who invented integrated business planning

Imagine a symphony orchestra where each musician plays their own tune without listening to others. The result would be chaotic and dissonant, right? Similarly, in the business world, when decision-making happens in silos and planning processes are disconnected, it’s like having a group of individuals playing their own instruments without any coordination. The harmony is lost, and the organization becomes inefficient, misses opportunities, and struggles to keep up with the fast-paced market.

Integrated Business Planning (IBP) addresses these challenges by providing a comprehensive framework that integrates strategic, operational and financial planning, analysis, and reporting to drive better business outcomes.    A retail company experiences a sudden surge in online sales due to a viral social media campaign. Integrated planning incorporates supply chain planning, demand planning, and demand forecasts so the company can quickly assess the impact on inventory levels, supply chain logistics, production plans, and customer service capacity. By having real-time data at their fingertips, decision-makers can adjust their strategies, allocate resources accordingly, and capitalize on the unexpected spike in demand, ensuring customer satisfaction while maximizing revenue.   This blog explores the significance of IBP in today’s modern business landscape and highlights its key benefits and implementation considerations.

Integrated business planning framework

Integrated Business Planning (IBP) is a holistic approach that integrates strategic planning, operational planning, and financial planning within an organization. IBP brings together various functions, including sales, marketing, finance, supply chain, human resources, IT and beyond to collaborate across business units and make informed decisions that drive overall business success. The term ‘IBP’ was introduced by the management consulting firm Oliver Wight to describe an evolved version of the sales and operations planning (S&OP process) they originally developed in the early 1980s.

Making up the Integrated Business Planning framework are six key pillars:

1. strategic planning.

Integrated Business Planning starts with strategic planning. The management team defines the organization’s long-term goals and objectives. This includes analyzing market trends, competitive forces, and customer demands to identify opportunities and threats. Strategic planning sets the direction for the entire organization and establishes the foundation for subsequent planning roadmap.

2. Operational planning

Operational planning focuses on translating strategic goals into actionable plans at the operational level. This involves breaking down the strategic objectives into specific targets and initiatives that different departments and functions need to execute.

For example, the sales department might develop a plan to enter new markets or launch new products, while the supply chain department focuses on inventory optimization and ensuring efficient logistics. The key is to align operational plans with the broader strategic objectives to ensure consistency and coherence throughout the organization.

3. Financial planning

Financial planning ensures that the organization’s strategic and operational plans are financially viable. It involves developing detailed financial projections, including revenue forecasts, expense budgets, and cash flow forecasts. By integrating financial planning with strategic and operational planning, organizations can evaluate financial profitability, identify potential gaps or risks, and make necessary adjustments to achieve financial targets.

 4. Cross-functional collaboration

A fundamental aspect of IBP is the collaboration and involvement of various functions and departments within the organization. Rather than working in isolation, departments such as sales, marketing, finance, supply chain, human resources, and IT come together to share information, align objectives, and make coordinated decisions.

5. Data integration and analytics

IBP relies on the integration of data from different sources and systems. This may involve consolidating data from enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, supply chain management systems, and other relevant sources. Advanced analytics and business intelligence tools are utilized to analyze and interpret the data, uncovering insights and trends that drive informed decision-making.

6. Continuous monitoring and performance management

The Integrated Business Planning process requires continuous monitoring of performance against plans and targets. Key performance indicators (KPIs) are established to measure progress and enable proactive management. Regular performance reviews and reporting enable organizations to identify deviations, take corrective actions, and continuously improve their planning processes.

What are the benefits of Integrated Business Planning?

By integrating strategic, operational, and financial planning organizations can unlock the full potential of IBP and drive business success and achieve their goals.

Enhanced decision-making

IBP facilitates data-driven decision-making by providing real-time insights into various aspects of the business. By bringing together data from various departments, organizations can develop a holistic view of their operations, enabling them to make better-informed decisions.

Improved alignment

By aligning strategic objectives with operational plans and financial goals, IBP ensures that every department and employee is working towards a common vision. This alignment fosters synergy and drives cross-functional collaboration.

Agility and responsiveness

In the rapidly changing business landscape, agility is crucial. IBP allows organizations to quickly adapt to market shifts, demand fluctuations, and emerging opportunities. By continuously monitoring and adjusting plans, businesses can remain responsive and seize competitive advantages.

Optimal resource allocation

Integrated Business Planning enables organizations to optimize resource allocation across different functions. It helps identify bottlenecks, allocate resources effectively, and prioritize initiatives that yield the highest returns, leading to improved efficiency and cost savings.

Risk management

IBP facilitates proactive risk management by considering various scenarios and identifying potential risks and opportunities. By analyzing data and conducting what-if analyses, companies can develop contingency plans and mitigate risks before they materialize.

Essential steps for implementing Integrated Business Planning

Implementing an effective IBP process requires careful planning and execution that may require substantial effort and a change of management, but the rewards are well worth it. Here are some essential strategic steps to consider:

1. Executive sponsorship

Establish leadership buy-in; gain support from top-level executives who understand the value of Integrated Business Planning and can drive the necessary organizational changes. Leadership commitment, led by CFO, is crucial for successful implementation.

2. Continuous improvement

Continuously monitor and adjust; implement mechanisms to monitor performance against plans and targets. Regularly review key performance indicators (KPIs), conduct performance analysis, and generate timely reports and dashboards. Identify deviations, take corrective actions, and continuously improve the planning processes based on feedback and insights.

3. Integration of people and technology

To foster cross-functional collaboration, the organization must identify key stakeholders, break down silos, and encourage open communication among departments. Creating a collaborative culture that values information sharing and collective decision-making is essential.

Simultaneously, implementing a robust data integration system, encompassing ERP, CRM, and supply chain management systems, ensures seamless data flow and real-time updates. User-friendly interfaces, data governance, and training provide the necessary technological support. Combining these efforts cultivates an environment of collaboration and data-driven decision-making, boosting operational efficiency and competitiveness.

4. Technology

Implement advanced analytics and business intelligence solutions to streamline and automate the planning process and assist decision-making capabilities.  These solutions provide comprehensive functionality, data integration capabilities, scenario planning and modeling, and real-time reporting.

Integrated Business Planning software

From a tech perspective, organizations need advanced software solutions and systems that facilitate seamless data integration and collaboration to support IBP. Here are some key components that contribute to the success of integrated business planning:

1. Corporate performance management

A platform that serves as the backbone of integrated business planning by integrating data from different departments and functions. It enables a centralized repository of information and provides real-time visibility into the entire business.

2. Business intelligence (BI) tools

Business intelligence tools play a vital role in analyzing and visualizing integrated data from multiple sources. These tools provide comprehensive insights into key metrics and help identify trends, patterns, and opportunities. By leveraging BI tools, decision-makers can quickly evaluate financial performance, make data-driven business decisions and increase forecast accuracy.

3. Collaborative planning and forecasting solutions

Collaborative planning and forecasting solutions enable cross-functional teams to work together in creating and refining plans. These planning solutions facilitate real-time collaboration, allowing stakeholders to contribute their expertise and insights. With end-to-end visibility, organizations can ensure that plans are comprehensive, accurate, and aligned with business strategy.

4. Data integration and automation

To ensure seamless data integration, organizations need to invest in data integration and automation tools. These tools enable the extraction, transformation, and loading (ETL) of data from various sources. Automation streamlines data processes reduces manual effort and minimizes the risk of errors or data discrepancies.

5. Cloud-based solutions

Cloud computing offers scalability, flexibility, and accessibility, making it an ideal choice for integrated business planning. Cloud-based solutions provide a centralized platform where teams can access data, collaborate, and make real-time updates from anywhere, at any time. The cloud also offers data security, disaster recovery, and cost efficiencies compared to on-premises infrastructure.

6. Data governance and security

As organizations integrate data from multiple sources, maintaining data governance and security becomes crucial. Establishing data governance policies and ensuring compliance with data protection regulations are vital steps in maintaining data integrity and safeguarding sensitive information. Implementing robust data security measures, such as encryption and access controls, helps protect against data breaches and unauthorized access.  

