins and sustainable benefits. But before you can plan that roadmap, you need to understand the basic elements of an IBP framework, which we detail below, along with the benefits each element brings to the table.

• Effective governance. Clear roles, decision rights, policies, and incentives create an atmosphere that enables everyone to work together as an organized unit to achieve the company’s mission.
• Clear mission. A defined aim sets the path for IBP and defines what IBP will deliver.
• Organized process. When processes are cross-functional and designed to align the organization toward one desired outcome, you can focus on meeting the goal instead of maintaining the process.
• Right talent. Build a talent base with the skills and core competencies essential to IBP, such as strategic planning, financial planning, and supply chain planning . With skilled and experienced employees on board, you’ll be able to more effectively implement IBP across the enterprise.
• Insightful analytics. With access to real-time analytics, you can run “what-if” scenarios, quickly respond to disruptions and market adjustments, and make insight-driven decisions the core of your business planning. This helps you be proactive and stay ahead of your market instead of relying on reactive decisions.
• Powerful technology. Since IBP is a cross-functional initiative, you need an agile, flexible, cloud-based technology to provide a central platform for IBP collaboration and execution.

In their webinar, our two Deloitte experts are joined by Vivek Soneja, Global Head of Supply Chain Solutions at Anaplan. They discuss how you can make IBP a success, as well as some common reasons why IBP initiatives fail. To learn more about how you can succeed at IBP, watch the webinar.

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What is Integrated Business Planning and What Are The Benefits?

If there is one thing any business analyst can forecast is this: sustained uncertainty. And organizations can’t do much to change this. What organizations can do though, is to prepare to deal with market variability by addressing the business challenges internal organizations may have: disconnected and lengthy planning processes, an insane amount of time collating data, siloed decision-making, lack of forecasting accuracy, poor sight into operational assumptions and what is driving margin. That’s what Integrated Business Planning is aiming for.

What is Integrated Business Planning (IBP)?

Integrated Business Planning aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. A trusted, common view of the numbers provides a robust baseline for agile decision-making and keeps all teams together, collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line is that IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

IBP Process: How Does it Work

The Integrated Business Planning process is a framework to address the C-suite needs and help them implement the business strategy and manage uncertainty to improve decision-making. The secret sauce of IBP is a collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance, that’s how the C-suite gets value from it. Consequently, finance plays a central role within IBP.

IBP typically focuses on 24- 60 months horizons, as opposed to short term: that’s Integrated Tactical Planning or Sales and Operations Planning and Execution. The process must be fully integrated, so it should remove the departmental silos and it must adapt to the organizational construct of every business (it is not a one size fits all type of process).

Figure 1 outlines the five core elements of the IBP cycle with its responsibilities:

The most efficient way to foster this collaboration is by having a unified solution and data model that caters the needs of the various agents involved on each review.  Figure 2 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

IBP Business Benefits

The benefits an organization can expect from an IBP implementation are diverse. In the big picture, IBP can certainly improve financial and business performance. Figure 3 outlines some of the most remarkable KPI improvements.

Want to learn how you can maximize the benefits of your IBP process and get your CEO onboard, read our blog on the 5 Considerations to Help Your CEO Trust the IBP Process .

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Integrated planning: The key to agile enterprise performance management

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What is integrated planning, change as a given: the truth about plans, planning across the organization, the ultimate integrated planning solution.

• Need for real-time insights
• Integrated planning
• Agile and ready organizations
• Integrated planning drives better results

Integration is key to streamlined planning, budgeting, and forecasting. In order to adapt to today's quickly changing business conditions, you need an enterprise performance management solution that creates a single source of truth and delivers speed and agility to your planning process.

Did you know that 33 percent of critical information is delivered late?

The delay of critical information can cause a ripple effect that drives poor decision making and poor results. Today’s business simply cannot afford this type of cost in our customer-centric environment, where data is one of our most valuable assets. To stay ahead of the competition, businesses rely on a solution that can deliver acceleration, agility, and collaboration in every part of the organization.

Integrated planning ensures all parts of the organization are connected and planning is streamlined.

A must in the culture of “now.”

In virtually all industries, work has become more interactive and collaborative. More sharing is required, and more data is available than ever before. Success means integrating information across strategic and operational perspectives, as well as different functional and external sources.

Integrated planning mirrors the modern way we do business — it elevates the critical value of collaboration and cuts through data silos, driving more access to information and faster insights. Leaders use highly collaborative approaches to plan, budget, and forecast. Business planning requires accurate and complete data and buy-in across the entire organization, both from the top down and the bottom up. It sounds simple, but organizational silos are some of the biggest obstacles to accomplishing good work because they hinder critical decisions that strategically steer the business. And at the modern enterprise, silos are everywhere.

Integrated planning starts with a sophisticated planning platform that everyone in the organization can use, creating one source of truth. Data from diverse data sources such as ERPs, CRMs, and HRMs is unified, so users can access the information they need when they need it. Integrated planning helps ensure that plans, budgets, and forecasts are created with a holistic approach. Trends are easier to spot and quickly act on with more accurate and reliable plans. According to analysts at the Aberdeen Group , those organizations that champion data accessibility and collaboration between stakeholders promote organizational accountability and decrease time-to-decisions while increasing revenue. 1

The fact of the matter is that without effective communication, coordination, and collaboration between stakeholders, there is no way to improve organizational performance. 1

Bringing together people, data, and technology leaves organizations well-poised for optimal performance. Most importantly, integrated planning enables employees to be agile in responding to changing circumstances and able make the best decisions possible — all at the speed of modern business.

According to an Aberdeen study, 1 leaders who adopt enterprise performance management tools show a keen understanding of the importance of collaboration. They recognize that to make data driven decisions, they need to make all information accessible by integrating data and breaking down silos. Figure 1 shows steps taken by leaders to democratize data and drive more accurate forecasts.

Leaders put a high value on data integration and accessibility. They see the value of providing real-time data to decision makers and taking the guesswork out of forecasting. These strategies create comprehensive, actionable visibility into overall company performance and drive better results.

Gartner Predicts by 2020, at least 25 percent of large organizations will increase planning accuracy by integrating key operational planning processes with financial planning and analysis. 2

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I have a good handle on my own departmental data (but only mine)

I have access to my data and that of other departments that impact my planning

IBM Planning Analytics helps Deutsche Bahn unite its global enterprise

Deutsche Bahn AG is a German railway company, and one of the largest IBM Planning Analytics customers with over 6,000 users worldwide. Deutsche Bahn uses IBM Planning Analytics to unite their wide-ranging operations across the globe, ensuring that the most accurate data is being used to create critical plans and forecasts that drive their business forward.

The truth about plans is that they always change. The goal of a dynamic, integrated planning approach is not to create a perfect, fixed plan. It’s to use all the resources available to create the most accurate, flexible and transparent plan possible, using a solution that does more than just plan — it analyzes data, reveals trends, and allows for real-time iteration.

Better, quicker access to data means faster and more informed decisions, laying the foundation for an organization to be agile and ready to pivot when changing business conditions demand.

If you’re reading this and thinking, “great, the finance team integrates all our plans, so we are off the hook,” think again. While we’d like to think that finance is the well-informed master of plans, miraculously weaving them together in perfect harmony and balance, that’s not always the case. In fact, it rarely is. Many, many finance teams rely on the manual collection of data into spreadsheets, which are often disconnected. Remember that much of an organization’s critical planning starts outside of finance and never gets communicated back up the chain or across the organization. There are simply too many top-down and bottom-up communication problems. Spreadsheets only complicate smooth communications. When a finance person is collecting and analyzing budget spreadsheets from across the organization, there is high risk for error in the process of combining and editing, causing confusion at the highest levels. Contradictory data can inhibit a clear picture of what is actually going on and identifying business drivers or detractors. Spreadsheets have proven over and over to be a highly imperfect yet highly common business practice.

With real-time access to data, companies take the guesswork out of planning, decreasing time involved in forecasting and increasing forecast accuracy. 3

Bye bye, silos. Hello, cross-functional planning.

A centralized, automated solution for performance data and planning allows coordination between different parts of the business and enables more streamlined, accurate plans. Leadership needs to understand what is truly driving the business — what causes increases and decreases in revenue or demand. At every level, access to a full range of data is critical to understanding how change (both internal and external) impacts the business. Though planning often starts with finance, other areas of the business can benefit from a dynamic planning solution as well. Let’s dive into a few use cases.

Supply chain planning

The term “operations” covers an enormous range of business activities. But one that’s almost universal is supply chain management. Supply chain planners are under constant pressure to reduce costs, increase efficiency and improve margins. Unfortunately, too many of them lack visibility into data and are misaligned with other teams. One centralized tool can help connect operational tactics with financial plans to allocate resources more effectively in response to market opportunities or competitive threats. This helps planners avoid mismatched data across multiple spreadsheets and enables them to pivot in the case of supply chain disruptions.

“ Our managers all have quick, easy access to the latest operational data via detailed reports that help them make better-informed decisions to improve the efficiency of the entire supply chain. ”

- Homarjun Agrahari, Director, Advanced Analytics, FleetPride

Learn more about supply chain planning

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Workforce planning

A company is only as good its people. That’s why it’s so important to hire and retain the right talent. Alignment between HR, finance and operations is crucial to ensure that the right people are in the right roles at the right time in order to meet organizational demands. This is rarely a simple task and too often it involves manual spreadsheet-based processes. Ensuring that departmental staffing targets are in sync with broader organizational objectives requires high levels of planning integration.

“ Our business is based on people. IBM Analytics is helping us manage that critical asset much more efficiently and effectively than ever before. ”

- Nadia Bertoncini, Coordinator of Governance, Projects and HR Analytics for Latin America, Natura Cosméticos

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Sales planning

Misalignment between finance, marketing and sales could lead to investment in the wrong initiatives, missed opportunities and inaccurate revenue forecasts that can severely hinder sales growth. And in a fast-moving market, manual processes and siloed systems are detrimental to agility. Decisions that are based on outdated information can lead to misguided sales strategies and thus lost sales and lost revenue. It’s critical to unite data under one roof for one single view to boost sales and effectively manage sales people.

“ The sheer level of detail that IBM Planning Analytics provides is very impressive … We can calculate our sales and gross margins for each SKU in IBM Planning Analytics and generate insightful reports at the click of a button. As a result, senior managers can rapidly access the comprehensive information they need to make effective strategic decisions. ”

- Vince Mertens, Group Accounting and Consolidation Manager, Continental Foods

Learn more about sales planning

Marketing planning

Constantly changing customer preferences and rising customer expectations require marketers to interpret high volumes of data and respond appropriately. But siloed data systems give only a partial picture and hinder smart decision-making. In addition, marketing teams can be fragmented and often disconnected from sales. Siloed planning causes misalignment with overall marketing goals, driving misallocated spend on the wrong elements of the marketing mix. Manual, siloed processes reduce visibility into how marketing activities affect one another, how marketing and sales touches move a lead through the funnel and how marketing helps achieve overall financial and business goals.

“ We first needed a better handle on our sales data. With so many lines of business, channels, and franchisees, collecting and consolidating this information was something that we knew we could do better. ”

- Donald Neumann, Demand Manager, Grupo Boticário

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IT planning

With IT, you need a business case for every dollar spent. But balancing the IT needs of an entire organization with digital transformation objectives and constant technology innovation is no simple task, and often requires additional resources. That’s why it’s so important leverage a planning solution that keeps IT focused on the projects that matter, automates planning tasks, gives a clear view into resources available and helps measure ROI. It’s also critical to coordinate with both finance and human resources to ensure the right resources are provided for IT initiatives and projects.

