If a company’s various departments are not involved in the planning process, it is not practicing integrated business planning (IBP). Product portfolios, consumer interest data, logistics, and financial planning are all part of IBP’s comprehensive sales and operations planning approach, which aligns with S&OP’s singular focus on sales and operations.
There comes a time when S&OP process maturity plateaus for companies that have successfully implemented and stabilized the process. At this point, companies should use integrated business planning to advance their planning process. Continue reading to go over the top five benefits of IBP.
Integrated Business Planning: How Does It Help?
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It is important to understand what is IBP. IBP is centered around managing decisions that affect other areas of a business. Here are some of the benefits of IBP for businesses of every type:
Streamlined Company Strategy
A company transitions from static to agile and continuous planning after implementing IBP. Any company that wants to stay ahead of the competition in the market needs to do planning and forecasting often, maybe even every day.
Factors like raw material costs, labor shortages, shipping expenses, and product sales orders impact the margins. Companies can identify and seize opportunities on time and address issues before they become critical with IBP’s continuous planning, execution, and analysis process.
Adaptive “What If” Situation
Implementing IBP makes it easier to run “what-if” scenarios that test different outcomes along the production chain, such as changes to gross margin, production capacity, costs, and workforce availability. Planners can proactively manage constraints and identify them.
Automation
There is no need to manually combine data from various areas and departments when using IBP models. Ad hoc modeling in spreadsheets is likewise unnecessary.
Transferring information from the finalized plan to the database is more convenient than creating a formal, consolidated plan. When doing variance analysis, the real data from the general ledger data system can also be imported into the IBP model. It helps stakeholders focus on strategic goals while saving time, money, and labor.
Displaying Data in Real Time
If you want your agile business planning to be successful, you need real-time data. Because there is no way to manually enter data into spreadsheets in IBP, this results in a lack of timeliness. All the data in the planning model is up-to-date when the source systems and database are integrated because time is automatically updated. The most recent data helps with decision-making.
Working Together to Reach a Decision
Managers and stakeholders can own their data and figures even when on the front lines, which is a huge plus for IBP. The planning process is flawless, with no lag time or obvious mistakes, because the planning function is decentralized. Planners can collaborate while planning and making decisions because different systems are integrated, allowing them to view the same data in real-time.
Last Remarks
An industry-wide adoption of IBP can attest to a process’s efficiency and effectiveness. Companies must execute and stabilize their S&OP strategies before implementing integrated business planning, even though doing so will benefit them. Because implementing IBP properly requires so much care, some companies may be unable to help handle the workload.