IBM Planning Analytics for Integrated Business Planning

IBM Planning Analytics   is a highly scalable and flexible solution for Integrated Business Planning. It supports and strengthens the five pillars discussed above, empowering organizations to achieve their strategic goals and make better data-driven decisions.  With its AI- infused advanced analytics and modeling capabilities, IBM Planning Analytics allows organizations to integrate strategic, operational, and financial planning seamlessly. The solution enables cross-functional collaboration by providing a centralized platform where teams from various departments can collaborate, share insights, and align their plans.  IBM Planning Analytics also offers powerful data integration capabilities, allowing organizations to consolidate data from multiple sources and systems, providing a holistic view of the business. The solutions’s robust embedded AI predictive analytics uses internal and external data and machine learning to provide accurate demand forecasts. IBM Planning Analytics supports continuous monitoring and performance management by providing real-time reporting, dashboards, and key performance indicators (KPIs) that enable organizations to track progress and take proactive actions.  As the business landscape continues to evolve, embracing Integrated Business Planning is no longer an option but a necessity for organizations. To succeed in this dynamic environment, businesses need an integrated approach to planning that brings all the departments and data together, creating a symphony of collaboration and coordination.

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A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of five essential building blocks: a business-backed design; high-quality process management, including inputs and outputs; accountability and performance management; the effective use of data, analytics, and technology; and specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

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In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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Complete guide to integrated business planning (ibp).

Integrated Business Planning, or IBP for short, is a strategic management process that connects various organizational departments to align business operations with financial goals. How? By integrating business functions – such as Sales, Marketing, Finance, Supply Chain and Operations – to create a holistic view of the company's performance and future direction. This blog post offers a comprehensive guide to discuss what precisely IBP entails and how Finance can drive business results and collaboration within the organization via a robust and comprehensive IBP process.

What Is Integrated Business Planning?

While the business world and Finance have always had shared language and acronyms, some new (and reimagined) acronyms may now be flooding your feed. One such topic you may be hearing a lot about lately is Integrated Business Planning (IBP). Yet the concept of IBP isn't new. In fact, it's related to Sales & Operations Planning (S&OP) , a concept that's been around awhile.

Still, IBP may seem overwhelming in the context of all the different acronyms related to financial and operational planning floating around lately. For example, IBP, S&OP, eXtended Planning and Analysis (xP&A) and others are just a few acronyms muddying the waters. But this comprehensive guide to all things IBP aims to help demystify the process.

So what, exactly, is IBP?

IBP ultimately aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. In turn, a trusted, common view of the numbers provides a robust baseline for agile decision-making. That common view also keeps all teams collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line? IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

How Integrated Business Planning Works

The IBP process is a framework to address the C-suite needs and help implement the business strategy and manage uncertainty to improve decision-making. So what's the secret sauce of IBP to make all of that happen? A collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance. That's how the C-suite gets value from IBP. Consequently, Finance plays a central role in the IBP process.

IBP typically focuses on horizons of 24-60 months, as opposed to the short term. That focus equates to Integrated Tactical Planning or Sales and Operations Planning and Execution. Since the process must be fully integrated, it removes the departmental silos. Plus, the IBP process must adapt to the organizational construct of every business (IBP isn't a one-size-fits-all type of process).

A typical IBP process involves several stages:

• Data Collection and Analysis : Gathering relevant data (e.g., sales forecasts, production capacities, inventory levels and financial projections) from different departments.
• Demand Planning: Predicting future demand based on historical data, market trends, customer feedback and sales forecasts.
• Supply Planning: Determining the resources and capabilities (e.g., materials, production capacity and distribution channels) needed to meet the forecasted demand.
• Financial Planning : Developing financial plans and budgets aligned with the demand and supply forecasts, considering factors such as revenue targets, cost structures and investment requirements.
• Scenario Planning: Creating alternative scenarios to assess how different strategies, market conditions or external factors impact business outcomes.
• Management Business Review : Collaborating across departments to make informed decisions on resource allocation, investments, pricing strategies and operational adjustments.
• Execution and Monitoring : Implementing the plans, tracking performance against targets, and continuously monitoring key metrics to identify deviations and take corrective actions.

The most efficient way to foster this collaboration is through a unified solution and data model that caters to the needs of the various agents involved on each review. In fact, Figure 1 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

Figure 1: A Unified Data Model for IBP

Core Elements and Stages of the Integrated Business Planning Process

The IBP process includes the following core elements:

• Governance Structure : Establishing a cross-functional team with representatives from key departments to oversee the IBP process, define roles and responsibilities, and ensure alignment with organizational goals.
• Data Integration : Integrating data from different systems and sources to create a single source of truth for decision-making, using technologies such as enterprise resource planning (ERP) systems, Corporate Performance Management (CPM) tools, business intelligence (BI) tools and data analytics platforms.
• Collaborative Planning : Encouraging collaboration and communication between departments to share insights, align objectives and develop consensus-based plans that support overall business objectives.
• Continuous Improvement : Implementing feedback loops, performance reviews and process refinements to enhance the effectiveness and agility of the IBP process over time.

Key Performance Indicators (KPIs) for Integrated Business Planning

Some key KPIs to measure the effectiveness of an IBP process include:

• Forecast Accuracy : Comparing actual sales or demand with forecasted figures to assess the accuracy and reliability of forecasting models.
• Inventory Turnover : Calculating how often inventory is sold and replaced within a specific period indicates efficiency in inventory management.
• Customer Service Levels : Monitoring metrics like on-time delivery, order fulfillment rates, and customer satisfaction scores to measure service performance.
• Financial Metrics : Evaluating financial KPIs such as revenue growth, gross margin, operating profit, and return on investment (ROI) to gauge overall business performance.
• Supply Chain Performance : Assessing metrics like lead times, supplier performance, inventory levels, and supply chain costs to optimize supply chain operations.

Technological Enablers for Integrated Business Planning

Several technological enablers support a robust IBP process:

• ERP Systems : Integrated ERP systems consolidate data from different departments, automate processes, and provide real-time visibility into business operations.
• BI and Analytics Tools : Business intelligence tools and analytics platforms enable data visualization, trend analysis, scenario modeling, and predictive analytics for informed decision-making.
• Collaboration Platforms : Cloud-based collaboration tools facilitate communication, document sharing, and workflow management among cross-functional teams involved in IBP.
• Advanced Planning Software : Specialized IBP software solutions offer capabilities for demand planning, supply chain optimization, financial modeling, scenario planning, and performance monitoring.
• AI and Machine Learning : AI-driven algorithms and machine learning techniques can enhance forecasting accuracy, identify patterns, optimize resource allocation, and automate repetitive tasks in IBP processes.

By leveraging these technological enablers, finance professionals can streamline the IBP process, improve decision-making, and drive business growth.

In conclusion, Integrated Business Planning (IBP) is a strategic approach that aligns business functions, integrates data-driven insights and fosters collaboration to achieve operational excellence, financial stability, and competitive advantage. By implementing a robust IBP process supported by technology and focused on continuous improvement, finance professionals can effectively drive sustainable growth, mitigate risks, and adapt to evolving market dynamics.

Want to learn how you can maximize the benefits of your IBP process and get leadership on board with the plan? Check out our eBook Unifying Integrated Business Planning Across Finance and Supply Chain . You'll learn how to unify IBP across Finance and Supply Chain teams and read about use cases as proof points. Plus, you'll gain an understanding of the unique capabilities OneStream's Intelligent Finance Platform brings to unify Finance and Supply Chain planning activities.

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The Ultimate Guide To Integrated Business Planning

Are you looking for a way to streamline your business planning process? Integrated Business Planning (IBP) is the perfect solution. It’s an approach that combines all aspects of business planning into one comprehensive strategy, allowing you to make decisions quickly and accurately. This guide will help you understand how IBP works and how it can benefit your organization.