“ A few years ago, my team probably spent around half their time just keeping everything running — now it’s around 10 percent. With the move to IBM Analytics in the IBM Cloud, we have 40 percent more time to focus on working with the business to add value. Instead of asking ‘how do I make it work?’ we ask ourselves ‘how do I make it better?’ It’s a quantum shift in mindset. ”

- Vimal Dev, Vice President – IT, Global Enterprise Applications Leader, Genpact

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Operations, sales, marketing, human resources and other departments and disciplines all have a need for fast, flexible planning and analysis. And all of them can use the same tools to provide insight and manage performance. When people in one part of the organization see how their decisions affect other parts of the organization, all of the activities will be better coordinated and drive better results. In fact, according to Aberdeen, leading organizations are those who align planning across departments at double the rate of laggards in areas like sales, marketing and finance.

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With IBM Planning Analytics , you can break down silos and generate an integrated view of your departmental or organizational performance. The solution enables you to create more accurate forecasts, identify potential performance gaps before they occur and make resource allocation decisions quickly and intelligently. Using multidimensional modeling and scenario analysis, IBM Planning Analytics lets you drill down into your data to examine the ripple effects of alternative courses of action and understand how your decision will affect related areas of the organization and ultimately impact the bottom line.

Using what-if scenario analysis to make smarter decisions

With IBM Planning Analytics, you can build multidimensional models and perform “what-if” analysis to explore scenarios or test business assumptions. Creating and maintaining sophisticated models with advanced sandboxing capabilities is simple. Easily test business assumptions and model scenarios to immediately see the impact of alternative courses of action on before deciding to implement changes.

IBM Planning Analytics offers all areas of your business — finance, operations, HR, sales, marketing, operations, IT and more — the ability to solve problems today and respond to new challenges with agility tomorrow.

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Integrated Business Planning

Embracing change: the power of integrated business planning.

In today’s dynamic business landscape, conventional planning processes riddled with departmental silos often hinder visibility and efficiency. However, a transformative shift is underway. Forward-thinking companies are embracing digital transformation and adopting Integrated Business Planning (IBP) to empower their activities with enhanced coordination and collaboration. This blog delves into the definition of IBP and explores the substantial benefits it’s brings to organizations in a modern setting.

What is Integrated Business Planning?

IBP is considered a best practice approach that seamlessly integrates financial and operational data from across the organization. This strategic method allows companies to optimize their output by connecting strategic plans with sales, operational, and financial plans. The result is enhanced visibility of the intricate relationships between resources, capabilities, and results. Through IBP, organizations collectively develop a comprehensive go-to-market plan that reflects contributions from every department.

Main objectives of Integrated Business Planning

IBP establishes a framework to achieve the following key goals:

• Align company plans and resources with corporate strategy: IBP ensures that all parts of the business are aligned with the strategic goals, focusing on financial performance as much as on operational capabilities.
• Improve visibility and collaboration across the business: By bringing together various functions—such as sales, production, logistics, and finance—IBP fosters collaboration and transparency across departments.
• Enable more accurate and forward-looking decision-making: With a unified view of business data and forecasts, companies can make more informed decisions, anticipate market changes, and react proactively.

Core elements of Integrated Business Planning

IBP consists of a series of interconnected processes that work together to create a unified business plan:

• Product and portfolio management: Managing the life cycle of products and aligning the product portfolio with market demands and strategic objectives.
• Demand planning: Estimating customer demand to guide supply chain and business planning.
• Supply planning: Ensuring the organization can meet the demand plans with optimal resources.
• Financial review and integration: Tying operational planning to financial planning and analysis to ensure that business plans are financially viable and aligned with financial goals.
• Strategic business planning: Aligning all business plans with the company’s long-term strategic goals, including financial objectives.
• Integrated reconciliation: Harmonizing plans across the business to ensure alignment and commitment from all departments.

Key benefits of Integrated Business Planning

IBP offers a multitude of advantages, including:

• Enhanced agility: Respond faster to market changes and capitalize on new opportunities.
• Improved financial performance: Make data-driven decisions that optimize resource allocation and profitability.
• Better risk management: Proactively identify and mitigate potential risks that could impact your business.
• Increased collaboration: Break down departmental silos and foster a culture of teamwork.
• More accurate forecasting: Gain a clearer picture of future demand and supply to optimize inventory levels.

While IBP requires a mature planning process with the right technology and tools, successful implementation also depends on strong leadership, clear communication, and a collaborative culture across all levels of the organization. It’s a strategic approach that, when executed well, can significantly enhance a company’s performance and competitive edge.

Challenges of traditional business planning processes

Conventional planning activities are often disjointed, especially across the supply chain. The use of disparate spreadsheets and standalone business intelligence solutions creates isolated pockets of knowledge, hindering a holistic approach to planning. While some firms implement Sales and Operations Planning (S&OP) principles, true unification across the entire organization remains elusive. This fragmented approach leads to inefficiencies and suboptimal performance due to:

• Limited visibility into departmental activities and their impact on the financial bottom line.
• Disconnection between strategies and operational activities, resulting in delayed responses to market changes.
• Lack of a collaborative approach and accountability, fostering business silos rather than a unified team.
• Multiplicity of point solutions and applications across divisions, increasing costs and data disparities.

Overcoming these challenges requires a shift towards a unified planning process. IBP offers a comprehensive framework that breaks down departmental silos, integrates financial and operational data, and fosters a culture of collaboration. By implementing IBP, organizations can gain a clear view of their business, make better decisions, and achieve their strategic objectives.

Integrated Business Planning vs Sales and Operations Planning: What’s the difference?

IBP and S&OP are both strategic processes used by companies to align various functions within the organization. While they share similarities in aiming to improve business performance through better planning and alignment, there are distinct differences in scope, focus, and depth.

Here’s a comparison between the two:

Key differentiators

• Breadth: IBP takes a more comprehensive approach, encompassing the entire organization’s planning processes. S&OP has a narrower focus on aligning supply chain operations.
• Time horizon: IBP has a longer-term perspective, considering market trends and setting strategic direction. S&OP prioritizes short-term efficiency and meeting near-term targets.
• Financial emphasis: IBP integrates financial planning with operations, ensuring financial viability. S&OP gives less weight to financial considerations, focusing on operational costs.
• Decision-making: IBP empowers decision-making across all levels, while S&OP primarily supports operational-level choices.

IBP builds upon the foundation of S&OP. It extends the principles of supply chain alignment to encompass broader financial and strategic planning. While both processes are valuable, IBP offers a more holistic and future-oriented approach for businesses seeking to optimize performance across the entire organization.

Case in point: Coca-Cola European Partners

Automating 90% of financial data input, slashing data transfer time from 24 hours to 15 minutes, and enabling digital, driver-based planning from production to delivery.

Coca-Cola European Partners (CCEP) leveraged IBP to transform their supply chain finance function. They implemented driver-based planning, which integrates financial and operational data, enabling them to make data-driven decisions and optimize resource allocation. IBP also improved collaboration across departments by providing a single platform for all users to access and analyze data.

This resulted in:

• considerable savings in time: a 90% reduction of manual tasks
• improved efficiency of data transfers: from 24 hours to 15 minutes
• a streamlined consolidation process: just one-click to incorporate 48 plants and 85 warehouses

Overall, IBP increased transparency, streamlined processes, and empowered informed decision-making at CCEP.

The future of business planning

The era of disjointed planning processes is giving way to the transformative power of IBP. Companies adopting it can unlock improved visibility, collaboration, and efficiency—setting the stage for sustained success in today’s rapidly evolving business landscape.

For further insights, explore our complimentary whitepapers and reports on the benefits of an IBP process.

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Integrated Business Planning

For integrating functional plans, deploying business strategy, and driving business management, what is integrated business planning (ibp).

Integrated Business Planning (IBP) is a common-sense process designed for effective decision-making and led by your leadership team. True business integration means senior management can plan and manage the entire organization over a 24-36 month horizon, aligning strategic and tactical plans each month, and allocating critical resources, people, equipment, inventory, materials, time, and money; to satisfy your customers in the most profitable way.

Integrated Business Planning represents the evolution of Sales and Operations Planning (S&OP) from the supply and demand balancing process developed in the early 1980s. Today it is a process that drives the alignment of all functions across an organization, models and creates readiness for alternate outcomes, drives deployment of strategy, and enhances collaboration across supply chains.

What is the difference between S&OP and IBP?

There are many differences between Sales & Operations Planning and Integrated Business Planning, but firstly it’s important to note that IBP is not a supply chain process ; it has a much broader reach. IBP is the process that connects your strategy and business plan to ensure both are delivered.

The purpose of IBP is not to drive a better forecast with which supply chain can plan. It is the process that brings focus to the deployment of your business strategy and provides a framework for effective decision-making to drive growth.

It's also much more than just a monthly meeting. IBP is a company framework to surface and solve problems and continually re-optimize plans as circumstances change. IBP enables businesses to create an aligned, cross-functional plan for the future, based upon key assumptions. These assumptions, documented and updated each month, are based on insights.

Read our white paper to learn more about what sets Integrated Business Planning apart from Sales & Operations Planning.

Looking for help with IBP software?

Oliver Wight IBP Powered by Board is a holistic solution combining Oliver Wight's industry-leading Class A and implementation change management processes with Board software. Fully align people, processes, and technology and embed IBP and its benefits for years to come.

This offering combines IBP technology and process in one package for rapid time to value. You will benefit from Oliver Wight consulting and education + Board Intelligent Planning Platform + specialist implementation services. 

Find out more.

How mature is your organization's true level of maturity in IBP?

Before embarking on any performance improvement program, it is imperative to identify your organization's true level of maturity. The Oliver Wight Maturity Model characterizes an organization as being in one of four key phases of maturity: Co-ordination, Business Process Control, Automation, or Integration. Assess your business maturity in Integrated Business Planning using our free online self-assessment tool .

Assess your business maturity

How you can benefit from Integrated Business Planning

Early identification of gaps in the business plan and strategy deployment, creating time to close them

An integrated view of performance and projection of your business over a 24-36 month horizon

Alignment of functional operating plans and financial projections with ‘one set of numbers’

Application of scenario planning and modelling to areas of your business where there may be uncertainty or impact

Increased responsiveness to uncertainties and unplanned events to minimize negative impacts and seize opportunities

Creation of transparency and clear accountability across the business/organization

Simplification of the budgeting or annual planning process

Integration of strategy deployment with operational plans

Increased employee engagement and efficiency

Growth in revenue

Reduced costs

Improved customer service

Reduced inventory

Visibility of planned product changes, future demand from sales and marketing, supply chain performance, planned supply chain capability and flexibility, plus bottom-up plans and the actions and decisions required to deliver ‘best for business' outcomes

You should consider Integrated Business Planning for your business if:

You are constantly in ‘fire-fighting’ mode

You have a misaligned management team

You are continually missing the financial plan

You are experiencing rapid growth and can no longer manage effectively using an informal process

Your budgeting process is ‘painful’

You are struggling to get on top of service issues

You cannot keep up with growth in demand

You have excessive inventory

You are experiencing excessive rework and cost

Departments or sites are working in silos

There is no ‘single source of truth’ or ‘single set of numbers’ to run the business

You feel like you never have time to look at the strategy

There is poor deployment and execution of the strategic plan

You have poor employee engagement

You feel like you are not getting a return on the effort put into your existing S&OP/IBP process

How we can help

A diagnostic assessment of your current S&OP or IBP process, including its effectiveness and identifying any performance issues

Transfer of our knowledge to your people so they can create and manage an effective IBP process

Change management – plan, monitor, and support the implementation of change and its impact on your people

Facilitate the design of an IBP process to best fit your organization and its needs

Scoping of an action plan to address issues and take advantage of the opportunities identified, including resourcing, timelines, and performance improvement expectations

Coach IBP process users as you introduce the new ways of working

Assess and validate that your IBP process has achieved a Class A level of effectiveness – firmly embedded as the ‘way you do things’ and delivering the benefits you wanted

Integrated Business Planning is a cutting edge process which creates cross-functional alignment and enables businesses to re-focus to meet the ever-changing environment. IBP generates readiness for alternative outcomes, enhances collaboration, and ultimately drives deployment of strategy in an uncertain world. The chosen process of some of the world’s most progressive and best-known organizations, IBP is a common-sense process that maximizes profit and enables leaders to manage risk with confidence.

