IBP is a holistic plan that connects sales and operations planning (S&OP) with strategic plans and financial budgeting and forecasting. It balances the demand and the availability of resources (inventory and capacity planning) with the financial objectives of the business.
“Many companies still operate in siloes that each have their own objectives, like cutting lead times, optimizing capacity or lowering costs of raw materials or suppliers, and their own KPIs,” says Lander Vanmeenen, Finance Manager at delaware. “Integrated business planning is no longer about the supply chain or the finance team, but about the business as a whole. So, rather than the traditional bottom-up planning approach, IBP starts from the corporate strategy to define objectives and targets. For example: if your corporate strategy is to boost sales and your financial plan budgets for a 20% sales increase, you can then calculate what that means for capacity planning, inventory planning, etc. If the corporate strategy is rather to drive volume or to retain an edge by delivering the highest-quality products, that will impact demand, inventory and capacity planning.”
IBP processes are supported by IBP solutions that help monitor and analyze data, swiftly simulate demand and supply scenarios, develop what-if scenarios, set up targeted alerts and bring all different data sources together. When implemented successfully, IBP will deliver the following benefits:
IBP introduces a new way of planning that stands apart from divisional siloes. That implies a step-change difference for everyone involved in planning and budgeting. Processes as well as roles will need to be redefined. Are you afraid that that might have too big of an impact on your organization? Integrated business planning doesn’t need to happen overnight. It’s easy to start small and gradually evolve towards fully-fledged IBP. Read our blog ‘How IBP helps finance add true business value' to discover what steps to take, how technology can be an enabler and how delaware can offer value at every single step.
Interested in discovering how IBP can benefit your organization? Contact one of our experts today.