With IBP, you can save time by having all of your data in one place, making it easier to identify trends and opportunities as they arise. You’ll also be able to make more informed decisions based on real-time data analysis instead of relying on outdated information or guesswork.

What Is Integrated Business Planning?

Integrated business planning (IBP) is a powerful process that could become central to how a company runs its business. It is one generation beyond traditional sales and operations planning (S&OP) and combines financial and operational data from across the organization to create an aligned, cross-functional plan for the future. IBP enables businesses to make decisions based on key assumptions that are documented and updated regularly, helping them to achieve corporate goals.

IBP solutions help align financial and operations plans, giving companies greater planning accuracy and operational performance. This process also incorporates forecasting and demand response , demand-driven supply management, inventory optimization, production scheduling, transportation optimization, and more. With business planning processes in place, companies can make better decisions faster by leveraging real-time data from across their organization.

What Is the Difference Between Sales & Operations Planning and IBP?

Sales And Operations Planning (S&OP) and Integrated Business Planning (IBP) are two different integrated processes used to manage the supply chain. S&OP is a cross-functional process that focuses on aligning demand forecasts and supply in volumes in a tactical range, while IBP has a broader scope that looks at aligning all aspects of the business to ensure better decision-making.

Sales and operations planning processes typically have medium-term planning horizons that rarely extend beyond 18 months, while IBP naturally has a longer time scale. Additionally, IBP starts at the executive level, and each month or planning cycle culminates in a performance review against plans.

Both S&OP and IBP are important for managing the supply chain and ensuring successful operations. However, it’s important to understand their differences to choose which process best meets your needs.

What is an example of an integrated business model?

An example of an integrated business model is a supply chain management system. This type of system links different parts of the organization, from the production and inventory to customer service and sales. It leverages data to streamline operations, improve efficiency, and reduce costs. By integrating processes across departments, businesses can gain greater visibility into their operations and make better decisions faster than ever before.

Benefits Of Integrated Business Planning

The main benefit of implementing IBP is increased revenue, followed by forecast accuracy and improved Perfect Order Delivery. Other benefits include creating transparency between strategic goals and financial and operational activities, unlocking P&L performance through coordinating strategies and tactics across traditional business functions, creating more collaborative decision-making, providing higher agility in responding quickly to the business environment and market volatility, and generating insights on developments in the market.

IBP is important because functional and technical silos across organizations can result in flawed decision-making. Transitioning to IBP can help companies enhance their performance by improving their ability to respond quickly to changes in the market.

Challenges Of Integrated Business Planning

Integrated Business Planning (IBP) is a powerful process that can revolutionize how companies run their business. However, it is not without its challenges. IBP requires an organization with the right technology, processes, and people to succeed.

One of the biggest challenges of IBP is getting all departments within an organization on board with the process. It requires buy-in from all levels of the organization, including executives, operations, and finance teams. Without this unified approach and skilled and experienced employees, getting everyone working together towards a common goal can be difficult.

Another challenge of IBP is data integration. In order for IBP to be successful, data must be collected from multiple sources and integrated into one system. This can be difficult due to different systems used by different departments or even different countries within an organization. It also requires a high level of accuracy and consistency in order for the results to be meaningful and actionable.

Finally, IBP requires constant monitoring and adjustment as market conditions change over time. Companies must stay up-to-date on changes in demand, supply chain disruptions, and other factors that could affect their plans. Without regular monitoring and adjustments, companies risk making decisions based on outdated information, which could lead to costly mistakes down the line.

Why Is Integrated Business Planning Important?

Integrated Business Planning (IBP) is an important process for businesses to align their goals with their financial, supply chain, product development, marketing, and other operations. It helps companies to create a unified plan that can be used to make better decisions and reach corporate objectives.

IBP is a powerful tool that allows businesses to consider all the different elements of their operations when making decisions. This means they can make more informed choices about allocating resources, developing products and services, and managing their finances. By taking into account all these factors, IBP enables companies to make better decisions and more informed strategic plans that will lead them toward success in the long run.

Another benefit of an Integrated Business Planning process is that it helps businesses become more agile and responsive to changes in the market. With IBP in place, companies are able to quickly adjust their plans based on new information or changing customer needs. This allows them to stay ahead of the competition and remain competitive in an ever-changing business landscape.

Overall, Integrated Business Planning is essential for businesses looking to stay ahead of the competition and reach their goals. By considering all aspects of operations when making decisions, IBP provides companies with a unified plan that can help them succeed in the long run.

Elements Of Integrated Business Planning

The three main parts of integrated business planning are categorized as “Plan,” which involves creating a strategy, “Execute,” which involves carrying out the plan; and “Monitor and Adjust,” which involves reviewing and making changes as needed.

The Plan element involves the initial step of creating a strategy. This includes identifying key goals, objectives, and expectations around the company’s products and services to understand better how those should be used in an overall strategy. Additionally, it includes developing plans for specific initiatives that will help advance those goals.

The Execute element is about carrying out those plans. This includes everything from setting timelines, allocating resources, and developing procedures to ensure the plan is implemented properly.

Finally, the Monitor and Adjust element involves reviewing progress on the strategy and business performance and making any necessary changes or adjustments. This could include changing timelines for certain initiatives, modifying business processes, or introducing new initiatives to stay ahead of competitors. This element is important to ensure the plan remains up-to-date and relevant in an ever-changing business environment.

The Integrated Business Planning Process

To be successful, integrated business planning needs to occur on a regular basis, usually every month or every quarter. This strategic planning process should be undertaken to align the different parts of the business and create a unified plan that everyone can work towards.

1. Product Management

A cross-functional team meets monthly to review the status of all product-related projects. This includes managing the entire product portfolio, identifying any new risks or opportunities, prioritizing high-value products, and aligning them with business goals. The ultimate aim is to ensure that raw materials and manufacturing floor capacity are available as needed. Whenever necessary, product managers update and publish a master plan that outlines the required resources for delivering the changes.

2. Demand Planning

Demand planning is a team effort that involves members from sales, marketing, and finance. Its goal is to meet customer demand and reduce excess inventory while avoiding supply chain operations issues. Improving profitability, customer satisfaction, and efficiency are all benefits of demand planning. The team works to create a demand plan that accurately estimates future demand, tailored to the right markets and methods. KPIs such as sales forecast accuracy, inventory turns, fill rates, and order fulfillment lead times are used to measure success.

3. Supply Chain Planning

Supply chain professionals aim to find a cost-effective way to meet expected demand efficiently. To achieve this goal, having visibility into complex supply chains is crucial. One way to accomplish this is through a formal supply chain optimization project, which helps identify and fix potential weaknesses, such as low inventory levels or order fulfillment challenges. The ultimate goal of supply chain management is to reduce the cost of goods sold (COGS) .

Supply chain leaders should deeply understand the production process from raw materials to finished goods. By understanding upstream and downstream processes, supply chain professionals can better anticipate customer needs, uncover new opportunities for cost savings, and mitigate risks. Additionally, they should build relationships with key suppliers and develop strategies to ensure a consistent flow of materials.

4. Financial Planning

Financial planning involves setting short-term and long-term goals for a company that are achievable through the best use of resources. This includes understanding financial trends, managing budgets, monitoring cash flow , financial forecasting, and making decisions about investments.

Financial planning gives organizations an understanding of their current economic environment and helps them create plans to achieve their objectives. It also helps to reduce risk and maximize profits. Ultimately, financial planning is essential for success in any organization.

Integrated planning can be challenging for organizations used to a traditional budgeting process. However, companies can improve their overall financial performance and better meet customer needs by taking a more strategic approach. This requires data-driven insights to inform decisions and the ability to quickly shift resources in response to changing market conditions. The finance team’s influence is driven by their ability to analyze and recommend quickly.

5. Customer And Channel Plan Development

Customer and channel planning are integral components of a successful business. These plans involve researching customer needs, segmenting target audiences and creating strategies to reach them. Additionally, customer and channel plans help determine the most effective marketing tactics for each target audience with the goal of increasing sales and brand loyalty.