Integrated business planning resources to help you improve.

White papers & case studies

Videos & webinars

Get in touch

Upcoming courses.

11 Jun 2024

Virtual (English)

Integrated Business Planning – Introduction, Overview, and Current Best Practice

More information +

10 Sep 2024

08 Oct 2024

Virtual (French)

French Integrated Business Planning Workshop

12 Nov 2024

Latest white papers & case studies

The IBP advantage: a roadmap for marketing and product teams to collaboratively deliver success

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Latest books

The Transition from Sales and Operations Planning to Integrated Business Planning - Second Edition

The Oliver Wight Class A Standard for Business Excellence

Le Standard Classe A d’Oliver Wight pour l’Excellence en Entreprise

Der Class A Standard für Business Excellence nach Oliver Wight

El Estándar de Clase A para la Excelencia Empresarial de Oliver Wight

Orchestrating Success: Improve Control of the Business with Sales & Operations Planning

Enterprise Sales and Operations Planning

An Executive's Guide to Achieving Class A Business Excellence

Latest videos and webinars

Balancing planning (ibp) and execution (itp) in rapidly changing socioeconomic environments.

Flavio Pietrocola, Oliver Wight Partner, explains how to find the right balance between Planning (IBP) and Execution (ITP) in this disruptive and rapidly changing world.

How to steer a company through the D-VUCAD world? (in German)

This podcast episode discusses how to steer companies through volatile, unpredictable times and what modern control instruments and technologies there are that companies should use.

Managing Change through Effective Implementation of Integrated Business Planning

Oliver Wight Partner, Gary Connors explains the five common failure modes in implementing Integrated Business Planning and how to manage changes through IBP.

Moving to E2E Supply Chain Management with IBP coordination

Watch the video to see Oliver Wight's CEO Les Brookes explains how to drive End-to-End supply chain transformation with IBP.

Eminox Ltd: What was it like working with Oliver Wight?

Oliver Wight Partner, Dawn Dent spoke to Eminox's Managing Director Mark Runciman, who shares his experience of working with Oliver Wight.

The Digital Supply Chain podcast

Supply Chain Resilience with Integrated Business Planning - a chat with SAP and Oliver Wight.

IBP: Driving Growth, Increasing Productivity & Improving Customer Service

Oliver Wight’s Paul Ducie joins Olivehorse Consulting to discuss how to assess your organization’s maturity, and define the correct approach for implementation.

Dynamic Integrated Business Planning: aligning process and tools to meet the challenges of an everch

The right collaboration between process and tools can deliver the IBP promise efficiently and dynamically.

The Enemies of Effective Measures

Does your business truly understand measuring and analysis? Do you apply the data and learn from it? Or are there conflicting or biased measures happening behind the scenes?

What business leaders are talking about today

Oliver Wight's Andy Walker and EY's Jocelyn Hallum discuss what business leaders are talking about today.

Financial Planning with IBP: Creating one process for your business

Join Oliver Wight Partners Monte Maritz & Lucy Jacobs for this webinar in our ongoing series focused on the evolution of Integrated Business Planning.

Data accuracy in the healthcare industry

Oliver Wight Partners Gary Connors and Steve Rowntree lift the lid on why data accuracy (or inaccuracy) is so prevalent in the healthcare industry.

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At its finest, IBP is fully aligned with growth and innovation metrics, having turned S&OP into a strategic business partner. Visualize aligning your company’s operational decisions with forward-looking financial performance across various timeframes, representing complex trade-offs, constraints, and real-time business realities across the value chain; this is what a successful IBP looks like! 

For more than a decade, our customers have struggled with the term IBP and how it relates to sales and operations planning (S&OP), sales and operations execution (SOE) sales inventory operations planning (SIOP), sales and operations management (S&OM), and other processes.

Despite knowing its importance, businesses have been slow to adopt integrated business planning. Many have yet to establish a fluid S&OP process.

Why Companies Struggle to Adopt IBP

So…why are companies still struggling to adopt IBP? A few reasons include:

• Conflicting goals among business units and barriers due to the evolutions of processes and technologies
• Existing technology design
• Traditional methods of doing business

A recent study shows that 79% of companies continue to use spreadsheet planning, yet only 39% say that spreadsheets support a collaborative planning process .

( Download the research perspective here for more insights and how to tackle problems with spreadsheet planning. )

Here’s the problem: Inflexible tools like spreadsheets don’t allow for a cross-functional representation of the business. Also, spreadsheets don’t provide forward-looking insights  — a requirement for IBP. Instead, spreadsheets produce infeasible plans, inhibit collaborative planning, and suck loads of time that could be better spent elsewhere.

In one case study, a snack food giant wasn’t meeting demand on its most profitable product due to constrained capacities. When it tried utilizing its 20+ spreadsheets, they continued to fall short of reaching targets and became well aware that they were missing out on major profit opportunities.

Spreadsheets may work for isolated scenarios but not integrating functions to solve one common goal (meeting demand) while aligning with strategic objectives (e.g., recognizing additional profit opportunities). This is the essence of integrated business planning 

Top 7 Barriers to Integrated Business Planning

In addition to spreadsheets, here are a few other barriers that we have found:

• Technology and process structures don’t allow integration.  Traditional software solution designs differ in structure, hindering integration. Supply chain software was built from the ground up with a data model that was singularly focused toward certain areas like demand, supply, logistics, etc. Financial planning and analysis tools which model the General Ledger/Chart of Accounts from a transactional and roll-up perspective take the opposite approach. As such, supply chain planning and financial planning technologies were never destined to meet.
• Complex skill set required.  Optimization solutions present barriers within barriers: modeling a complex supply chain often requires difficult coding and provides no visualization.
• Different cultures within the organization.  Business units within the enterprise usually have a culture of its own; the undertaking of understanding another unit’s goals while striving to reach its own seemed impossible.
• Linear scenario management tools.  Like optimization, scenario management tools can’t replicate real-world complexities, nor acknowledge that what-ifs are not linear.
• Use of spreadsheets as a primary planning tool.  Maintaining the status quo use of spreadsheets presents an inflexible resource unable to integrate and align business goals.
• Inflexible solutions prevent data quality, access, and management.  Solutions are designed to operate a specific way, and often unlike the business, meaning that the access to data or its quality and management are reliant upon the system.
• No C-Suite awareness.  Understanding the meaning and feasibility of IBP often lies outside the C-Suite periphery. As a relatively new process that has been difficult to put into practice, IBP is an educational endeavor within the organization; IBP fails to get the attention of the C-Suite that benefits from it most. The CEO/CFO can be unaware of the benefits of IBP. In this post, we describe situations where employees keep profit-improving opportunities a secret , because an individual silo may be somewhat negatively impacted.

Clearly, navigating the challenges to implementing IBP starts with understanding the advantages that IBP provides.

How Does IBP Work?

IBP represents the end-to-end business goals with a process that takes into consideration each business silo and its various functions. For example, is the operational plan represented in a cash flow statement? If not, what good is an operating plan that includes a product mix with margin contributions that put cash flow risk?  It’s why the outcome of IBP is a true business plan, rather than a demand plan, supply plan, production plan, or a financial budget.

Through IBP, enterprises gain a single holistic plan that unifies the business, seamlessly connecting corporate performance management, financial planning processes, and operational planning systems. This comprehensive business plan increases business alignment through the sharing of performance strategies and helps quantify business risk so enterprises can rapidly adapt to meet challenges.

Why We Need IBP Now More than Ever

Even in a good economy, financial pressure to perform is paramount to maintaining a competitive edge and interesting enough, no different than the factors driving IBP following the 2009 recession. These include:

• Demand volatility has increased considerably for most companies.
• Supply complexity has increased with options such as subcontracting manufacturing and logistics operations — both of which are more common. Supply chains are broader in scope, including goods that are distributed across worldwide supply chains.
• Input cost volatility is a constant, increasing challenge for profitability. No matter the commodity (e.g., aluminum, gas, or petrochemicals), all experience sudden market changes.
• Non-linear connection between costs and volume fluctuates with a mix of fixed and variable costs; some costs vary by volume and others by time, making it more difficult to understand the financial implications of business decisions.

Yet, IBP is essentially an outgrowth of S&OP that fully aligns customer, product, demand, product, and strategic portfolios across a value chain to drive the strategy of a company, its financial performance, and its operational and tactical plans. This realization began as early as decades ago but hasn’t gained much traction in implementation until recently.    

With process changes like global sourcing and distribution, the complexities of the supply chain make it necessary to synchronize operational plans with financial and strategic business goals and understand impacts to the enterprise as a whole.

The Need for What-If Analysis for Successful Integrated Business Planning

IBP is only possible with cross-enterprise, what-if scenario planning across various planning horizons. With true integrated business planning, new questions to new answers can be address — driving unmatched value to every aspect of the value chain.

In one use case involving a product mix portfolio, IBP can answer what-ifs such as:

• What if we need to move from one raw material to another, over the next several years?
• What if we want to expand into new opportunities. Where should we be investing?
• What if we make changes in design, materials, and production. How will it affect short- and long-term planning?
• What if new capital expenditures are required today and in the future?
• What if we made acquisitions instead of more capital expenditure projects?

The what-ifs allow companies to find optimal scenarios in addition to optimizing the existing way of doing business.

In other words, what-if scenario analysis is what allows companies to integrate their supply chain plans with finance, manufacturing, procurement, sales, marketing, etc. 

The Unmatched Benefits of IBP

IBP has some astounding impacts on those companies who successfully adopt it. Some of the benefits our customers have seen are:

• Profit improvements equal to 2-5% of annual revenue within the first year alone
• Reduced working capital expenses by 15% or more
• Optimization of logistics, capacity, procurement, supply and demand all with the use of a single planning solution
• Improved cross-functional collaboration, planning agility, risk mitigation, and forecast accuracy
• Reduced planning timeframes from weeks or months to just a few days or hours.
• Increased stakeholder value for the company, at large
• Broader trust in plans 

6 Factors to Find the Best IBP Solution

Cloud-based technologies, machine learning, and artificial intelligence (AI) sources have eliminated some technology barriers; however, traditional methods continue to play a significant role in preventing companies from using IBP.

When evaluating Integrated Business Planning solutions, these should include:

• Can execution characteristics, capabilities, and constraints be modeled correctly in order to gain an achievable strategic plan?
• Can the IBP solution co-create financial plans in sync with operational plans? Note: a financial plan refers to audit quality financial statements (e.g., Income statement, Balance Sheet, Cash Flow) which provide a full financial picture?
• Does this solution allow users to clearly understand variances – from a budget to a plan, or a baseline to a scenario, at operational and financial levels?)
• Can the solution evaluate alternative “what-if” scenarios in the formation of budgets, strategies, and operational plans? Can the scenarios consider financials as constraints? Can the scenarios optimize to multiple objective functions at the discretion of the user?
• Can we drill down and understand the root causes of those gaps?
• Does the solution have a concept of marginal contribution? This provides the specifics needed to understand the targeted actions taken. If more of this product is sold, will it have this impact? Is it worth it? If less of that product is sold, will it have this impact? Are the risks worth taking?

Intelligent Modeling as a Requirement for Successful IBP

Successful Integrated Business Planning includes unique technology capabilities. Below are the most important ones:

• An underlying holistic model that represents the business as it behaves in reality, including business, financial, and supply chain constraints. Additionally, it is essential to know how variable and fixed costs are incurred, the structure of reporting hierarchies, and process flows with mass/energy balance.
• Allowing users to simulate and optimize scenarios with multiple objective functions
• Supporting analyses from different angles (e.g., solving for optimal product mix rather than holding product mix constant, and solving for a supply plan) allow users to communicate effectively and understand the impact on key performance indicators.
• Providing rich information, including detailed cost analyses, marginal profitability, financial statements, key bottlenecks/constraints, etc.

