Integrated Business Planning is a best-practice process that aligns Commercial, Financial and Supply Chain activities. In doing so, they are performed as coordinated business decisions with the intent to deliver increased revenue, improved service levels, reduced supply chain costs, greater productivity, better cash flow and higher profits. In short: your integrated business planning process (IBP process) will never be the same.
Why is IBP important?
Integrated business planning (IBP) is important because functional and technical silos across organizations result in flawed decision-making. Within every enterprise there are many thousands of decisions being made and business processes to be aligned, resulting in a final business strategy.
Among those decisions are: commercial decisions related to new products, marketing and sales decisions, supply chain decisions (across the full supply chain and supply chain management, related to positioning of material and capacity and then fulfilling customer demand). Last but not least, financial decisions (related to setting budgets and targets, allocating resources and the forecast that you hold to external stakeholders).
Making the right decisions is not easy and many decisions counteract each other, which may lead to poor business outcomes. Let’s look at some of the fundamental challenges that enterprises face.
1. Isolated decisions are being made
Planning decisions need to be made in a synchronized fashion, but for practical purposes organizations sometimes have to create functional planning departments. For example, the demand planning and supply and operations planning processes are used to manage the supply chain. Then, you have commercial & sales and operations planning processes driving commercial decisions and finally, financial planning processes to set the budgets and targets.
These plannings and processes are the core of functional planning processes, but they are largely operating in silos today.
2. Cycles are not properly synchronized
Not only do organizations have departmental silos, a second challenging factor is that the siloed teams perform their planning processes in what are called ‘planning cycles’. A business planning process can involve daily planning cycles for operational planning, weekly and monthly planning cycles for tactical planning and annual cycles for strategic planning.
If these planning cycles are disconnected then the execution of each can be flawed and will almost certainly end up deviating from the intended strategy. In short: an integrated business planning process is very important to connect the planning teams, their processes and their schedules.
3. Technology stacks don’t communicate
The third major challenge to successful Integrated Business Planning (IBP) is the decision-making technology stacks. Historically, many technologies have been used to aid enterprise decision-making and performance management. There are data stacks, planning stacks and reporting stacks. Plus, there’s technology for importing data and then technology used for insights, learning and algorithm development.
All of these types of technology aid decision-making and may lead to integrated business planning (IBP). Still, they can also make the lives of business users much more complex and the adoption of integrated business planning (IBP) more difficult to achieve.
Integrated Business Planning
Functional silos, disconnected cycles and separated technology stacks mean that commercial, financial and supply chain decisions are not easily synchronized. As a result, enterprises will typically suffer from service level issues, inventory issues, excess costs in the supply chain and lower returns on investment from marketing and sales spend.
What this translates to is a significant amount of value leakage. Integrated Business Planning is the strategy and methodology of bringing all these planning processes together and connecting them to respond effectively to market risks and opportunities. IBP can help with your business performance – for example supply chain optimization – and help to develop an effective business planning process, enabling the right decisions to be made to reach your company’s business goals.
Integrated business planning framework
Integrated business planning (IBP) is a journey with many steps requiring a roadmap of prioritized actions that drive quick wins and sustainable benefits. But, before you can plan that roadmap and the business planning process, you need to understand the basic elements of an IBP framework (which we detail below) alongside the benefits each element brings to the table.
Establishment of accountability
The first element to consider is defining the correct roles and responsibilities as well as setting effective governance to ensure the establishment of accountability. 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.
For example, supply chain leaders and supply chain management need to take the lead in the IBP process where needed, just as business leaders need to demand planning from their departments.
Alignment with Leadership
The next element is to detail the objectives with a high-level action plan and seek leadership alignment. Having a clearly defined aim sets the path for integrated business planning (IBP) and defines what IBP will deliver. Strategic plans, strategic goals, a business strategy as a whole and scenario planning will help with defining a clear mission.
Alignment among the leadership team is vital if integrated business planning is to achieve its goals. A clear mission provides the pathway people can follow and ensures that the actions and goals are correct, rather than simply the integrated planning process itself.
Achieve Organizational alignment
When processes are cross-functional and designed to align the organization in one desired outcome, you can focus on meeting the goal instead of maintaining the process. This is why both scenario planning and business strategy are important.
You can write down different processes and define operations planning next to financial planning. Still, if the overall strategy is not clear enough, it’s impossible to reach an organized cross-functional process.
Build Talent base
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 implement IBP across the enterprise more effectively.
Not only that, but new possibilities will equate to new opportunities and the imagined future state will garner enthusiasm and bring new energy to the business. Successful Integrated business planning will transform process efficiency and motivate the workforce to achieve even greater improvements.
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 to be proactive and stay ahead of your market instead of relying on reactive decisions. This way, tasks like financial forecasting and predicting business performance become simpler and easier. Scenario planning encourages thinking about ranges of possibilities. Allowing planning teams to have a recognised and structured approach to future states reduces the likelihood of being blindsided by events and being unable to react to risks or leverage opportunities.
Usage of 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. Next-generation planning solutions will provide advanced AI/ML capabilities, but equally important for integrated business planning should be the collaborative functionality, dashboards, volume-to-value conversions, metrics and exception handling, automation, performance and security.
The technology you use for implementing integrated business planning throughout your entire business should not only help supply chain management, but also the integrated processes used by the highest management team.
IBP best practices by o9 solutions
o9 solutions came up with a single integrated plan for all planning processes across the horizon. o9’s Graph Cube Data Model allows for aggregation and disaggregation to the right level of detail for each planning horizon to support end-to-end synchronization.
09 solutions offers IBP software that can be used throughout the entire organization and will solve the future demand of business-wide business planning. A few reasons why this software works:
Complete P&L and KPI visibility
The software summarizes scenarios with connected financial KPIs and strategic plans. It understands financial metrics, such as margins, revenues, and working capital and molds this into operational data.
With the help of the Graph Cube Data Model, most companies can use financial performance, financial reasoning and reconciliation within the integrated planning process of your business.
Cross-functional and interactive plan review & publication
o9’s integrated business planning uses Natural Language Processing (NLP) based search & discovery. With this IBP process platform, you can create interactive views instead of static dashboards and turn cross-functional processes, review and alignment into a fluid process.
Live on platform meeting capability
Your management or business leaders can create live presentations step by step with live data for S&OP meetings, removing hundreds of hours of manual work. The business planning process will take up less time, and the complex supply chains and their ways of working will be easier to understand.
Big data enabled
With the help of the IBP software, you can leverage real-time structured and unstructured data from the market, customers, and operations to drive insights into trends and potential disruptions and thus set up a strategic plan for the future.
Summary: IBP software by o9 solutions
o9 Solutions’ Integrated Business Planning provides an intelligent, automated planning solution that bridges all the functional silos across the planning cycles in a unified technology stack that can drive up user adoption and enable better decision-making.
o9’s Integrated Business Planning solution uses automation to bring together finance, marketing, sales, and supply chain to address risk and opportunities in an online live platform.
It provides full visibility and complete transparency on the gap vs. the annual strategic plan in revenues, cost, margin and volumes, and therefore enables management to quickly come up with a strategic plan and informed decisions. This results in predictive analytics, profitable growth that balances strategic, financial and operational objectives and many more benefits for your business.