This includes selecting the best delivery channels (offline or online) that suit certain markets and target audiences and considering customer preferences when designing products or services. Through customer and channel planning, organizations can create a more successful marketing strategy and reach their desired goals.

4. The Integration Team

The integration team, which is usually composed of individuals from the finance organization, combines the initial product, demand, and supply plans into a single strategic plan that covers a 24- or 36-month period. As necessary updates are made, significant changes are identified by the teams. Decisions that require higher-level approval are prepared for executive review.

The integration team also leads scenario planning . This process involves considering different potential business plan outcomes and helping identify risks. The teams then help develop strategies to mitigate risk, thereby ensuring the success of the overall planning process.

5. The Executive Team 

The executive leadership team addresses disagreements and shares the revised plan with the entire organization. This management team is responsible for making final decisions on the plan and ensuring it reflects the organization’s objectives. Additionally, they review progress made against the plan and make adjustments as needed.

The executive team also considers external factors such as market conditions, customer expectations, competitive environment, and other factors to ensure the organization is on track to reach its desired goals.

6. Supporting Software

Many organizations use software to support their IBP process. This software may include budgeting and forecasting tools , customer relationship management (CRM) systems, financial analysis programs , and inventory tracking applications. Such software assists in streamlining the process of gathering data from multiple sources and increasing overall efficiency within the organization. It can also assist with scenario planning.

7. KPI Assessment

At regular intervals, organizations assess the performance of their plans using key performance indicators (KPIs). These KPIs provide a snapshot of progress and help determine whether or not the plan is on track to achieve its desired outcomes. By evaluating KPIs on an ongoing basis, organizations can identify areas that need improvement and adjust their plans accordingly.

Software To Support IBP

Software solutions are available to support Integrated Business Planning processes. These enterprise performance management solutions provide a comprehensive view of the entire business, allowing you to analyze financial data in real-time data analysis from multiple sources. This helps organizations make informed decisions based on accurate information and forecasts. Additionally, software solutions can automate many of the manual processes associated with IBP, such as data collection and analysis, which helps streamline operations and reduce costs.

Organizations looking to transition to Integrated Business Planning should consider investing in cloud based technology and software solutions supporting their IBP initiatives. Many software solutions can support financial forecasting processes with new tools like predictive analytics ,and feed right into your financial plan.

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FP&A Leader | Digital Finance Advocate | Small Business Founder

Mike Dion brings a wealth of knowledge in business finance to his writing, drawing on his background as a Senior FP&A Leader. Over more than a decade of finance experience, Mike has added tens of millions of dollars to businesses from the Fortune 100 to startups and from Entertainment to Telecom. Mike received his Bachelor of Science in Finance and a Master of International Business from the University of Florida, laying a solid foundation for his career in finance and accounting. His work, featured in leading finance publications such as Seeking Alpha, serves as a resource for industry professionals seeking to navigate the complexities of corporate finance, small business finance, and finance software with ease.

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Supply Chain Trend

Shaping the world of s&op and supply chain.

Integrated Business Planning: A New Narrative for an Old Process

Integrated Business Planning (IBP) has been a valuable business process since its incarnation as Sales & Operations Planning in the mid-1980s. The monthly cycle of S&OP meetings has been the forum in which a firm’s forecasts have been presented and reconciled across functional areas. Authors Niels van Hove and Hein Regeer explain that while planning and forecasting technologies have benefitted from significant innovations since then, today’s IBP seems unhinged from the day-to-day operations of the business. They call for a reinvention of traditional IBP that more fully integrates its governing meetings and reporting into operations, enabling faster decision making, better responsiveness to disruption, and liberation for planners to work on more strategic issues.

• Many IBP cycles around the world are based on a 20-year-old process definition supported by 20-year-old planning concepts. This traditional IBP is not set up for a fast-changing world, where speed of decision making confers a competitive advantage. New Wave 3 Technology can empower a more efficient and responsive planning process.
• We propose that IBP be segmented by decision type into execution, operational, planning, and strategy/culture. For the execution and operational decisions, modern planning technology can largely automate processes and decisions. For the longer-term decisions on planning and strategy, technology will augment the quality of human-centric decisions and nurture human-machine collaboration.
• IBP should be converted from a separate, sequential, monthly planning cycle to an integrated component of day-to-day business. This will be feasible as new technology enables more autonomous decision making, freeing the planner to focus more fully on designing policies and targets

TRADITIONAL IBP AND PLANNING TECHNOLOGY

If we look back over the history of supply-chain planning, we can properly say we are in the third wave of integrated supply-chain planning software (Van Hove, 2019).

• Wave 1, Enterprise Resource Planning (ERP), started in the 1980s with a focus on automating transactional business processes, but less so on planning.
• Wave 2, Advanced Planning Systems (APS), first adopted in the 1990s, facilitated a forward view of the business, integrated plans with other functions, and optimized supply-chain metrics such as forecast accuracy, inventory holdings, and customer service.
• Wave 3 systems, now gaining momentum, will provide intelligent automation that replaces the human planning process as well as cognitive automation that augments a planner’s decision making with predictions, insights, and recommendations.

Wave 3 systems will enable fully automated planning, decision making, and execution. By bringing together several technologies that have matured separately over the last decade, it is becoming a system of intelligence, seamlessly integrating the following capabilities:

• Integration and harmonization of data from internal and external sources, with transactional data self-cleansed and planning parameters self-maintained.
• Automation of descriptive, diagnostic, predictive, and prescriptive analytics, including self-selecting machine-learning models for a library of predefined problems.
• Smart process flow through a digital twin that can be configured to mimic any business user during forecasting, planning, decision making, and execution processes.
• Prescriptive analysis and recommendations that provide business users with advice on why, how, and when to act.
• Automatic decision making and writeback of actions to underlying systems of record.
• Digitization of every decision made, using an automated loop that learns from both human and machine decisions.

At about the same time that Wave 2 was gaining momentum, we saw publication of the book Enterprise Sales & Operations Planning: Synchronizing Demand, Supply and Resources for Peak Performance (Palmatier and Crum, 2002). The authors detailed a sequential S&OP cycle around a

New Product Review, a Demand Review, a Supply Review, and a Management Business Review. Figure 1 is an image from the cover of the book.

Figure 1. The IBP Cycle According to Palmatier and Crum

A whitepaper by Coldrick, Ling, and Turner (2003) entitled “Evolution of Sales & Operations Planning – From Production Planning to Integrated Decision Making” presented the five-step process – shown in Figure 2 – which is still the foundation of most planning processes today, even though the scope of S&OP has expanded into IBP.

Figure 2. The Five Key Steps of Integrated Business Management / Integrated Decision Making

In his 2009 Foresight article, Bob Stahl emphasizes the five-step sequential monthly process. Similar to the other publications, he asserts that executive S&OP is first and foremost a decision-making process.

The planning processes and governing S&OP meetings described in these publications have been widely implemented across the world, supported by Wave 1 and Wave 2 planning technology. These technologies focused on transactions, planning, and insights, but were never built for automated planning, decision making, and execution. Many of today’s IBP processes are still rooted in this prior generation of planning concepts, reflecting a notable absence of progress, especially considering that supply-chain executives expect to see autonomous supply chains by 2025 (Steinberg, 2019).

Autonomous supply chains, where decisions and actions will largely be made by machines rather than by humans, cannot be realized by Wave 1 and Wave 2 systems as these systems are aimed at automating processes rather than decisions. To become autonomous, supply chains require the new technology of Wave 3 planning systems, which we think of as systems of intelligence

LIMITATIONS OF TRADITIONAL IBP

As IBP managers, we have facilitated well over a hundred IBP meetings and, as consultants, we have implemented IBP processes across many countries and companies. We acknowledge the value of IBP in support of an organization’s effort to deploy and execute its strategy (Van Hove, 2016). However, we’ve seen the shortcomings of these processes as well, including reliance on old technology.

