 |
This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these template messages)
|
Integrated business planning (IBP) is a process for translating desired business outcomes into financial and operational resource requirements, with the overarching objective of maximizing profit and / or cash flow, while cutting down risk. The business outcomes, on which IBP processes focus, can be expressed in terms of the achievement of the following types of targets:
Integrated Business Planning is defined in different ways. One challenge in developing a common definition of IBP is that there is no universally agreed way of describing different degrees and forms of integrated processes. Mature IBP processes enable organizations to bring together different elements of planning into a single process. This includes, but is not limited to, the following:
Vision of Integrated Business Planning
 |
This section does not cite any sources. Please help improve this sectionbyadding citations to reliable sources. Unsourced material may be challenged and removed. (February 2024) (Learn how and when to remove this message)
|
The essence of Integrated Business Planning (IBP) is a vision aimed at reshaping how organizations strategize and execute their plans by seamlessly incorporating various functions across the organization. This vision encompasses several crucial components:
1. Functional Integration: IBP aims to dismantle functional silos that often exist between different departments within an organization. It aims to establish a establish a unified planning process between and for R&D, Manufacturing, Supply Chain Management, Marketing, and Sales in order to create a common business plan anchored on a central supply chain planning process that takes inputs from all the above functions.
2. Harmonization of Planning Cycles: IBP goes beyond functional integration by synchronizing planning activities across different time horizons. By aligning monthly, quarterly, and annual planning cycles, IBP ensures a cohesive approach, eliminating discrepancies arising from disparate starting points and data sets.
3. Integrating across multiple Planning Horizons: Short and Medium-Term Planning: IBP facilitates collaboration between sales and marketing teams to capture demand and create a consensus plan.
Medium and Long-Term Financial Planning: IBP aligns demand forecasts with pricing data and inputs from marketing teams to develop financial plans and also uses the inputs to predict financial outcomes.
Long-Term Strategic Planning: IBP incorporates phases of New Product Introduction by leveraging input from Product Development Organization portfolios.
4. Capacity Expansion Planning: IBP includes capacity expansion planning by aligning plans with new product development, cost improvement projects, and management of existing product portfolios, with the long-term strategic plan serving as a crucial input. These demand elements are matched against mapped capacity data in the system to conduct gap analysis.
Outcome-Driven View of IBP
|
This section does not cite any sources. Please help improve this sectionbyadding citations to reliable sources. Unsourced material may be challenged and removed. (February 2024) (Learn how and when to remove this message)
|
The role of IBP is to balance these different objectives in a way that achieves the best overall result. One way of accomplishing this is with prescriptive analytics. These tools are often employed in these processes to mathematically optimize parts of a plan, a classic example of which is inventory investment. The most mature IBP processes try to mathematically optimize all aspects of a plan.
The history of integrated business planning can be traced back to sales and operations planning (S&OP), a process that balances demand and manufacturing resources.
According to Gartner, there is a 5-stage maturity model for S&OP, and in this model, integrated business planning is denoted as Phased 4 & 5.[1]
Over time, IBP has evolved, combining Enterprise Performance Management (EPM) and S&OP to enhance planning capabilities for financial and operational professionals.[2] IBP platforms leverage predictive analytics.[3] and machine-learning technology to optimize plans across multiple constraints.[4]
|
This section does not cite any sources. Please help improve this sectionbyadding citations to reliable sources. Unsourced material may be challenged and removed. (February 2024) (Learn how and when to remove this message)
|
Key components of Integrated Business Planning include:
a) Enterprise Model:
b) Integrated Planning:
c) Enterprise Optimization:
|
This section does not cite any sources. Please help improve this sectionbyadding citations to reliable sources. Unsourced material may be challenged and removed. (February 2024) (Learn how and when to remove this message)
|
IBP has been used to model and integrate the planning efforts in a number of applications, including:
All of the above can be summarized as Enterprise Optimization use cases . These are however to be seen as use cases only. The pristine vision of IBP is to integrate the organisation using a unified planning process across functions and across different planning horizons.
Some argue that IBP is not any different from S&OP. Patrick Bower has described IBP as a marketing hoax,[5] a name developed to create confusion and sell consulting and system services. The main proponents of IBP are consulting companies. In response to this criticism, it has been asserted that IBP is not a marketing hoax,[6] but an important part of Enterprise Performance Management (EPM) system.
Another criticism is that IBP is not academically defined[7] and is supply chain biased in its definition. The lack of academic standard leaves room for interpretation to what IBP is, which is confusing practitioners. In a 2015 S&OP survey,[8] 32% of participants answered that there is no difference between S&OP and IBP, 20% "did not know", and 71% of participants answered that there is a need for more industry standards around S&OP.
It has been called out that IBP has a lack of governance and in need of an industry group to create a unified definition. Due to the lack of academic and industry standards, there has been an attempt to create an open source definition for IBP:
A holistic planning philosophy, where all organizational functions participate in providing executives periodically with valid, reliable information, in order to decide how to align the enterprise around executing the plans to achieve budget, strategic intent and the envisioned future.
— Supply Chain Trend, 2015[9]
According to Smith, Andraski & Fawcett, when two programs—Sales and Operations Planning (S&OP) and Collaborative Planning, Forecasting and Replenishment (CPFR)—are integrated, they provide the information we need for decision making. Key success factors and performance outcomes are also discussed.[10]
Teo & King argue that strategic planning for information systems (IS) involves combining IS planning (ISP) with business planning (BP). While this has been talked about a lot lately, there hasn't been much research specifically focusing on it. This study looks at four ways these plans can be integrated, from being separate to fully intertwined. The study looked at how this integration relates to organizational success by surveying both business planners and IS executives. The results show that the more integrated the plans are, the better the IS contributes to organizational success, and the fewer problems there are with ISP as per this paper.[11]
Pal Singh Toor & Dhir highlight the benefits of integrated business planning, forecasting, and process management. The paper focuses on need of advanced business intelligence and the crucial role of integrated business planning, forecasting, and process management. Various case studies are used to highlight benefits.[12]
Manufacturers can achieve step change improvements to how they plan and manage their business by developing strategies that combine EPM and S&OP.
