What is Integrated business planning (IBP)?
In this video, we will discuss the concept of integrated business planning. We will explore the following topics:
- What is the definition of integrated business planning?
- What are the benefits of integrated business planning?
- What are the challenges of integrated business planning?
- What is the future of integrated business planning?
Integrated business planning (IBP) is a holistic approach to planning that brings together all of the different planning processes within an organization. This includes demand planning, supply chain planning, financial planning, and commercial planning.
The goal of IBP is to ensure that all of these planning processes are aligned and that they are all working towards the same goals. This can help to improve decision-making, reduce costs, and improve customer satisfaction.
There are many benefits to IBP, including:
- Improved decision-making: When all of the different planning processes are aligned, it is easier to make informed decisions about the future of the business.
- Reduced costs: IBP can help to reduce costs by eliminating duplication of effort and by ensuring that resources are allocated in the most efficient way possible.
- Improved customer satisfaction: IBP can help to improve customer satisfaction by ensuring that products are available when and where customers need them.
However, there are also some challenges associated with IBP, including:
- Complexity: IBP can be a complex undertaking, requiring the coordination of many different people and processes.
- Resistance to change: Some people may be resistant to change, especially if they are used to working in silos.
- Technology: IBP requires the use of sophisticated technology, which can be expensive and difficult to implement.
Despite the challenges, IBP is a valuable tool that can help organizations to improve their performance. The future of IBP is bright, as new technologies are making it easier to implement and manage IBP.
Chakri, so there are a myriad of business planning processes. What is your vision of integrated business planning? Simon, indeed there are a myriad of planning processes out there before we define integrated planning or integrated business planning. Let's talk about what planning means in general in vernacular, right?
If you're planning a wedding or if you're planning a trip, there's a set of coordinated decisions that need to be made. Planning is that process of making coordinated decisions. In the context of an enterprise, there are hundreds and thousands of decisions being made across the enterprise. There are commercial decisions related to new products, marketing, sales.
There are supply chain decisions across all the supply chain activities of the enterprise related to positioning of material and capacity and then fulfilling customer demand. There are financial decisions related to setting budgets and targets, allocating resources and the forecasts that you commit to external stakeholders. All of these decisions need to be made in a synchronised fashion. But for practical purposes, because of functional organisations, these have evolved into functional planning processes.
Within supply chain you have demand planning processes, you have demand supply match processes that are aligning the supply chain. You have commercial planning processes that are driving the commercial decisions and your financial planning processes that are setting the budgets and the targets. So these are functional planning processes, but they are largely operating in silos today. The impact of those functional silos, functional planning silos, is your commercial decisions and supply chain decisions are not synchronised and the result is service level issues, inventory issues, excess costs in the supply chain, lower ROI on marketing and sales spend.
So there's a significant amount of value leakage happening because these dots are not getting connected. Dysfunctional planning silos are not getting connected and integrated planning is about bringing all these planning processes and connecting them to really respond to market risks and opportunities. Number two, they're also planning silos across what we call planning cycles. In a company, you have daily planning cycles for operational planning, you have weekly planning cycles, monthly planning cycles for operational tactical planning, and you have strategic planning cycles which are more annual.
And if these planning cycles are not getting connected and often strategy is deviating from execution or rather execution is deviating from strategy. So it's very important to connect your monthly, weekly, and daily and annual planning cycles as well. So that's the second level of integration that we are talking about where planning cycles have to be connected. Finally, the third is the decision making technology stack.
Historically, there's been a number of technologies that are used to aid the decision making. There are data stacks, there are reporting stacks, reporting technology. There's technology for planning the future, there's technology for insights and learning and algorithm development. But if you think of it, all of these are in aid of decision making.
They are making the life of the business user very complex driving adoption to be lower. So in the in the future of planning, as we drive more and more intelligent planning, more and more automated planning, more and more automated decision making, we see this technology stacks having to be completely transformed to really bring them together into an integrated planning stack. So that's what our definition of integrated planning or integrated business planning is, bridging all the functional silos of planning, bridging the silos across the planning cycles from strategic to operational and bridging the technology stack in aid of driving up user adoption and making more and more intelligent automated decision making.
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