In the last blog, we had an overview of Integrated business planning (IBP). It is the process of integrating all the departments of a company into the planning process. Unlike S&OP, which focuses on planning the sales and operation strategies, IBP takes a holistic approach to planning and including all the aspects of operations and sales, such as product portfolios, customer demand data, logistics, and financial planning. For companies who have successfully implemented the S&OP process and stabilized it, there comes a time when their S&OP process maturity plateaus. This is when companies need to incorporate integrated business planning to take their planning process to the next level. This post will discuss the top seven benefits of integrating business planning into your planning process. Read on.
What are the Benefits of Integrated Business Planning?
IBP focuses on managing the decision taken in one area of business that impacts the other areas. It helps create a more collaborative process that allows stakeholders to address the planning in their areas in such a way that it aligns with the overall company goal. Let’s look at the benefits of IBP for companies.1. Agile Business Planning
Once IBP is implemented in a company, the company moves from static to agile and continuous planning. Frequent forecasts and planning are critical for any organization’s competitive edge in the market, and they can be done weekly and even daily. Factors such as product sales orders, workforce constraints, shipping costs, and raw materials prices change rapidly, affecting the margins. The IBP brings continuous planning, execution, and analysis to the process, allowing the companies to identify and exploit opportunities on time and address the issues before they are critical.2. Dynamic ‘What If’ Scenarios
After implementing IBP, dynamic ‘what if” scenarios become more straightforward, which helps evaluate the consequences of potential actions performed in the production chain, including gross margin, production capacity, expenses, and workforce availability. This allows planners to identify and manage the constraints proactively.3. Automation
IBP models do not require manually consolidating the data for different areas and departments. Ad hoc modeling that is done on spreadsheets is also not required. It is easier to take data from the approved version of a plan and then push it to the database for an official consolidated plan. Also, the actual data from the general ledger data system can be pulled into the IBP model for variance analysis. It saves time, cost, and labor and helps stakeholders stay focused on the strategic goals. It helps in building logic around the ‘what if’ scenarios. For example, if there is the addition of another shift, the expenses involved, training and staff required will automatically populate the model. Furthermore, if there is a forecasted increase in demand, the system will automatically add the requirements for materials, staff, and work capacity related to demand.4. Real-Time Data Rendering
The data must be real-time to get the best results from agile business planning. This means the time lag because manually populating data in spreadsheets cannot be there in IBP. When the database and source systems are integrated, data is automatically updated, ensuring that all the data populated in the planning model is in real time. The latest data helps in better decision-making.5. Collaborative Decision Making
A significant benefit of IBP is that it allows managers and stakeholders to take responsibility for their data and numbers while working on the frontlines. As the planning function is decentralized, there is no lag time, glaring errors, or inaccuracies in the planning process. Because of the integration of different systems, planners can see the same data in real time and work collaboratively with each other while planning and making decisions.6. Cost Improvement
As IBP helps optimize supply chain management, all points of the supply stream are brought into the process. Each point is accountable for the failure and success of the goods movement and manufacturing. This helps companies develop more cost-effective strategies for managing products and services on a larger scale.7. Better Customer Satisfaction
IBP brings more accurate demand forecasting leading to more precise supply and financial planning. This 360-degree capability brings value to the company and the customers and helps combat potential supply chain disruptions and bottlenecks. With the help of integrated business planning, companies can ensure product deployment at the correct times.
An industry-wide acceptance of IBP can vouch for the efficiency and efficacy of the process. The implementation of integrated business planning is beneficial for the company; however, it is essential that before implementing it, companies need to implement and stabilize their S&OP strategies. Implementing IBP in one go can be too much for some companies, and it requires too much diligence to implement it correctly.