River Logic as a Recognized Leader in S&OP/IBP

Currently, River Logic is a Leader in Gartner’s Magic Quadrant for S&OP and a Gartner-ranked global leader in both prescriptive analytics/optimization and Corporate Financial Planning. To date, we are the only vendor that is noted in all three of these areas.

River Logic has been a long-time thought leader in the IBP space and has been delivering Integrated Business Planning and S&OP solutions to global clients since 2005.

Our solution fundamentally looks at IBP through the lens of the CEO/CFO: charts of financial accounts and net income and a focus on the value chain. In other words, it truly has an integrated business plan as part of its data model regarding finance, supply, demand and any value chain function that needs to be modeled. River Logic is a comprehensive business modeling tool and much more than just supply-chain modeling tool.

1 Magic Quadrant for Sales and Operations Planning Systems of Differentiation , Gartner Research, May 2017.

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• Unveiling the Power of Integrated Business Planning (IBP) in Supply Chain Excellence
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Integrated Business Planning (IBP) plays a defining role in the overall growth of the business.  In the dynamic business landscape companies are looking for solutions that can seal the gap between various business functions that drive efficiency and agility.

Since the supply chain plays an integral role in the growth of the business, IBP or Integrated business planning in the supply chain becomes crucial.  

In this blog, we will delve into the intricacies of Integrated Business Planning, exploring its role in the supply chain, providing examples, understanding its implementation in SAP, exploring the framework, and deciphering the crucial processes and execution strategies.

Table of Contents

Integrated Business Planning in the Supply Chain

Integrated Business Planning is a strategic approach that integrates various business functions to streamline decision-making processes across an organization. In the context of the supply chain, IBP aims to align demand, supply, and finance functions, breaking down silos and fostering collaboration. By providing a holistic view of the entire supply chain, organizations can enhance their responsiveness to market changes, minimize risks, and optimize resource utilization.

Key Components of Integrated Business Planning

Demand planning.

At the core of Integrated Business Planning is demand planning. This component involves forecasting future demand based on historical data, market trends, and other relevant factors. By aligning demand projections with overall business objectives, organizations can optimize inventory levels and ensure a responsive supply chain.

Inventory Management

Another integral component of IBP is inventory management. This entails overseeing the entire inventory lifecycle, from procurement to storage and distribution. By integrating inventory management into the planning process, organizations can prevent stockouts, minimize holding costs, and enhance overall supply chain efficiency.

Financial Planning

Financial planning forms the financial backbone of Integrated Business Planning. This component involves aligning the budgeting and financial forecasting processes with operational plans. By integrating financial considerations into the overall planning framework, organizations can ensure that strategic decisions are financially viable and contribute to the bottom line.

Sales and Operations Planning (S&OP)

Sales and Operations Planning is the bridge that connects demand planning, inventory management, and financial planning. It involves a collaborative process where cross-functional teams work together to align sales forecasts with operational plans. S&OP ensures that all departments are on the same page, fostering coordination and minimizing conflicts.

Collaboration and Communication

While not a traditional “component,” effective collaboration and communication are intrinsic to successful Integrated Business Planning. This involves breaking down silos between departments, fostering transparency, and ensuring that information flows seamlessly across the organization. Clear communication enhances the effectiveness of the planning process.

Technology Integration

In the digital age, technology plays a pivotal role in the key components of IBP. Advanced analytics, artificial intelligence, and collaborative platforms empower organizations to make data-driven decisions. Technology integration ensures that the planning process is not only efficient but also adaptable to the dynamic nature of modern business.

Risk Management

A proactive approach to risk management is a crucial component of IBP. This involves identifying potential risks, assessing their impact on operations, and developing strategies to mitigate these risks. By incorporating risk management into the planning process, organizations can navigate uncertainties with resilience.

Scenario Planning

Scenario planning involves considering various possible future scenarios and developing strategies to address each scenario. This forward-thinking approach allows organizations to be agile in the face of changing market conditions. Scenario planning is a proactive component that adds a layer of flexibility to the IBP process.

Continuous Improvement

The final key component of IBP is a commitment to continuous improvement. This involves regularly evaluating the effectiveness of the planning process, identifying areas for enhancement, and implementing changes. A culture of continuous improvement ensures that IBP remains a dynamic and responsive strategy for the organization.

Integrated Business Planning Example

Consider a consumer goods company that utilizes IBP to align its sales forecasts with production schedules and inventory levels.

Through a unified platform, the sales team can communicate market demands directly to the production and procurement teams, ensuring that the right products are produced at the right time. This prevents overstock or stockouts, ultimately improving customer satisfaction and operational efficiency.

Nowadays companies have the option of choosing Integrated Business Planning in SAP. Through this, companies can leverage advanced analytics, machine learning, and real-time data to make informed decisions across the entire supply chain.

Integrated Business Planning Framework

Integrated Business Planning (IBP) is a strategic management process that aligns various business functions to ensure a cohesive and synchronized approach to planning and decision-making. It integrates key business processes, such as finance, sales, marketing, operations, and supply chain, to create a holistic view of the organization’s performance. Here is a general framework for Integrated Business Planning along with an example:

Strategic Planning:

• Define the organization’s long-term goals and objectives.
• Identify key performance indicators (KPIs) that align with the strategic direction.

Sales and Operations Planning (S&OP):

• Align sales forecasts with production and inventory plans.
• Create a consensus plan that balances demand and supply.

Demand Planning:

• Use historical data, market trends, and customer feedback to forecast future demand.
• Collaborate with sales and marketing teams to understand market dynamics.

Supply Planning:

• Evaluate the capacity and capabilities of the supply chain.
• Ensure that resources are available to meet demand in a timely and cost-effective manner.

Financial Planning:

• Develop a financial plan that aligns with the operational plans.
• Monitor and manage financial performance against targets.

Scenario Planning:

• Assess various scenarios and their potential impact on the business.
• Develop contingency plans to address potential disruptions.

Performance Monitoring:

• Implement key performance indicators (KPIs) to measure the success of the integrated plan.
• Regularly monitor and analyze performance data to identify areas for improvement.

Collaboration and Communication:

• Foster communication and collaboration among different departments.
• Ensure that information flows seamlessly across the organization.

Let’s consider a manufacturing company that produces electronic devices. The company wants to increase its market share over the next five years. The Integrated Business Planning framework is applied as follows:

• Set a goal to increase market share by 15% in the next five years.
• Identify KPIs, such as revenue growth, customer satisfaction, and operational efficiency.
• Align production plans with the expected increase in sales.
• Ensure that inventory levels are optimized to meet customer demand without excessive holding costs.
• Analyze historical sales data and market trends.
• Collaborate with the sales and marketing teams to understand the impact of promotions and new product launches.
• Assess manufacturing capacity and identify potential bottlenecks.
• Evaluate the reliability of suppliers and establish contingency plans for any disruptions.
• Develop a budget that supports increased production and marketing efforts.
• Monitor financial performance regularly to ensure alignment with the strategic goal.
• Consider scenarios such as supply chain disruptions, economic downturns, or unexpected increases in demand.
• Develop plans to mitigate risks and capitalize on opportunities.
• Track KPIs to measure progress toward the goal of increasing market share.
• Adjust plans as needed based on performance data.
• Facilitate regular meetings and information-sharing sessions among departments.
• Use technology and collaborative tools to enhance communication and coordination.

Integrated Business Planning Process

step-by-step explanation of the Integrated Business Planning process:

Strategic Direction:

• Objective: Define the long-term goals and strategic direction of the organization.
• Conduct a thorough analysis of market trends, competitive landscape, and internal capabilities.
• Engage with key stakeholders to establish a clear vision and strategic priorities.
• Objective: Understand and forecast customer demand for products or services.
• Analyze historical sales data, market trends, and external factors influencing demand.
• Collaborate with sales and marketing teams to gather insights and input.
• Objective: Align the organization’s capacity and capabilities with anticipated demand.
• Evaluate manufacturing capacity, production capabilities, and resource availability.
• Identify potential constraints and bottlenecks in the supply chain.
• Objective: Achieve consensus on a balanced plan that aligns demand and supply.
• Collaborate with cross-functional teams to reconcile demand and supply plans.
• Resolve conflicts and establish a unified plan that meets organizational goals.
• Objective: Develop a financial plan that supports the operational and strategic objectives.
• Align budgeting and financial forecasting with the integrated demand and supply plans.
• Monitor financial performance against established targets.
• Objective: Anticipate and prepare for potential disruptions or changes in the business environment.
• Identify various scenarios that may impact the business, such as market fluctuations or supply chain disruptions.
• Develop contingency plans and strategies for different scenarios.

Performance Monitoring and Measurement:

• Objective: Monitor key performance indicators (KPIs) to track the success of the integrated plan.
• Establish relevant KPIs for each functional area and the overall organization.
• Objective: Foster collaboration and communication across departments.
• Facilitate regular meetings and communication channels between different functional areas.
• Utilize technology and collaborative tools to enhance communication and information sharing.

Continuous Improvement:

• Objective: Iteratively refine and improve the planning process based on feedback and changing circumstances.
• Conduct regular reviews and evaluations of the IBP process.
• Solicit feedback from stakeholders and make adjustments to enhance effectiveness.

Feedback and Adjustment:

• Objective: Gather feedback from the execution of plans and adjust future plans accordingly.
• Evaluate the performance of the integrated plan against objectives.
• Adjust the plan based on lessons learned and changing business conditions.

Frequently asked questions

Why is an integrated business plan important.

An integrated business plan is crucial for aligning various functions, fostering collaboration, and adapting to market uncertainties. It ensures a unified strategy, enhancing efficiency and decision-making.

What is the difference between IBP and S&OP?

While both involve planning, Integrated Business Planning (IBP) is a broader process that includes financial planning, demand forecasting, and more. Sales and Operations Planning (S&OP) specifically focuses on aligning sales forecasts with operational plans.

What is the meaning of integrated planning?

Integrated planning refers to a holistic approach that synchronizes various organizational functions. It involves aligning strategies, processes, and resources to work cohesively toward common goals, promoting efficiency and adaptability.

What is an integrated strategic business plan?

An integrated strategic business plan combines strategic goals with operational plans, financial considerations, and cross-functional collaboration. It provides a comprehensive roadmap for an organization, ensuring that every aspect works in tandem to achieve long-term success.

In conclusion, Integrated Business Planning stands as a strategic imperative for organizations looking to enhance their supply chain efficiency.

By breaking down silos, fostering collaboration, and leveraging advanced technologies, IBP empowers businesses to make informed decisions, optimize resources, and respond swiftly to market changes.

As the business landscape continues to evolve, Integrated Business Planning will undoubtedly play a pivotal role in shaping the future of supply chain management. Additionally, newer technologies like

Data Science is reshaping the way organizations operate.

At Pickl.AI we have curated Data Science courses that will equip you with the right skills that will ensure unparalleled professional growth. To know more about it, click here.

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Raghu Madhav Tiwari

Introducing Raghu Madhav Tiwari, a highly skilled data scientist with a strong mathematical foundation, and a passion for solving complex business challenges. With a proven track record of developing data-driven solutions to drive business growth and enhance operational efficiency, Raghu is a true asset to any organization.

As a master of the art of data analysis, Raghu possesses a unique ability to convert raw data into valuable insights that lead to tangible results. Armed with exceptional critical thinking skills, Raghu employs a meticulous approach to problem-solving that involves leveraging cutting-edge statistical and mathematical techniques to drive informed decision-making.

In addition to his impressive analytical acumen, Raghu is also a gifted communicator and writer, regularly sharing his insights through engaging articles on various topics related to his field of expertise.

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Integrated Business Planning: A Detailed Exploration of Strategy and Execution

✅ All InspiredEconomist articles and guides have been fact-checked and reviewed for accuracy. Please refer to our editorial policy for additional information.

