Today, many company’s performance is restricted by fragmented decision making. To deal with increasing complexity, decision making has been split into functions such as Finance, Sales, Procurement, Manufacturing and Distribution. In many cases these functions act as separate silos, making decisions based on their own objectives, incentives and locally available data.
The Need for IBP
Silo behaviour leads to Demand/Supply mismatches resulting in loss of Revenue and an increase in Operating Expenses and Working Capital. Demand signal accuracy is compromised by not understanding “true” customer demand, and the Supply response doesn’t take all the relevant material and capacity constraints into consideration. Furthermore, organisations do not always understand what the impact of decisions will be on Profitability and Budgets.
To address above mentioned issues, companies need a structured approach and process to drive a single set of forward looking numbers over a 12 to 24 month planning horizon. Each element of this number set must be translated into terms that key shareholders can understand and be made accountable for.
What is IBP?
IBP is a framework that builds on Sales and Operations Planning (S&OP), aligning it to Strategy and Finance. S&OP is the process that facilitates and enables the optimal balance between demand and supply.
IBP is a mindset or way of managing your supply chain, enabled through process, organisation and technology.
IBP’s objective is to maximize operational results driven by your strategic objectives such as maximizing Revenue, maximizing Profit, increasing geographical coverage or new product introductions.
IBP deploys a single model across your organisation and leveraging your information assets, decision makers use can evaluate plans and activities based on the true business impact of each consideration.
What Business Value will IBP Deliver
Experience has shown that real financial benefit have been achieved by many companies who have embarked on the journey towards IBP. Besides just financial benefit the following benefits are delivered:
- An integrated planning platform across marketing, operations and finance
- A holistic understanding of performance drivers
- Quantifying the financial impact of planning decisions
- Increased business flexibility and responsiveness
How do we begin
A phased approach based on maturity
IBP is not a quick fix or fast implementation – it is a journey that you will embark on. Nor is it one size fits all approach, based on maturity levels and organizational readiness we start by defining the key planning objectives and underlying process and organisation changes.
Always focus on the value
At each stage of implementation our focus is always on the potential value that can be extracted. We also consider your strategic objectives and risk.
Begin with the end in mind
By understanding what you want to achieve we reverse engineer the process to link information, process and reporting to key organisational objectives.
You must provide effective leadership
IBP crosses organisational boundaries – that is its strength but also its vulnerability. Executive leadership is required to set clear ground rules and boundaries for working together. Only through cross-functional co-operation will your IBP journey lead to success.