While IBP comes in many shapes and forms, it is based on a few foundational concepts.

• Cross-functional, human decision making. IBP seeks to align key stake[1]holders from multiple functions on “a single version of the truth”; that is, a common understanding of matters that need to be addressed and the collaboration needed in decision making.
• Periodic planning cycles. Most common is the weekly Sales & Operations Execution (S&OE) cycle to address immediate operational issues, and a monthly cycle for medium- to long[1]term issues. This dichotomy facilitates responsiveness in short-term planning while freeing senior management to focus on high-impact decisions over the longer-term horizon (and only by exception on operational issues).
• Sequential process steps. Both the weekly and monthly cycles follow a strict cadence of sequential meetings and activities. The outcome of one step (for example, the Demand Review) is required input for the next step (Supply Review). An IBP team typically drives the process and strives to maintain adherence to it within the organization. While these general concepts are straight[1]forward, implementation can be challenging. Even after decades of experience, companies struggle with persistent shortcomings:
• Excessive focus on short-term issues. Despite weekly S&OE meetings for operational issues, IBP meetings still become distracted by acute short-term issues. And even though the planning is designed to encompass a rolling 24-month horizon, IBP discussions are heavily skewed toward the first few months.
• Information and process focus, rather than decisions focus. Many IBP meetings take on an “information sharing” character rather than a decision-making focus. The meetings should mark the moments in the month where we “synchronize the watches” in terms of demand and supply plans. Because IBP managers are incentivized to adhere to the process – follow the agenda, attendance, data availability and standardized templates – the time spent policing process compliance steals from the time devoted to high-value decision making.
• Limited attention to high-value decision making. In a traditional IBP cycle, there may not be adequate time to prepare advanced simulations and business continuity plans, or to seek cross-functional alignment in time for executive-level decision making. One of the key reasons is the excessive number of meetings.
• Excessive meetings. Typical IBP cycles span a month’s time, but this can stretch to six weeks because of pre[1]meetings in which we prepare for meetings. Planners are now committed to prepare for the pre-meeting and then replan for the real meeting, all while trying to keep stakeholders aligned. It is not uncommon for an IBP meeting to take four to eight hours.
• Inability to deal with disruptions. In IBP cycles that span many weeks, executives cannot respond quickly to market disruptions. COVID exposed the inability of companies to make rapid strategic choices, such as in days or weeks – impactful decisions such as closing a factory, entering or exiting a product category, or reallocating limited resources in their supply chain. Some companies actively bypassed IBP by installing executive-led COVID war rooms to more rapidly implement strategic decisions.
• Lacking insights. Meeting notes and actions might be published after every IBP meeting; however, actions and outcomes are often not properly recorded, not measurable, or not easily accessible. This omission limits continuous learning and restricts the creation of corporate insights around decisions. Was the plan the right plan and the decision the right decision under

the circumstances? Was the right action taken by the properly authorized person? The authors believe these shortcomings can largely be addressed by aligning the IBP process with Wave 3 planning technology.

MACHINE-CENTRIC VS HUMAN-CENTRIC DECISION MAKING

While IBP has become nearly synonymous with “the S&OP monthly cycle,” there really is no compelling justification for this monthly frequency. By automating aspects of the process, Wave 3 technology can decouple decision making from this arbitrary cadence, allowing planners to concentrate more fully on goal setting and oversight of policies and systems, while providing the knowledge augmentation for these human-centric decisions.

Planning Horizons

This new technology will support decision making in different planning horizons. In earlier Foresight articles (Van Hove, 2020, 2021), Niels distinguishes decision automation from knowledge augmentation and examines the relative desirability of these features across different planning horizons. Longer planning horizons, for example, require human-centric decisions, while shorter-term operational decisions are more amenable to automation.

Figure 3 summarizes the possible enhancements to IBP from Wave 3 technology. The key is to segment IBP along decision type and then differentiate between machine-based IBP, which runs under highly automated planning and decision making with human involvement only by exception, and human-centric IBP, which will benefit from decision augmentation and human-machine collaboration.

Figure 3. IBP Segmentation by Planning Horizon, Automation, and Augmentation

Machine-Centric IBP Decisions

As shown in Figure 3, machine-centric decisions will be well suited for automation of both Sales & Operations Execution (S&OE) and Operational IBP.

In the short-term horizon (0-3 months), operational decisions are frequent, repetitive, low value, and granular (e.g. at the SKU/location level). These include demand and supply balancing, inventory change, order purchase and allocation, stock transfer, and product pricing. Such decisions require limited human alignment and sign-off. Hence, they can be automated to sense change or disruption in the supply chain and respond to it. Humans will still set policies and rules to structure the automated process.

Operational IBP decisions (4-12 months ahead) are less frequent and time urgent than in the S&OE horizon, but still have low impact/value and apply at a detailed level so that planning and decision making can be automated as well. Figure 3. IBP Segmentation by Planning Horizon, Automation

Demand-planning tasks, including data gathering and cleansing, statistical/ML forecasting, and detection of variances to targets and budgets, can be actioned automatically with only limited human-machine collaboration required. Human input will be required to set goals and policies to help the machine optimize promotions, price settings, and phasing of new-product introduction to reach certain targets. Supply-planning processes in this horizon can be partly automated. Due to the longer decision horizon and higher uncertainty, supply-planning decisions become more probabilistic in nature, and so will be amenable to medium levels of automation and augmentation.

Based on demand input, optimized supply plans can be automated to run concurrently across an entire network and pro – vide planning outputs for distribution, replenishment, and production. Even changes to planning parameters such as lead times, safety stocks, capacities, and batch quantities can be automatically updated, and gaps to service levels or cost structures in the supply chain will be detected and actioned automatically.

Many operational decisions that might look complex can be solved through business rules, machine learning, and probabilities. For example, when planning to introduce a new product to the market, the system can calculate a probability of hitting the introduction date and so automatically update the phase-out planning of the predecessor product.

For both machine-centric IBP segments, while many decisions can be automated, decisions above a certain value or probabilistic threshold will require crossfunctional collaboration and sign-off. Yet cross-functional meetings can become more agile by acting upon exceptions suggested by the machine.

Human-Centric IBP Decisions

Planning decisions in this category address higher levels of aggregation (e.g. product families) and normally have high impact/value. Since these decisions are more complex, they require human alignment and sign-off and so are less amenable to automation. The role of the machine is to support the planner in decision making, resulting in human-machine collaboration.

The machine can support the planner with probabilistic simulations and what-if scenarios, network or price optimization, multisourcing, new-product development, and innovation updates. It will detect gaps in revenue, margin, or cost versus targets and budgets automatically and provide recommendations for gaps closure. These recommendations will be actioned functionally for the most part, as pre-agreed policies and functional tradeoffs have been incorporated in the recommendation. In this way, IBP will morph into an aspect of business as usual rather than a distinct and dogmatic process.

At the strategic level, decisions are complex, infrequent, and high in granularity, as well as in value/impact on the business. They can also be cultural and value-based, requiring human alignment and sign-off at the executive level. These decisions are too complex and important to be automated, and they likely require human capabilities that the machine doesn’t possess. The human-centric nature of strategic IBP decisions means that a greater emphasis should be placed on governance – that is alignment, decision rights, rewards, and culture (Sorenson, 2020) – instead of automation.

Machines, however, can develop recommendations for executives around strategic scenarios, mergers and acquisitions, network risks assessments, geopolitical war games, category changes, onshoring versus offshoring, and large CAPEX in – vestments, thus providing probabilities and financial impacts.