Integrated Business Planning Definition

Integrated business planning is a management process that synergizes sales, marketing, finance, operations, and logistics to drive an aligned operational plan and business strategy, balancing demand and supply while also considering financial objectives and the allocation of critical resources. It embraces short, medium, and long-term business planning and assists in decision-making, reducing risks, and increasing profitability.

Importance of Integrated Business Planning

The crucial role of integrated business planning.

Today’s businesses exist in a world that is, to say the least, complex and full of rapid changes. In these circumstances, integrated business planning plays a pivotal role in navigating through the turbulent times by bridging the gap between the company’s strategic ambitions and their operational constraints.

As a unifying framework, the process provides a link between the top-level strategic planning and day-to-day operational activities. It eliminates silos between departments providing a holistic, transparent and real-time view of the business. By mapping all operations to strategic goals, it ensures that all decisions and actions are pulling in the same direction toward the fulfillment of those goals.

Aligning Strategic, Operational, and Financial Planning

With integrated business planning, synchronization becomes achievable at an elevated level. It enables businesses to align their strategic objectives with operations and finances, thus ensuring a smooth flow of processes. When strategy, operations, and finance harmoniously work together, it eliminates any disconnects, resulting in effective and efficient decision-making.

From a strategic perspective, the approach aids in prioritizing goals and developing responsive and realistic plans to achieve them. On the operations front, it identifies bottlenecks, assesses risk, and ensures that all operations are in line with strategic objectives. Lastly, the integration with financial planning leads to accurate financial forecasts, effective cash management, and robust financial control.

To put it another way, this integrated view of business planning is akin to a well-conducted orchestra. Each section of the orchestra, be it strategic, operational, or financial, knows its role, its tasks, and how it contributes to the overall performance of the melody; which in this case, becomes the successful completion of strategic goals.

The Outcome: A Resilient Business Model

In the face of evolving markets and shifting customer demands, integrated business planning empowers businesses to quickly identify, adapt, and respond to changes efficiently. The approach supports timely and informed decision-making, improves communication and collaboration, and nurtures a proactive business culture focused on future growth.

The process also provides a robust system that facilitates scenario planning and risk mitigation. It promotes informed and rational decision-making, thus creating a resilient business model capable of withstanding market uncertainties and disruptions.

In summary, integrated business planning offers a comprehensive, more intelligent approach to business management—one that aligns strategy, operations, and finance towards a common goal while driving performance and sustainable growth.

Core Components of Integrated Business Planning

At the epicenter of integrated business planning is demand. Understanding current customer needs and predicting future ones is key to running a profitable operation. This involves market research, analysis of historical data and forecasting. By getting an accurate approximation of demand, businesses can take proactive measures to efficiently meet those needs.

Supply Management

It’s not just enough to understand the demand. A business must have a competent supply management system that can meet the anticipated demand. This is achieved by coordinating all elements of procurement, production, and logistics to effectively fulfill customer needs. A successful supply chain management strategy incorporates everything from sourcing raw materials, managing inventory, production planning, to eventual delivery.

Product Management

Product management is a very significant part of integrated business planning. It’s the process by which a business decides what products to offer and how to position them in the market. Product managers work cross-functionally with other teams like marketing, sales, and engineering, to ensure that the product aligns with company goals and customer requirements. They also analyze market trends, competitive landscape, and customer feedback to inform product features and enhancements.

Financial Planning

Lastly, financial planning provides the fiscal framework for integrated business planning. It involves budgeting, revenue projection, expense tracking, and monitoring financial performance against these predictions. A detailed financial plan enables a business to execute its strategies within available resources, capitalize on opportunities and respond timely to market changes. Financial planning is indispensable for a sustainable long-term business growth.

Each of these components works seamlessly with the others in integrated business planning. While demand, product, and supply chain management ensures that the business retains a competitive edge in the market, financial planning provides the necessary oversight to ensure the business remains profitable while doing so. This alignment across all the key functional areas is what makes integrated business planning so critical to the success of a business.

The Role of Integrated Business Planning in Corporate Decision Making

In a dynamic business environment, integrated business planning helps corporations quickly adapt and respond. It operates as a navigational tool, guiding decision-making processes at various levels of an organization, from operational to strategic.

Operational Decision Making

At the operational level, integrated business planning aids in managing immediate and short-term decisions. It provides a detailed view of the current business operations- from sales forecasts, customer demands, supply chain management to available resources.

For instance, consider a rise in demand for a product. An operational decision might involve assessing the production capacity and inventory levels, which integrated business planning can readily provide by unifying data from multiple business functions. This allows the organization to react swiftly and efficiently to unexpected changes.

Tactical Decision Making

Tactical decisions contributing towards achieving short-term goals also benefit from integrated business planning. It aids in providing a firm ground that aligns operational decisions with corporate strategy.

Key functions like marketing campaigns, collaborations, or prodigious investments often hinge on the insights captured through integrated business planning. It not only allows companies to seize up-to-the-minute market opportunities but also helps in mitigating potential risks.

Strategic Decision Making

At a strategic level – where decisions have long-term implications and contribute directly to the achievement of an organization’s mission – integrated business planning is instrumental. It provides organizations with forward-thinking views, predicting future scenarios, and laying out a roadmap to achieve the desired goals.

For instance, making decisions about entering new markets, launching new product lines, or obsoleting older ones are all powered by the insights from integrated business planning.

Thus, integrated business planning is central to decision-making processes, underpinning them with a clear, synchronized view of business functions. It enables corporations to respond effectively and swiftly to business environment changes, maintaining their competitive edge.

Integrated Business Planning and Risk Management

Integrated business planning (IBP) plays a crucial role in managing business risks. It enables organizations to align strategic, operational, and financial plans to achieve overall corporate objectives.

Assessing and Managing Risks with IBP

With IBP, an organization can continually assess potential risks and adjust its plans based on a comprehensive and timely understanding of possible implications. This process reduces the likelihood of sudden impact from unanticipated events and enhances the resilience of the business.

For instance, IBP can help in foreseeing economic downturns and prepare for them by diversifying income streams or increasing savings. Similarly, if a company anticipates a shortage of raw materials, it may use IBP to develop contingency plans such as seeking alternate supply sources, redesigning products, or adjusting manufacturing schedules.

Identifying Opportunities

On the flip side, integrated business planning also plays an essential role in identifying opportunities. This comprehensive approach can uncover potential synergies, efficiencies, and strategic initiatives that would otherwise go unnoticed. Leveraging integrated data, businesses can identify market trends early, allowing them to deploy new solutions or services ahead of their competitors.

Consider an organization that notices an increase in the use of sustainable materials via integrated data analysis. With IBP, the company can assess the possible financial and operational implications of shifting to eco-friendly materials, then devise strategies to capitalize on this trend.

Holistic View of Business Landscape

Furthermore, the holistic view provided by integrated business planning assists businesses with identifying both threats and opportunities. By providing viably comprehensive, cross-functional views of the business landscape, IBP allows companies to anticipate changes, react effectively, and seize the opportunities these changes bring.

In conclusion, integrated business planning’s role in risk management is immense. It promotes resilience by enabling organizations to anticipate potential risks and build strategies to navigate them. It also encourages innovation by highlighting emerging opportunities, leading to improved competitiveness and sustainability.

Tailoring Integrated Business Planning to Different Business Models

Applying integrated business planning (ibp) to service-based businesses.

The successful application of Integrated Business Planning (IBP) in service-based businesses can prove to be unique due to the nature of service delivery and customer expectations. Unlike in a product-oriented business where the primary goal is to manage the supply chain, service-based businesses encounter market variability and require a flexible planning process.

IBP helps these businesses by providing a platform to align their operational plans with strategic goals. For instance, the nature of the service can dictate the planning horizon and the frequency of revising plans. A healthcare provider may need a more immediate planning horizon compared to a consultancy firm due to the unpredictable nature of medical emergencies. Hence, IBP can be tailored to accommodate these different planning horizons.

Adapting IBP for Product-Oriented Businesses

Product-oriented businesses, on the other hand, often have tangible inventory and a visibly structured supply chain. Here, IBP comes in handy to integrate various components like sales, operations, and finance to ensure the business stays on track to achieve its strategic goals.

By synchronizing all critical business units, the company can ensure demand forecast accuracy, reduce stockouts and overstocks, and optimize cash flow. For instance, in a manufacturing business, the use of IBP can be pivotal in decisions ranging from raw material procurement to production planning to order fulfillment.

Implementing IBP in Hybrid Business Models

A hybrid business model, a mix of service and product-oriented business, calls for even more flexible application of IBP. Hybrid businesses need to balance the complexities of both models, and this can be achieved by integrating decisions about service delivery and product supply.

The outcome is a more harmonized strategic plan that accommodatively factors in both the intangible and tangible aspects of the business. For instance, a software company that offers both software products (product-oriented) and software services (service-oriented) may use IBP to synchronize the timeline for product development and service delivery.

In conclusion, while the fundamental elements of IBP remain the same, its implementation can and should be tailored to the unique needs of specific business models. The flexibility of IBP lies in its ability to adapt and accommodate the diverse patterns of businesses, ensuring alignment of strategic goals with operational plans. This is what makes IBP not just an effective planning tool, but an innovative business methodology.

The Relationship between Integrated Business Planning and Corporate Social Responsibility

In the application of integrated business planning, it’s important to consider its impact on a corporation’s social responsibility (CSR) practices. Integrated business planning has direct implications, as it can form a strategic platform for organizations to proactively manage their social and environmental responsibilities, in addition to driving financial performance.

When considering a business’s social and environmental responsibilities, it’s clear that these elements can significantly influence planning processes. This is because businesses, especially those operating in sensitive sectors such as mining or manufacturing, must account for the potential social and environmental impacts of their operations.

Effect on Planning Process

Understanding this, the planning process under an integrated business planning model needs to not only focus on traditional economic factors, but integrate CSR into the heart of their business strategies in a structured and systematic way. This might involve predicting potential social and environmental risks and planning appropriate mitigation strategies, or identifying socio-environmental initiatives and integrating them into the business’s operating model.

Asset Utilization and ESG Compliance

Moreover, integrated business planning can allow businesses to better utilize their assets in the service of both financial objectives and CSR. For instance, a manufacturing facility might plan to use more energy-efficient technologies, demonstrating commitment to environmental sustainability, while also potentially reducing operational cost.

Furthermore, a solid integrated business planning can enhance a company’s efforts in Environmental, Social, and Governance (ESG) compliance. It allows the business to consistently align its operational activities and financial planning with its CSR policies and governance standards. This, in return, may improve the public image, customer trust, and overall market reputation of the company.

Aligning Business Goals with Societal Values

Ultimately, a key aim of integrating CSR into the business planning process is to ensure that an organization’s business goals are well-aligned with societal values and environmental sustainability. Doing so not only helps businesses to fulfill their moral and civic duties, but is also increasingly recognized as a powerful driver of long-term financial performance.

Software Tools for Integrated Business Planning

In order to successfully implement integrated business planning (IBP), businesses need to make use of a variety of software tools. These tools not only make the complex process more manageable, but they also increase accuracy, improve collaborative efforts and provide meaningful insights for better decision-making.

Popular Software Tools

One popular tool is SAP Integrated Business Planning (SAP IBP) . This tool is lauded for its real-time supply chain management features. SAP IBP offers features for demand planning, supply and inventory planning, sales and operations planning, and response and supply control.

Another widely adopted software is Anaplan . Anaplan’s platform helps businesses model and visualize their data, and is known for its capability to handle extremely large data sets, making it ideal for large organizations.

Oracle Demand Management Cloud is also worth mentioning. It provides predictive analytics to understand and manage demand, and it integrates well with other Oracle applications, making it an attractive choice for businesses already using the Oracle ecosystem.

Kinaxis RapidResponse stands out for its scenario planning features, allowing businesses to simulate and compare various situations and their outcomes.

