Find out how your organization measures up with our IBP Maturity model-
Understanding the discerning digital consumer today is complex and the marketplace turbulent. Navigating the demands and expectations of the supercharged market proliferated by Omni-channel commerce and disruptive technologies makes supply chain and business planning in general, a whole new ballgame.
It is no longer the business with the best product or best price point that has the competitive advantage but one who has access to data and has the ability to analyze and harness that data to create a real-time supply chain, tailored to the consumer’s need and behavior patterns that will stay ahead of the pack. A new ultra-sensitive, integrated business planning (IBP) is what you need to catapult you there.
WHAT IS INTEGRATED BUSINESS PLANNING ANYWAY?
In simple terms, IBP is a holistic end-to-end planning process across the whole of the organization including supply chain, financial planning and enterprise performance management (EPM), integrating multiple departments across the enterprise to maximize real value and growth for the business.
Integrated business planning has evolved from Sales and Operations (S&OP) planning but it is a far more comprehensive approach which harnesses cutting-edge digital technologies to overcome legacy challenges that have plagued supply chain and financial planning, making the business plan a live-action, ever evolving and dynamic process which can counter any volatile market trend with precision and speed.
THE DIGITAL AGE IS HERE BUT IS IBP IN ORGANIZATIONS THERE YET?
According to the Hackett group research, 90% of organizations have reported that they use some form of Integrated Business planning but only 30% designated their IBP programs as “standardized and consistently adopted across the company.”
Only the very crème de la crème of organizations have been able to fully tap into the immense potential of the emerging technologies and achieved a notable maturity level in their planning models that goes beyond a healthy S&OP framework. Most firms however are at a nascent level of maturity when it comes to planning.
CLIMBING THE MATURITY LADDER TO THE WINNERS CIRCLE
The rudimentary stage of planning for an organization is the siloed stage, ‘Aware’, where planning is contained within the supply chain department with limited or no collaboration with other departments and disengaged management processes. Annual budgeting is short-sighted with use of multiple data sources, a maximum of 3 month forecast and use of basic spreadsheet tools.
As the planning evolves to the ‘Developing’ stage, we start to see the use of monthly S&OP processes with regular formalized reviews, decision making forums with a 3-6 monthly view and scenario planning to drive efficient supply chain and demand equilibrium.
A single source of data and ERP is connected to the planning system and new types of reporting tools for forecasting and inventory optimization come into play. According to the Aberdeen group’s research, companies that deployed S&OP frequently outshined their competition by at least 20%.
Move up the growth chain to the ‘Progressive and ‘Leading’ stages and a new world of integrated planning opens up with inter-departmental collaboration including sales and marketing, liaising with 3rd parties, shared KPI’S and data which starts narrowing the gap between finance and supply chain.
This is the budding IBP stage where planning magic starts to happen- faster planning cycles, what-if scenarios and cloud based advanced analytics. But, the real exciting stuff lies in the accelerated level of maturity of ‘Excellence’.
The final and dream stage of maturity which organizations must now reach for to stay relevant, will involve developing an IBP framework fortified with the powers of Artificial Intelligence. Using sophisticated processes such as auto-decision support, demand sensing, live data dashboard, intelligent alerts, algorithmic planning and risk-adjusted inventory optimization, the revolutionary benefits of full automation and integration can be unleashed. From reduced variability, inventory costs and lead times to increased cost savings, visibility and sustainability- the gains are limitless.
THE ROAD AHEAD
Embracing an Integrated business planning approach for your firm is imperative to avoid becoming obsolete. An integrated live planning model will reveal a holistic view of the market and anticipate customer’s needs even before it is known but this will require making the right investment now into acquiring new skills, implementing relevant disruptive technologies and a business transformation roadmap.
Integrated Business Planning is a complex model and will test managers understanding of end-to-end value chain management across functions. It will require an expertise in business enablement, ERP process transformation, disruptive technologies and transformation management. It is a defining sink or swim moment and firms must make the right decisions including the choice of an expert advisor who can help them overcome the challenges and steer them through these unchartered territories.
You can read our in-depth whitepaper on IBP by clicking here
Principal, Infosys Consulting
Paula is a Principal in the supply chain practice of Infosys Consulting with more than 13 years’ experience across sectors ranging from oil and gas to consumer goods. Her focus is advising clients on best practices and innovation around supply chain optimization, S&OP and operations. She also leads process design and modelling programs, as well as IT solutioning initiatives around business intelligence and data management and agile methodology.