A NEW SET OF IBP CONCEPTS AND ASSUMPTIONS

Segmented by decision type as is Figure 3 and supported by new Wave 3 technology, the new IBP will improve a firm’s ability to address many traditional IBP challenges and create structures that are far more aligned with current times. These are summarized in the table below:

To start the transition to this new type of IBP, we need to establish a fresh IBP mindset, supported by new aspirations and assumptions. We suggest replacing the foundational concepts discussed earlier by the following:

Data and Analytics

• IBP will automatically gather and cleanse relevant internal and external data and distribute these across the business in one common data layer, near real time. This will permit sales to change prices and demand forecasts up to a certain threshold (say 25%) w/o consulting finance or operations.
• It will automatically provide descriptive and diagnostic analytics and make these available at any time throughout the business.
• Planners will guide the machine with policies, goals, and targets.
• Planning will take place continuously and require human input only upon matters that exceed certain impact or complexity thresholds.
• The machine will identify variations and gaps to plan and automatically action these up to a defined threshold. Above that threshold it provides recommendations to be decided upon by humans.

Process & Meetings

• The frequency and duration of IBP meetings will be driven by decision requirements, not process requirements.
• IBP teams will be incentivized to provide strategic business scenarios and improve decision making, not to police process compliance.

Decisions & Execution

• IBP decisions and impacts will be recorded digitally, applied to self-learning, and accessible to all IBP stakeholders.
• Such decisions will be executed automatically where possible, as all con[1]textual information available will be stored.
• Human adjustments made to the system-generated recommendations will benefit from feedback, reducing the impact of human biases.

For a company to transform from a traditional planning process to one segmented by human and machine decision making can be quite a journey. Changes will be required to operating models and systems, roles and organizational structure, rewards, and incentives. Additionally, planner capabilities will need to adjust to collaboration with the machine. Still, it can be done.

During COVID, the global CPG giant Unilever compressed its planning cycles from four weeks to one week, then to three days. It now combines human and machine aspects in its organizational structure with machine reporting to a human. It has clearly defined when the human is in the loop, on the loop, or out of the loop in decision making. Unilever’s approach may pave the path to the new norm for IBP.

The traditional IBP process and supporting Waves 1 and 2 planning technologies are a generation old and incapable of effectively adapting to today’s challenges or taking advantage of innovations in technology. Long overdue is a reset of traditional processes to approach IBP from a decision perspective. Supported with today’s systems of intelligence, we can assess where the machine should automate decisions and where the human will guide the machine and lead in decision making. We can then integrate IBP into day-to-day business meetings, rather than maintain it as a separate planning process.

3 thoughts on “ Integrated Business Planning: A New Narrative for an Old Process ”

Neils, always good thoughts form you on such an important topic ! I think the challenge of synchronizing basic supply chain execution data between entities / enterprises / nodes must be addressed first before even simple S&OP plans can be effectively and reliably deployed. Decentralized network, secured, distributed data systems is a key answer to this long standing need as nearly all current ERP and supply chain data only collects and stores deep water wells of independent data with no capability and worse yet INTEREST in connecting. The interesting phenomenon we have experienced with clients ( helping big and small companies with S&OP / synchronize their supply chains) is once the data is reliably and when in place so many great decisions can be made quite simply with the human mind and instincts. We believe greatly in power of human instinct, decision making and statistics and that machines are not decades but hundreds of years behind even a solid human trained in basic finance and production planning concepts. Here is a very basic concept of a 2×2 matrix explaining collaboration. A concept have been using for 30 years but recently reintroduced by Gartner. It is the different place different time intersection that is so badly need in supply chain tech. We have suffered through 15 years of IT distraction that “cloud” automatically address this need and it does not at all. It is the decentralized network, secured, decentralized distributed database capability that enables this business to business collaboration and then breaking S&OP free to the masses ! https://soptime.wordpress.com/2021/09/02/collaboration-framework-for-supply-chain-synchronization/ Keep up all the great work ! Maybe we can work together on a few projects soon !

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By  Niels Van Hove , Supply Chain consultant, Mental Toughness coach and S&OP/IBP expert at  Truebridgese

As S&OP found its origin in the supply chain, IBP is often biased with supply chain terminology and reasoning. It can be argued that current IBP development is still driven by a supply chain bias. With this lack of diverse thinking, IBP innovation runs the risk of being not truly ‘integrated’.

Contrary to most current defined maturity phases of IBP, one can find on the internet, we also can define IBP maturity phases from a more strategic angle.

Many experts agree that IBP has a monthly check and balance with the budget and the strategic intentions of a business. Therefore, a well-executed IBP cycle will provide monthly visibility and measures progress against business objectives and strategy in the long-term horizon. Furthermore, we can say that a business strategy and the required strategic resources and capabilities have the goal to get a company closer to its vision.

According to Collins and Porras, a company vision exists from its core values, core purpose, a BHAG (big, hairy, audacious goal) and a vivid description.

• The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfill a strategy, you can’t fulfill a purpose.
• Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations.

Well defined, integrated and truly lived, purpose and values will drive companywide behavior. Imbedded company behaviors will drive a sustainable company culture, which will last over time.

A well-defined achievable BHAG with a vivid description provides employees with an envisioned future they can identify with and which creates an emotional attachment, which makes them go the extra mile. As CEO Bob McDonald says on the emotional component and innovation at P&G; ‘People will innovate for financial gain or for competitive advantage, but this can be self-limiting, there is a need for an emotional component as well – a source of inspiration that motivates people‘.

If a company wants to track its budget and strategy and we use this vision framework and IBP as the planning process to support the business, IBP can be defined with the following maturity phases:

1. Integrated planning:

In this phase, companies start to focus on integrated planning between previously siloed functional areas. Some functions are more advanced than others. A company might have focused on the state of the art finance processes and systems, but doesn’t reap the full benefits of that due to lack of integration of other functional areas into the finance process. Some integration exists, but not across all functional area’s and there is not enough integration with finance to make a monthly financial prediction on EBIT level in the long term horizon. S&OP as most define it will be in this phase.

2. Dynamic budget planning:

In this phase, enough functional areas plan in an integrated way for the process to provide their input to the P&L to create a fully-loaded forward projected P&L. Finance understands the ‘volume’ input and the other functional areas understand the financial ‘value’ planning. This will provide the company visibility on how it is tracking versus the budget or annual operating plan on a monthly basis on EBIT level.

Why EBIT level? Because I heard too many times in a boardroom the argument, when only gross profit was on the table; ‘we can’t decide on this because we don’t have EBIT a number’ . We can also expect these companies to deliver monthly balance sheet and cash flow prediction. For these companies, there is no separate budgeting or forecasting cycle. Every month can be the budgeting cycle. Dynamic indicates that opportunity and risk scenarios across all functional areas are integrated into the financial projection.

3. Dynamic strategy and capability planning:

In this phase, the company has defined its strategic goals, measurements, and targets and is capable of checking and communicating monthly if they are on track to meet the strategy in the horizon beyond the budget. The strategic intent, which can be defined on lower levels like product segment, country or business unit level, will also guide in decision making for decisions on the budget horizon.

The company has also defined its core strategic capabilities to meet its strategy. There are many strategic capabilities possible.  Ideally, a company shouldn’t have more than a handful as if it will define more it will erode the focus on these capabilities. Some examples are:

• Risk management: for companies that have extended and complex networks that are sensitive and dependent on changes in global and geopolitical events. For example companies with global supply chains, but also the Finance industry.
• Innovation: for companies that in a highly competitive market can outpace their competitors based on innovation and new product development. Often seen in the technology industry and CPG
• Commodity trading: for companies that are highly influenced by commodity cycles as the commodities can be more than 80% of the COGS of their core products. For example, food & beverage companies that have crops and livestock as core raw material.
• Demand is driven supply chain: for companies that can get the competitive advantage from driving their business from the front end of the supply chain. For example food, beverage and consumer package industry. Often in retail and consumer environment, which are promotional driven and where POS information is available,
• Knowledge management: for companies that are highly dependent on knowledge workers and the exchange of knowledge between people and business units. Companies that have IP to integrate, sell and protect. For example Consultancies and software industry.
• Supply exploration: for companies that have to spend high amounts of capital to find new or increase the supply of their core product. For example the oil and mining industry.
• Collaboration:  Collaborative IBP can be a separate phase for companies that see the strategic advantage in collaborating with their suppliers and customer in the longer horizon and therefore want to integrate their business plans. For companies that have the power in the supply chain through size or uniqueness of offering this will most likely not be a strategic focus.