Role of Technology in IBP

Technology plays a pivotal role in IBP, simplifying and enhancing the process. With the vast amount of data businesses deal with today, manually managing such processes would be time-consuming and prone to human errors. Software tools automate most of these tasks, ensuring accuracy and efficiency.

Moreover, these tools often provide data visualization features, converting complex data into easy-to-understand charts and graphs. This not only makes data more accessible to all stakeholders, but also aids in quicker decision-making.

One significant advantage of using these tools is the ability to collaborate in real-time. Multiple users can work together on the same data sets, breaking down silos within the organization. With everyone on the same page, the alignment between different business functions improves, boosts the overall business performance.

Lastly, with features like predictive analytics and scenario planning, businesses can better anticipate future scenarios and prepare accordingly, reducing the risk associated with unforeseen changes in the market or supply chain.

Thus, with the help of software tools, integrated business planning becomes a more streamlined, accurate, and collaborative process.

Implementing Integrated Business Planning

Essential considerations for successful implementation.

To ensure a successful transition to using integrated business planning, several key aspects must be considered.

Employee Training

A central aspect of this change-over is the training of employees. Your employees need to understand the principles of integrated business planning and how they can apply these principles in their day-to-day activities. This training could be delivered through workshops, seminars, or e-courses, depending on what’s most effective for your employees.

Ongoing mentorship and support are also beneficial, helping employees adjust to the new system over time. By providing continuous learning opportunities, you keep your employees engaged and motivated, thus enhancing the adoption of integrated business planning.

Technological Requirements

The transition to integrated business planning is not only about changing mindset, but also about updating your technology stack, as this approach often relies on advanced software solutions. The exact technology needed may vary depending on the scale of your business and the nature of your operations, but a comprehensive business planning software suite is usually a baseline requirement.

Additionally, you would need to evaluate your current IT infrastructure to check if it can support the new systems. It might be necessary to upgrade certain components to ensure seamless operation. Remember, your new software should be user-friendly to promote ease of use among your employees.

Embracing Cultural Change

Implementing integrated business planning can bring about a significant shift in your company culture. As an approach that emphasizes collaboration and transparency, it requires a shift away from organizational silos. Employees at all levels need to get used to sharing information and making collective decisions.

Promoting this cultural shift can be challenging. Clear, effective communication will be crucial. Explain the advantages of the new system, engage employees in the planning process, and make sure everyone understands their responsibilities. Celebrating small victories can also help to promote positive feelings towards the change.

By paying attention to these critical aspects – employee training, technology, and culture change – you can lay the foundation for a smooth transition to integrated business planning.

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Integrated Business Planning: How to Pave Your Way to End-to-end Orchestration

What is integrated business planning, market uncertainties, holistic data analysis, customer centricity, short product life cycles, smaller margins, globalization, being ready for ‘what-if’ scenarios, collaborative and decentralized decision-making, enhanced customer experience, ibp vs s&op: different names for the same process, prioritize the p&l owner, decide on the apt design and cadence, apply consequential thinking to facilitate decision making, support ibp with appropriate technology, a framework for ibp success.

“We plan, God laughs”. True. However, planning is not about knowing the exact outcome. It’s more about gearing up for what-if scenarios, in case something goes awry. 

To adapt successfully to evolving market needs and work around economic turbulence businesses need the collective effort of the whole organization — from finance to marketing.

But how can you align the mashup of a company’s strategy, operations, and financial performance? Enter an integrated business planning process.

Once a legacy of Fortune-500 companies, the IBP strategy can be leveraged to transform businesses of all sizes. IBP solutions help both industry giants and young companies manage growth-related risks and help establish disruption-tolerant processes.

An integrated business planning (IBP) process refers to scaling and connecting the planning activities across each business function, silo, and department. Hailed as the enabler of an innovation-ready environment , IBP also syncs business targets, budgets, operations, and business units across the entire organization. At its core, IBP includes technology and applications that connect the planning and operational functions of the company.

Why put your planning processes in a broader perspective?

According to McKinsey , businesses that have fully integrated business management are in the minority, with only a handful of companies implementing IBP to its fullest. Two-thirds of companies confine unified strategic planning to occasional business reviews.

This means that most companies leave their business decisions to the mercy of siloed planning solutions with limited process visibility and one-sided insights. Conversely, integrated business planning solutions cast their nets wide to deliver value across the entire business and help battle ever-growing business challenges.

In a world of interconnected economies, each company can be affected by the overall market resonance. This is why the pandemic’s disruptions to logistics in China have echoed through global supply chain operations, resulting in a shortage of components. International political uncertainties can reduce the trade openness of a given country, destabilizing the whole world. It means that the success path of a single company depends on a whole lot of political and economic levers involved in internal management.

At least 2.5 quintillion bytes of data are produced every day. However, instead of generating actionable insights, around 95% of companies are unable to make sense of unstructured data — a fundamental building block of business decision-making. The growing amount of big data and its complexity also prevents companies from landing new growth opportunities.

Focus on a customer is a beacon for successful companies and higher profits with over 70% of consumers considering it a basic expectation. However, isolated planning doesn’t factor in all touchpoints. Unable to create a unified customer image, companies struggle to deliver personalized services and initiatives.

Along with granular offerings, customers expect new products to be released faster in regular cycles. However, rolling out new products like a conveyor belt is not enough. To keep up with quickly-changing customer preferences, companies require robust analytical capabilities that consider an entire landscape of opportunities and predict current demand areas.

The world? Volatile, to say the least. Over the last few years, shrinking margins have made a comeback driven by cutthroat competition, market saturation, and inflated costs. Since 2020, margins have been falling down the curve with a negative of at least 0.04% .

As a result, the traditional supply and demand balancing has been rendered ineffective, jolting companies into optimization based on a patchwork of metrics, market trends, and forecasts.

Despite ample opportunities, border-free supply chains have exposed businesses to the ripple effect of global bottlenecks and equipment availability. Differences in standards and regulations, harder planning, and budget constraints require unmatched agility from companies.

To pivot and flex, an organization requires an integrated business planning process flow that eliminates communication lags and steers the whole organization towards its goals despite global instability.

Unmatched benefits of integrated business planning

According to KPMG , integrated business planning best practices stand to increase ROE up to 14 points, reduce costs by up to 10%, and ramp up revenue by 4%. But besides core metrics, what is the true value of IBP solutions?

‘How would the pandemic affect my company? Can I slash the costs to battle the recession?’ Within traditional business management, the answer to your questions is left to guesswork and historical analysis at best.

Paired with robust data analysis , integrated business planning software enables you to simulate the effects of potential actions and changes across the whole organization — from capital expenditures to workforce availability.

You can also mold your growth objective into different market opportunities based on the resources owned or quickly re-allocate the current assets for any transformation with no ad hoc firefighting.

With data sourced across all operations, the decision-making authority is distributed throughout a cross-functional team. Enterprise-wide activation of purpose promotes greater accountability and decision ownership where business units work collaboratively towards a general business goal.

At the same time, consolidated enterprise planning applications eliminate version control and spreadsheet complexity.

It is stated that agility improves customer experience by up to 30 points . A shared purpose and vision embodied across the organization are some of the qualities required to have agility. Besides enterprise adaptability, a bird’s-eye view and corporate alignment deliver a more unified customer image sourced from across the organization. As a result, customers are served more granular messages, desired products with on-time delivery, and customer-centered services.

Make your business future-proof

The difference between S&OP and IBP is challenging to spot as integrated business planning is generally considered an exercise of sales and operations planning. However, an integrated business planning framework makes evidence-based thinking more comprehensive, while S&OP prioritizes supply chain planning as the main benchmark.

Moreover, integrated business planning consultants devise a proactive plan that responds to challenges with the most benefits and least losses, while S&OP is more about satisfying customer needs at all costs.

Below, you’ll find the main differences between IBP and S&OP:

How to create real value? Four pillars of fully integrated business management 

According to McKinsey , ineffective consolidated strategic planning is the collective result of three factors. First, if an organization doesn’t include IBP in its regular decision-making process, the added value of unified orchestration tapers off. Secondly, some companies delegate unified planning to junior staff, who, naturally, often lack vision and authority for the function. Lastly, if the executors do not have a single vision of critical decision enablers, they won’t be able to navigate business thinking as a whole.

Yet, despite common reasons, there is no ultimate integrated business planning template that caters to all businesses with unique needs. However, some practices can bring your organization closer to the desired outcome of SAP integrated business planning.

In most cases, the owners of P&L at your company have a great read of the existing drivers of revenue and spending. Unlike the supply chain or production management, a P&L-focused integrated process has the most practical requirements based on a broad outlook.

When designing your planning regimen, make sure the groundwork also includes input from upper management so that decisions can be made regularly. This way, the footprint of decisions can be checked against financial thresholds.

At the same time, this business plan allows the P&L owner to align the trade-offs between perils and prospects with the affected area, be it local or global. To unlock this level of visibility, companies should employ robust data governance practices and tools which enable real-time data processing.

To make the most of unified strategizing, companies need to design an IBP flow with a focus on better visibility and critical data sourcing. The main objective of this fit-for-purpose IBP design is to equip the P&L owner with the right output that is clean, standardized, analysis-ready, and can be easily injected into templates. However, even industry-best design practices can fail if the initial input isn’t sifted through an established data infrastructure and effective processing systems.

Adopting the right reviewing rhythm is another salient part of a holistic IBP framework. Analysis-intensive initiatives, such as product releases, should be subject to regular reviews, while urgent issues such as material shortages or insufficient space should be resolved within a weekly agenda.

To facilitate regular feedback loops, companies also need to establish the right technology infrastructure that promotes seamless and real-time communication between business units.

The right integrated business planning example also stimulates an organizational shift within the company. Therefore, when adopting integrated planning, companies should factor in decision-making power, the value of the decision-making variable, and reporting hierarchy as well as giving key stakeholders more authority in the process.

In practice, collaborative and autonomous thinking can be supported with event classification and pre-defined troubleshooting guidelines based on the root cause approach. Also, the autonomous structure should dwell on the scope of operational thinking as well as the escalation mechanism to bring decisions to the appropriate level of responsibility for adequate resolution.

The right technology infrastructure allows each business function to keep its language and still collaborate effectively with each other. Since the operational data becomes paramount in this case, the technology suites have to be easy-to-use interfaces that demonstrate digestible, real-time insights — all within one platform.

From a technology standpoint, the building blocks of an IBP-friendly ecosystem include but are not limited to:

• Real-time data and visual management

Plotting the business course is impossible without seamless and real-time data flows. To enable collaborative thinking, your tech ecosystem should also support easy integrations among the modules and enable modeling of the supply chain in real time.

• Big data, analytics, and KPI control

KPIs dashboards allow your departments to monitor the performance, report the number of open opportunities, and share insights for other business units. Robust analytics, in turn, allows your dedicated team to drill down into specific metrics and initiate corrective actions for those metrics. Predictive analytics also accelerates your planning by improving assessments of your capacity, generates dynamic forecasts as well as supports scenario planning and optimization.

• Cloud technologies

By moving applications into the cloud , companies can more easily integrate them at a process level. Following a single data model, integrated business planning managers can cover all aspects of planning and arrive at the ‘single number’. Cloud technologies also enable better business continuity and drive down the costs of analytics.

• Machine learning and artificial intelligence

Injected with expert systems, planning systems offer advanced optimization techniques. The latter, in turn, automatically generates replenishment strategies, inventory optimization, and other response measures needed to embrace the volatility of the market. AI-based stress test simulations also help organizations model the scenarios of combined workloads.

A synergy of strategy and execution is what prevents companies from veering off the rails in chaotic times. This synergy is manifested in integrated planning and allows you to create a link between all business operations, uniting them into a cohesive whole driven by the same goal. Unlike traditional S&OP-enabled planning, IBP allows you to go beyond capacity levels and gain a broader foresight of possible business scenarios.

To achieve IBP excellence, you need to look beyond the internal processes and enable visibility into all pivots, from supply chain leaders to customers. Combined with agility, high visibility levels promote business resilience and maximized profits without low-risk exposure.

Data is also the pinnacle of this visibility, making a technology infrastructure critical to IBP success. That’s why the choice of the right technology partner can advance your planning and fine-tune the planning pathways to your unique business needs, making it a critical step in ensuring success.

Looking for the right IBP partner?

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What is Integrated Planning? (And How to be Successful at it!)

What is integrated planning.

Integrated planning is a cross-functional process that ensures all stakeholders are involved at the right time to align priorities across an organization.

Integrated planning gives a complete view of resources and commitments. It makes sure that financial and capital resources are aligned in order to support strategic decision-making. Without integrated planning, planning activities can becomes fragmented, resulting in confusion about priorities and use of resources.  

Integrated planning helps to set strategic priorities and to better coordinate the use of resources. It also can assist with showing transparency and accountability in activities throughout a public sector organization. 

What is the difference between strategic planning and integrated planning?

Integrating involves merging distinct elements to create a cohesive entity. While strategic planning anticipates and adjusts for the future, and operational planning handles short-term resource allocation, integrated planning delves into how an organization can coordinate across various functions, levels, locations, and other divisions—both natural and artificial. This planning approach extends beyond the organization's internal efforts, aiming to examine external economic, social, political, and environmental impacts.

By combining internal and external integration, integrated planning enables a comprehensive evaluation of all available options, facilitating the formulation of well-suited courses of action. Moreover, it encompasses various social dimensions and hinges on active participation from all stakeholders and entities affected by the process.

Features of Integrated Planning Process

• Transparency – Your planning process should be known, understood, and accessible to those in the organization. Communication amongst stakeholders is key to effective integrated planning.
• Comprehensive – Participation from all relevant stakeholders is necessary to best integrate organizational goals.
• Structured – integrated planning should be completed using a framework that includes timelines and deadlines throughout the planning cycle.
• Results – Integrated planning should include real decision-making results, with resources attached to those decisions. It should be tied to a common purpose or mission that propels the organization’s vision and priorities forward.
• Consultative – Stakeholders should be involved and there should be opportunities for leadership to offer advice and guidance for emerging initiatives.
• Action-oriented – The budgeting and planning process should be robust and principled so that it results in decisions on the allocation and re-allocation of resources.
• Streamlined – Efficiencies should be built into the process to reduce duplication of effort. Organizational effort should be focused on selected strategic initiatives, keeping bureaucracy to a minimum.
• Flexible – The process should provide a way to respond to changing conditions and emerging opportunities.
• Accountability – The process should link decisions to responsibilities and results. There should be a way to explain those decisions to a variety of communities and stakeholders. Budgeting should be delegated to operational decision-making. Information should be provided on what resources are needed, organizational data, budget projections and other documentation.

Integrated planning creates the foundation for evaluating and understanding the needs of an organization, both now and in the future. It helps to identify the best strategies and activities for mitigating risks and choosing the best course for action.

Though some organizations in the public sector have taken innovative approaches to planning, there is a need for sound integrated planning across every level of the government.

Why should I use integrated planning?

• It aligns every part of the organization to higher echelon priorities, and to the organization’s mission, strategic plan, and budgetary resources.
• It supports both current and future needs of the organization
• It helps to justify how resources are used
• It helps reduce the politics of budgetary planning by creating common organizational goals
• It helps managers and leadership to meet their responsibilities and to be accountable to one another
• It promotes initiatives that support, attract, and retain an engaged and competent workforce
• It leads to a supportive workplace and culture of learning
• It helps performance to improve through the development of performance measures that require regular reporting

What are the key principles of good integrated planning? 

• Planning that occurs at all levels – Integrated planning should take place at all levels of an organization.
• Data-driven planning framework– Information needs to be up-to-date to inform planning processes and decisions based on current and future needs.
• Risk and challenge identification – Integrated planning helps to find challenges and key risks to deliver on priorities and find methods for mitigation of potential issues.
• Transparent, justifiable decision-making – Integrated planning should be values-based, transparent, and communicated regularly to employees and stakeholders.
• Regular reporting – The organization should establish regular intervals for reporting that shows planning efforts and results.
• Monitored, measured, and evaluated – Performance and progress towards objectives should be monitored.

What are the five steps to determine current and future needs in integrated planning?

• Determine your organization’s goals
• Analyze your current environment to identify whether you have the resources necessary to meet current and future needs
• Assess gaps in your resources
• Initiate strategies to close any gaps and to get what resources are required
• Review, monitor, and measure progress and success towards efforts

How to be Successful at Integrated Planning

Linear function-driven planning (the traditional approach to planning), no longer works. At many organizations planning is managed by multiple functions, but each of these functions operate separately and are only responsible for one part of the plan. Different parts of an organization may have different plans, with different measures of success, and different systems and sources of data rather than operating from a single source of truth. This creates a disjointed planning process where hours of work must be spent reconciling numbers.  

Traditional planning makes it challenging to ensure everyone is aligned and can execute on projects because information ends up siloed, and opportunities and potential risks are identified too late.

To implement integrated planning, an organization needs clearly defined roles and responsibilities from the get-go, as well as a coordinated calendar that aligns various functions so that they can work as efficiently as possible. Using integrated planning, your organization can ensure alignment on key organizational objectives.

What are the benefits of Integrated Planning?

Below are the benefits of an integrated planning approach over traditional planning: 

• Iterative vs. Linear – Cross-functional partners work together to develop and refine the plan continuously.
• Collaborative vs. Siloed – Groups across functions unite to share data and make decisions.
• Aligned vs. Disjointed – Definitions of metrics and goals are common knowledge to the organization and data is from a singular source of truth, which aligned across all planning groups.
• Strategic vs. Reactionary – The line of sight to strategy is clear and all decisions and plans are made based on looking at the bigger picture to support the organization’s overall mission.

Integrated planning ensures that all functions within your organization are speaking the same language and that everyone can work together towards a common strategy.

What are the five factors for integrated planning success?  

Integrated planning often involves big changes within your organization’s people, processes, and technology. You can have success if you keep the following tips in mind:

• Share your organization’s vision.  Make sure that your long-term strategic plan is well-documented with clear objectives, and that it is communicated across your organization. Your organization’s strategy should clearly define how you plan to reach your objectives and what milestones are along the way.
• Involve the right stakeholders. Good integrated planning decisions are made when all key stakeholders across the organization are involved to provide information and take part throughout the planning process.
• Ensure the right timing. In order to act quickly and efficiently requires that some planning decisions be made quickly. Though directions may change, based on organizational needs or input from leadership, the overarching mission of the organization and activities that support that mission should be prioritized and worked towards.
• Use a common language for performance indicators. Ensure that those across the organization understand key performance indicators and that measures of success are agreed upon and in alignment to improve trust in the information and facilitate communication. A single source of truth is essential in today’s rapid-paced planning environment.
• Use tools to support your planning. A single system to host your data with some level of analytics and reporting tools, as well as tools to support you in managing your portfolio and developing your 1-n list is essential to integrated planning success. Your organization can benefit from reliable integrated planning tools that ensure you are always at the ready with information to present to leadership.  

What tools can help with integrated planning? 

Finding new tools to support your integrated planning efforts, rather than relying on outdated tools and linear methods can help your organization to fulfill its requirements and be successful in its mission. Decision Lens has been modernizing public sector planning for 15+ years, evolving our solution to meet the needs of today while delivering the cutting-edge capabilities of tomorrow.

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• Making the Case for Integrated Business Planning

By: Henry Canitz

Increasingly, company executives are viewing supply chain functions as critical to business success. This shift has driven initiatives across organizations that aim to improve performance, lead to more effective decision-making processes, and balance and align supply and demand.

According to the Aberdeen Group report “Sales and Operations Planning: Strategies for Managing Complexity within Global Supply Chains,” being best in class versus a laggard in these areas can result in a 47 percent increase in year-over-year gross profit margins, a 2.7 percent decrease in year-over-year cash-to-cash cycle time, a 28 percent improvement in orders that are on-time-in-full and a 31 percent better forecast accuracy three months out. Research firms, solution providers, subject matter experts and even end users have difficulty agreeing on an industry standard term for this process. Some refer to it as sales and operations planning (S&OP) or sales, inventory and operations planning (SIOP); in the retail world, you can find merchandizing, inventory and operations execution (MIOE), or simply integrated planning; and others opt for integrated business planning (IBP).

Regardless of the name, its importance to company health is obvious, as it can significantly lower costs, increase agility, improve Customer Relations and boost profits. The industry may settle on a term one day. Until then, three overlapping concepts — executional, tactical and strategic planning — can help clarify the objectives and potential of this methodology.

Executional planning deals with balancing and aligning supply and demand in the near-term, often within the span of a planning cycle. Decisions tend to be prompted by exceptions and disruptions — and thus are made on the fly to ensure customer orders are met and financial objectives are made. This near-term planning horizon involves workflow; exception-based messaging; alerts; and visibility to supply, demand and transportation. Often, specific scenarios are analyzed — for example, if a customer order can be accepted, if people should work overtime or if expedited shipping is the best option.

Tactical planning encompasses just a few months to 18 months or more, depending on the business. The goal is to plan at an aggregated level and then make effective midcourse adjustments in resources and partners in order to respond to changes in demand. Activities include new product introduction planning, decisions about product life cycles, product-family-level demand projections, running high-level capacity analyses, optimizing inventory positions and making any adjustments that are necessary to meet expected demand while aligning with company objectives.

A multitude of scenarios can be run, including optimistic versus pessimistic plans, inventory postponement trade-offs, whether to add suppliers or production capacity, transportation and warehousing alternatives, and more.

Strategic planning describes high-level balancing and alignment over a long time horizon. Companies may look out three, five or 10 years to plan for new category introductions, moving a plant or warehouse, or entering new countries or regions. Some call this IBP, while others also include tactical and strategic activities under the IBP umbrella. Alternative scenarios are used to make financial projections, plan investments and compare potential strategies through volumetric and financial metrics.

With these three concepts in mind, consider the following breakdowns of the different tactics:

• S&OP is an integrated business management process through which an executive team continually achieves focus, alignment and synchronization among all functions of the organization. In practice, S&OP processes rarely stretch far enough to cover all the bases of integrated, tactical and strategic business planning and tend to focus on developing a demand consensus or tactical volumetric supply and demand balancing. 
• SIOP is, frankly, a superfluous attempt to emphasize the importance of inventory. It’s unnecessary, but if you need to use this term to move your program forward, please continue to do so. Like S&OP, most SIOP processes focus on tactical volumetric balancing, rather than delivering true integrated planning capabilities.
• MIOE aims to establish a periodic planning process that meets the requirements of each business function, integrates company strategy with execution activities, and balances supply and demand while exceeding customer expectations. Retail planning activities — including merchandize planning, allocation, replenishment, and distribution and transportation — parallel the elements of what manufacturers call S&OP.
• IBP focuses on ensuring continuous alignment among demand, inventory, supply and manufacturing plans on the one hand, and between the tactical and strategic business plans on the other, in an effort to maximize operational performance and meet financial objectives. IBP is a fairly new competitive weapon for supply chain leaders in the battle to accelerate, direct and optimize business decisions for both near- and longterm planning. IBP encompasses S&OP, SIOP and MIOE across all time horizons.

Whether key stakeholders hail from sales, inventory, marketing, purchasing, production or finance functions, they are all from the same business and engaged in planning activities that are closely integrated. In this way, IBP is the best term to describe the regular actions, behaviors and processes that heighten performance, bring about better decision-making, and optimize supply and demand.