The list can go on and on with Technology, Sustainability etc. Once a company has defined its strategic capabilities and has defined goals, measurements and targets for these capabilities, it needs plans to implement or improve these strategic capabilities. An update on status, progress, risks and mitigations for those plans will be part of the IBP cycle in this phase. Dynamic indicates that sensitivity analysis around the plans to reach the goals of the strategic capability is part of the update.

4. Integrated vision & purpose:

In this phase, companies have a well-defined purpose, values and an achievable BHAG with a vivid description that people can identify with and which create an emotional attachment. The company aims to integrate this with the IBP cycle.  A company can decide not to pursue strategic opportunities because doing so would compromise their core purpose or values.

A large multi-billion dollar beverage company, for example, decided not to enter the very lucrative market of premium RTD’s (Ready to Drink) alcoholic beverages because the alcohol content was too high. Although the opportunity was achievable and margins were very interesting, the alcohol content would not be in line with their core purpose of ‘bringing more sociability and wellbeing to our world’ . The purpose guided decision making in the strategic horizon.

The company values and the emotional attachment will be tracked in the monthly IBP process and have actions, goals, and measurement. Executives follow progress to understand if employees believe and identify with the companies values, BHAG, and purpose and show emotional attachment. This can be done by 360 degrees feedback, engagement surveys or roundtable discussion between executives and employees. Executives also have to lead by example in behaviour and actions. Their own behaviour will have goals and measurements and progress is tracked,

For all phases, communication is important , although it can be argued that it’s most important when developing an emotional connection. An IBP document on the key decision, outcomes, progress and wins in the IBP cycle can be communicated to a well-defined stakeholder group in the company. This will both give the stakeholders an understanding of business performance, priorities, improvement opportunities and successes, as well as keep the engagement with the company vision, purpose, and the IBP process.

Executives have to realize and appreciate that this communication document is the results of all the hard work from middle and lower management to gather all required IBP information for the executives to make decisions in the IBP meeting. This communication makes sure the IBP meeting is not seen as a ‘black hole’ which only sucks up information and doesn’t provide feedback.

Once a company masters these four phases, it tracks and plans on a monthly basis the budget, the strategic intent and strategic capabilities, the company values, and purpose and the emotional attachment of the employees. If a company then links these plans with shorter-term control plans and execution, we might call it real Integrated Business Planning.

Would these four phases be IBP innovation?

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What Is Integrated Business Planning (IBP)?

The term today is highly debated between two groups of practitioners: one defines it as the planning process that includes demand review, supply review, product management review, management business review, financial reconciliation, and business strategy. Some view IBP as a broader version of S&OP, which also emphasizes the role of strategic planning. It continues to evolve.

Integrated Business Planning

How to Integrate Planning Processes, Organizational Structures and Capabilities, and Leverage SAP IBP Technology

• © 2018
• Robert Kepczynski 0 ,
• Raghav Jandhyala 1 ,
• Ganesh Sankaran 2 ,
• Alecsandra Dimofte 3

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SAP LABS LLC, Tempe, USA

Walldorf, germany, sap switzerland, regensdorf, switzerland.

• Describes the Integrated Business Planning from the perspective of business and technology practitioners
• Covers in one book people, process and technology integration as key to success
• Considers operational, tactical and long term process implications

Part of the book series: Management for Professionals (MANAGPROF)

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Managerial insights for AI/ML implementation: a playbook for successful organizational integration

Artificial intelligence: how leading companies define use cases, scale-up utilization, and realize value

Changing with Grassroots Business Intelligence at a Large Global Manufacturing Firm

• sales and operations planning
• business transformation
• demand planning
• demand management
• finance in sales and operations planning
• organizational structures
• capabilities

Table of contents (9 chapters)

Front matter, recent past disconnected planning.

• Robert Kepczynski, Raghav Jandhyala, Ganesh Sankaran, Alecsandra Dimofte

Why Move to Integrated Business Planning

What makes integrated business planning, how to run ibp: use cases, how to manage organization and capability change, how to enable change with sap ibp technology, how to measure transformation success, how to build transformation path, “quo vadis” integrated business planning, authors and affiliations.

Robert Kepczynski

Raghav Jandhyala

Ganesh Sankaran

Alecsandra Dimofte

About the authors

Robert Kepczynski has more than 20 years’ experience in supply chain management and technology. Robert does assess, design and implement people capability models, process design and delivers efficient technology solutions. He is specialized in supply chain planning processes and technologies. Robert took business roles in plant supply / production planning and sequencing, inventory and materials management, warehouse and duty operations, costing and budgeting, in market IBP and S&OP, distribution planning, and in regional & global S&OP, forecasting, demand planning and demand management, and process ownership. Robert led x-functional transformation programs delivering functional optimization and differentiation. His production plant, market and global process experiences was valued in the 2nd worldwide SAP IBP implementation, which has started in 2013. This project proved that Robert has heart, head and hand for IBP.

Raghav Jandhyala is a Senior Director of ProductManagement at SAP for SAP IBP responsible for sales and operations planning and unified planning processes and best practices in IBP. Raghav has over 16 years of experience in different fields like Supply Chain Management, Retail and Banking along with strong technical background in development and adoption of business applications. Raghav held various roles in his career as business consultant, development architect, solutions manager and product manager. Raghav is responsible for developing the roadmap for S&OP solution and works with multiple IBP Customers for new innovations and as a trusted advisor for their global rollouts.

Ganesh Sankaran is a Supply Chain Management technology practitioner. Ganesh helps clients solve business problems and generate value from their supply chain processes, particularly in the planning domain. Ganesh possesses a skillset that combines deep theoretical insights in SCM and rich implementation experience in SAP solutions further enriched by around seven years of prior software development experience.

Alecsandra Dimofte is working for SAP where she started as a supply chain management consultant. Alecsandra was involved in several IBP / S&OP implementation projects which allowed her to play different roles, from integration consultant to functional design lead. Alecsandra contributed to the development of the S&OP practice within her delivery unit and to the growth of the IBP online community by active participation in the space dedicated to IBP.

Bibliographic Information

Book Title : Integrated Business Planning

Book Subtitle : How to Integrate Planning Processes, Organizational Structures and Capabilities, and Leverage SAP IBP Technology

Authors : Robert Kepczynski, Raghav Jandhyala, Ganesh Sankaran, Alecsandra Dimofte

Series Title : Management for Professionals

DOI : https://doi.org/10.1007/978-3-319-75665-3

Publisher : Springer Cham

eBook Packages : Business and Management , Business and Management (R0)

Copyright Information : Springer International Publishing AG, part of Springer Nature 2018

Hardcover ISBN : 978-3-319-75664-6 Published: 12 June 2018

Softcover ISBN : 978-3-030-09292-4 Published: 11 February 2019

eBook ISBN : 978-3-319-75665-3 Published: 31 May 2018

Series ISSN : 2192-8096

Series E-ISSN : 2192-810X

Edition Number : 1

Number of Pages : XIII, 265

Number of Illustrations : 237 b/w illustrations

Topics : Business Process Management , Information Systems Applications (incl. Internet) , Sales/Distribution , Supply Chain Management , Business Information Systems

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Integrated Business Planning (Advanced Sales & Operations Planning)

The integrated management process known as Sales and Operations Planning (S&OP) has evolved over three decades. In recent years it has taken a major evolutionary step for many companies that have realized the need for, and the benefits of, operating with one integrated management process. Integrated Business Planning is the name many companies are using to describe a strategic management process integrating all the functional elements of the business, picking up where traditional S&OP leaves off. This paper discusses the integrated management process known as Sales and Operations Planning and its more mature version, Integrated Business Planning. It is written to give management and leadership a quick synopsis of this integrated strategic management process.

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The Evolution of Sales and Operations Planning (S&OP) to Integrated Business Planning (IBP)

What is Sales and Operations Planning (S&OP)?