Ensure IBP success

The following step-by-step checklist comprises the main capabilities necessary to maximize IBP:

• Smoothly integrate S&OP and strategic planning under one comprehensive process. Align and synchronize your strategic and tactical planning, including S&OP, annual operations, and financial and strategic business planning. IBP should encompass strategic plans, initiatives, activities, and regional and multidivisional operational plans.
• Perform fast simulations, comparisons and what-if scenarios. You need unprecedented global visibility in order to drive a higher level of proactive decision-making. Make sure your team can model the entire supply chain, including plants, suppliers, storage facilities, partner capabilities, customer locations and lanes of transportation, so you can identify any disconnects between supply and demand months or years in advance.
• Compare actual performance to the plan. Global supply chains are always in motion. You need to quickly detect the differences between plans and actuals and then respond in an efficient manner. The ability to sense and highlight shifts in the extended supply chain — particularly as they relate to the agreed-upon plan — is vital. Then, you should be able to suggest an optimal solution while adhering to predetermined company goals and objectives through multiple scenario comparisons.
• Develop plans that evaluate both financial and volumetric performance. Establishing one comprehensive plan that spans strategic and tactical horizons reveals the true merits of multiple alternative paths. Break away from silos, and combine information from sales, marketing, production, procurement, transportation, finance and external partners in a single system to keep your team aligned while streamlining planning processes and responding effectively to supply chain disruptions or new opportunities. A good question to ask is, In addition to balancing financial criteria against constraints, demand prioritization and Customer Relations objectives, can we analyze alternative scenarios based on revenue, profit, capacities, Customer Relations and other critical business metrics?
• Plan across global, regional and multidivisional organizations. Although global supply chains continue to increase in complexity, often the biggest opportunities for cost reduction and Customer Relations improvements lie in the ability to manage the entire supply chain as a system. It’s important to be able to adapt to regional differences in business processes, currencies, objectives, metrics and supply chain structures in order shift regional plans into a consolidated strategy and identify previously hidden opportunities.
• Assess timing, impact and risk of new product introductions. With the number and frequency of launches on the rise, the need to address this area is critical because the most difficult planning problems often occur here. New product planning often takes place across multiple functions or even organizations. IBP can help facilitate this process through collaborative workflow and active messaging. In addition, the ability to compare the performance of a new product to the agreed-upon plan, quickly identify deviations and provide rich what-if analysis plays a major role in determining appropriate actions.
• Visualize operational risk and develop mitigation plans. Disruptions happen more often in today’s globally complex supply chains. For many, it’s only a matter of when, where and how often disruptions will affect Customer Relations and company profitability. The ability to visualize operational risk with enough detail, accuracy and lead time to successfully mitigate the potential hazards is a key business capability. You must sense disruptions and highlight data to enable management by exception. Again, powerful what-if analyses, network scenarios and graphical comparisons help identify an optimal response.
• Model your business over multiple time horizons. Most organizations perform both short-term tactical and long-term planning, at least in some form. In many cases, these processes land on conflicting paths forward because the planning is disconnected and run by different sets of people using different data, assumptions and supporting systems. Effective IBP requires all business-planning efforts across all time horizons to be synchronized. IBP is an effective tool in this regard because it supports the needs of all planning efforts and makes it easier for changes made in one plan to be reflected in others at the appropriate levels of aggregation and in suitable units and time horizons.
• Evaluate alternate product aggregations. Every business function needs to plan at different levels of aggregation to support its goals. Purchasing considers data by supplier; manufacturing views data by what is produced; transportation is concerned with optimizing lanes and loads; sales strategizes by region, customer and account; finance plans by business; and executive management reviews data on company performance. The plans of the various functions have unique purposes, but they all must be coordinated and based on uniform data. A flexible IBP data hierarchy enables simple, real-time changes to data aggregation.

Moving forward together

IBP is powerful because it brings together the often-fragmented worlds of strategic and tactical planning. In this way, the methodology can provide continuous alignment among supply, demand, inventory, manufacturing, tactical and strategic business plans in order to maximize operational performance and meet financial objectives. Now is the time to drive change in your organization.

About the Author

Henry Canitz Product Marketing & Business Development Director, Nulogy

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• Integrated Business Planning

What is Integrated Business Planning (IBP)? And what are the similarities, but also differences when compared to S&OP? In this article, Inchainge discusses everything you need to know about IBP.

What is integrated business planning (IBP)?

Integrated Business Planning (IBP) is the business planning process that extends the principles of Sales and Operations Planning (S&OP) throughout the value chain . It is to create a bridge between strategy and execution. IBP is a next step for companies that already have an S&OP process in place. It is a next step because it integrates the Financial Planning Cycle. The financial function will become part of this cross-functional process. In most companies the business owner of this process will change as well.

Similarities between IBP and S&OP

Integrated Business Planning and Sales and Operations Planning have several similarities between them. These are as follows:

• Monthly process
• Cross-functional approach
• Driven by business strategy
• Tactical planning at an aggregated level

Differences between IBP and S&OP

However, Integrated Business Planning includes content on top of Sales and Operations Planning:

• Financial function involved
• Integration financial planning cycle, like financial budget and forecast
• From volume planning to volume and value planning
• It drives the overall business performance

How does the IBP process work?

Companies have an annual budget cycle, based on their strategic plans and targets. The annual budget projects planned revenues and costs for the year.

In traditional S&OP companies go through a monthly process during which they project for the next 6 to 24 months where demand will go, and what resources need to be available to meet that demand. When gaps are discovered between expected demand and available resources looking this far ahead into the future, this often provides ample time to balance supply and demand, so that by the time real customer orders are submitted, demand can be met.

Suppose that during this monthly S&OP cycle, one would also look 6 to 24 months into the future where expected revenues and costs will go. And how these financial figures would look compared to the annually budgeted revenues and cost. Most likely gaps will occur here as well between the annually budgeted numbers and the monthly updated numbers. Actions could then be taken to address these gaps. Integrating a financial view. When this happens, we actually practice IBP. In IBP the relationship with the financial performance management cycle is very important. Budget and financial forecasting must be aligned and integrated with the steps from the original S&OP cycle.

The challenges of IBP

IBP is a next step in maturity after companies have implemented a proper S&OP process. Integrating finance sounds simple but is not easy at all. People from the physical supply chain side of the business, often speak a different language than people who operate on the financial side. Supply chain people often speak about units, products, and product families, whereas financial people often speak about money, currencies, etc. That also causes both functional areas to be assessed differently with the KPIs that they use. This calls for other participants in the IBP process, compared to participants in the S&OP process.

The 8 common pitfalls when implementing IBP

Be aware of the following risks related to integrated business planning:

• Lack of commitment in some of the needed departments
• If the S&OP process was not yet implemented or stable, IBP is too big of a step
• Targets and forecasts are mixed
• Information not available
• Discussion about numbers instead of the underlying assumptions
• Discussing only short horizon instead of midterm
• Too granular plans and discussions
• Thorough understanding of trade-offs is lacking

Want to know more? Experience IBP!

Because IBP is simple but not easy, a real-life experience creates enormous value for learning about this topic. The participants will feel and recognize the important issues in this process. In our business simulation game, The Cool Connection ,  we have incorporated the most important functions and decisions.

In this business game the team is forced to make a yearly financial budget and quarterly forecasts. The objective is to close the gaps between prediction (the budget and forecasts) on one hand and attained performance on the other. The best performing teams are both profitable and predictable at the same time. In business game The Cool Connection the team is almost experiencing a real-life IBP process.

Besides our business games, you can learn more in our articles about topics such as Total Cost of Ownership (TCO) , strategic alignment and external alignment and collaboration .

Now you know

Now you know that IBP is a next step for companies that already have an S&OP process in place, by integrating the financial planning cycle in this cross-functional process. IBP prompts companies to include planned revenues and costs in their annual budget cycle. Budget and financial forecasting must be aligned and integrated with the steps from the original S&OP cycle. Integrating finance sounds simple but is not easy at all. Supply chain people and finance people tend to speak a different language. Make sure to be aware of the 8 common pitfalls when implementing IBP.

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Learning is the process of acquiring new understanding, knowledge, behaviors, skills, values, attitudes, and preferences. There are many ways to learn but what works best? And why does it matter? In this article, Inchainge discusses everything you need to know about learning.

The Cool Connection

The Cool Connection is an innovative web-based business simulation game. It engages participants in making strategic decisions in the management of a manufacturing company of personal care products. Working in teams of four, participants will represent the functional roles of sales, purchasing, supply chain management and finance. They will be confronted with various real-life, real-time dilemmas.

• Total Cost of Ownership

When buying new equipment, the price tag only tells you part of the story. Energy costs, maintenance, and repair fees are often several times higher than the initial price! But often these are left unconsidered and hold nasty surprises further down the line. Calculating the Total Cost of Ownership is an important step when planning new investments.

• Strategic Alignment

Understanding what strategic alignment really is and why it is important can make the difference between being a successful company and failing. Due to its complexity, the supply chain often faces challenges in aligning its strategy properly and working as one. In this article, Inchainge discusses everything you need to know about strategic alignment.

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In an increasingly global and connected world, companies rarely execute supply chain operations themselves, but must outsource certain tasks. To make sure that supply chains across several companies run smoothly, external alignment is essential. In this article, we’ll discuss everything you need to know about external alignment.

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What is SAP Integrated Business Planning for Supply Chain?

Plan for a sustainable, risk-resilient future with the SAP Integrated Business Planning for Supply Chain (SAP IBP) solution. Speed responsiveness and stay ahead of change with supply chain analytics, what-if simulations, alerts, and more.

Powered by SAP HANA, this cloud-based solution combines sales and operations planning (S&OP), forecasting and demand, response and supply, demand-driven replenishment, and inventory planning.

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Frequently asked questions

What is SAP IBP?

The SAP Integrated Business Planning for Supply Chain (SAP IBP) solution is a cloud-based supply chain planning solution that scales to accommodate business growth and integrates with other SAP and third-party systems. It integrates key aspects of the planning process including demand, supply, inventory, and sales and operations planning (S&OP). Designed to help you streamline planning and improve performance, SAP IBP supports data-driven decision-making and simplified collaboration to increase operational efficiency. This is accomplished with help from advanced analytics, artificial intelligence, and powerful optimization algorithms that enable real-time visibility, better forecasting, and faster decision-making across the entire supply chain.

Which modules are part of SAP IBP?

• Demand management: SAP IBP integrates historical data, market trends, and advanced predictive analytics so that you can generate more accurate demand forecasts.
• Response and supply planning: SAP IBP takes capacity constraints, lead times, and inventory levels into account so that you can optimize production and distribution plans and more efficiently meet customer demands.
• Inventory management: SAP IBP helps you maintain optimal inventory levels by balancing the trade-offs between carrying costs, stockouts, and service levels.
• Sales and operations planning: SAP IBP provides a unified platform for collaborative planning, allowing different departments to align on strategic goals and operational plans.
• Demand-driven replenishment: SAP IBP supports DDMRP for strategically positioning inventory buffers in the supply chain to absorb variability and uncertainty.
• Supply chain control tower: SAP IBP supports the real-time supply chain visibility and enhanced analytics you need to quickly respond to changing market conditions and customer requirements.

Who uses SAP IBP?

More than 1,000 companies worldwide use SAP IBP to streamline supply chain and planning processes. Ranging from large multinational corporations to medium-sized enterprises, these companies span a wide range of industries, including manufacturing, retail, consumer goods, pharmaceuticals, automotive, aerospace, and many others. Some of the key users of SAP IBP include:

• Supply chain managers: They use SAP IBP to optimize supply chain processes, improve visibility, and monitor and control inventory levels.
• Demand planners: They use SAP IBP to forecast customer demand accurately, align supply with demand, and improve overall customer satisfaction.
• Sales and operations planners: They use SAP IBP to align sales, marketing, and operations teams to execute integrated business plans and achieve financial targets.
• Inventory managers: They use SAP IBP to optimize inventory levels, minimize carrying costs, and improve working capital efficiency.
• Executives and decision-makers: They use SAP IBP to gain insights into the overall health of the business, make data-driven decisions, and drive strategic initiatives.

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