A general understanding of both terms is required to understand the evolution of Sales and Operations Planning (S&OP) to Integrated Business Planning (IBP). In our article Why Do Sales And Operations Planning Projects Fail? we already had a look into the definition of S&OP and the most likely obstacles for a successful implementation. In the following, a short re-cap is given about the definition of S&OP, and in addition, a brief look into the origins and the development of S&OP throughout the decades.

In a nutshell, Sales & Operations Planning (S&OP) is a business management process to balance demand and supply, integrate financial planning and operational planning, and link high-level strategic plans with day-to-day operations.

S&OP works as a lubricant between the different departments involved, their functions, and different plans, merging them into one integrated set of numbers.

The below graphic “Sales and Operations Planning in a nutshell” summarizes the definition, framework, typical focus areas, and challenges of an S&OP process.

The History of Sales and Operations Planning (S&OP)

Originally, Sales and Operations Planning has emerged from the discipline of material requirement planning (MRP), a part of production planning, in the late 1970s. Back then, it was first originated by Oliver Wight associates to align demand and supply on a month-by-month basis. Since then, it has constantly evolved in several steps. Although the process is often used to enhance the supply chain, it has become much more than just a process to control and optimize the supply chain.  

As illustrated in the graphic above, the Sales and Operations Planning process developed from being a simple reconciliation between sales plans and operations plans in the early 80s towards the Integrated Business Planning process known today. This was achieved in the first step by adding a balance between demand and supply. Outstanding is that the process has become demand-driven back then, reflecting and focusing on customer requirements rather than production capabilities.

Moreover, finance was integrated into the S&OP process in the late 80s. This meant linking units and value measures, as the finance plan usually deals in values while the operation plan usually deals in units. This was one of the main factors that made Sales and Operations Planning a breakthrough in the 1980s since business planning, sales planning, and production/procurement planning were usually separated functions.

The process kept changing and constantly adjusting, coping with the challenges and requirements from evolving industries and customer requirements, faster-moving environments, internationalization, and increasing complexity in worldwide supply chains. In the late 90s, Product and Portfolio Management was getting more into the focus of S&OP. While in the last two decades, scenario planning, supply chain collaboration, and optimization were put more into focus, facing the ever-growing market challenges in a more dynamic environment with the latest IT capabilities and solutions.

These days, S&OP is a monthly occurring integrated end-to-end business process led by the executive management to steer the operative execution in consensus with the company’s strategic plan over a horizon of at least 18-months.

Thereby, the process still focuses on classic objectives of supply chain management such as service level, customer satisfaction, and cost reduction but is also aligned with the business plan and its goals. This is, and always has been, one of the objectives of Sales and Operations Planning!

Having this background and statement in mind, the big question arises: What is the main difference to the famous term “Integrated Business Planning (IBP)” since Sales and Operations Planning (S&OP) already sounds pretty integrated into the overall organization.

Sales and Operations Planning (S&OP) vs. Integrated Business Planning (IBP)

During the last years, the term “Integrated Business Planning” (IBP) (during its emergence, sometimes also called “Advanced S&OP”) has come up more and more frequently, originally impelled by Oliver Wight. These two labels represent the same: An evolved S&OP process.  

But what does evolved mean, what is the key differentiator, the changes and enhancements, and how does this process look?

According to Oliver Wight, the background of IBP lies within the current practice of S&OP in many companies. Research studies have shown that in many companies, Sales and Operations Planning is seen as a process to balance the supply chain and not accepted or operated as a management process for steering the whole business. These companies are stuck in a certain maturity stage of their S&OP process, and they are not willing or able to put the necessary effort into reaching the next stage.

We have seen this behavior in many S&OP projects, and most likely, you have the same experience. With the start of an initial S&OP project, there are a lot of areas to cover, from setting up a first understanding and process to outlining and improving the core processes underneath, such as Demand Planning, Supply Planning, and Inventory Management. Typically, the focus is on volume planning rather than value planning. Ideally, the first link to value planning is created by integrating price and cost information, giving the flexibility to translate volumes into value and vice versa. However, even this step is often omitted due to compliance regulations in the finance department, fully stretched project resources, missing structures, etc. The possible reasons for putting this topic aside, in the beginning, are numerous.

Although supply chain management is the origin of Sales and Operations Planning and is still a vital part, the true intent evolved. The objective should be to use S&OP as an integrated end-to-end management process to steer the organization.

A new name was invented to achieve this objective and reinforce this intention that better represents this process function: Integrated Business Planning (IBP).

We can recite the definition of the IBP process from the definition of the S&OP process: a business management process to balance demand and supply, to integrate financial planning and operational planning, and to link high-level strategic plans day-to-day operations.

This definition is still valid, as it holds all the key objectives of both S&OP and IBP, but the detail in which the objectives are pursued might differ based on the individual understanding.

This leads to the conclusion that IBP is the same as S&OP, at least when the S&OP process is implemented and used with its full potential as an integrated end-to-end management process. Due to this reason, there are some critique voices against IBP, calling it a hoax, selling something already existing under a new name. It makes sense from a marketing point of view, regarding some basic principles of marketing, e.g.:

• The Law of Leadership: “It is better to be first than to be better.”  
• The Law of Category: “If you can’t be the first in a category, set up a new category you can be first in.”  

Following this line of argumentation, IBP is a new way of selling S&OP to implement it with its full potential and focus on establishing the status as a management process to steer the whole organization considering the business strategy.

As so often, the truth lies somewhere in the middle. Although it is often forgotten that close integration with the finance department was foreseen initially, it is in practice an optional step to have in an S&OP process. IBP changes this by “Integrated Reconciliation Meeting,” a must-have and not only an optional meeting.  

Furthermore, IBP focuses even more on linking the strategic and financial plans with the operational plans. While S&OP already moves away from the traditional silo-thinking to a vertical collaboration, IBP has the objective and power to remove these boundaries, completely involving all departments in a collaborative way of working with one set of integrated numbers driven by the same guidelines.

Independent from the label, this should be the objective of a mature S&OP/IBP process. The beauty and simultaneous challenge that both frameworks provide is a powerful management process that must be defined and outlined in detail, based on the individual requirements and challenges of a company and the environment in which it operates.  

Benefits of Integrated Business Planning

A list of gained benefits by transitioning from Sales and Operations Planning to Integrated Business Planning is presented in the graphic below “Improved Benefits from Integrated Business Planning,” based on the book “The Transition from Sales and Operations Planning to Integrated Business Planning. Moving from Fundamental Demand and Supply Balancing to Strategic Management” from Palmatier and Crum (Oliver Wight).

On closer inspection of these benefits, it is again realized that none of these are entirely new. Most benefits include adjectives like “improved” or “more.” The added value in the benefits comes from further focusing on the function of Sales and Operations Planning as an integrated management process. This is done by focusing even more on the financial aspects and strategic integration, such as making the annual budgeting process a significant non-event by leveraging the power of IBP. In this context, extending the time horizon to at least rolling 24 months is often recommended further to improve the connection with the company’s strategy.

Again, you could fulfill these benefits by achieving a fully matured and developed S&OP process. Another aspect of IBP is customer and supplier collaboration. This aspect is much more focused in the IBP approach than in the original S&OP process, but once again not an entirely new concept as the idea did exist before.

Some scholars represent the opinion that IBP provides the strategy. However, at this point, the opinions and views differ if it allows for or supports the strategy. In the end, the power of both S&OP and IBP lies within its flexibility and how the company defines its detailed purpose and agenda.

However, no matter if S&OP or IBP, in the end, it is about making it happen and ensuring execution of improvement levers identified during the S&OP/IBP process. This is where our AIOimpact platform comes in. Learn more on how AIOimpact platform can support the S&OP/IBP process and ensure leveraging the benefits of S&OP/IBP by unlocking the real value of S&OP Execution in our recorded webinar Digitalization of Sales and Operations Planning .

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Transitioning from Sales and Operations Planning to Integrated Business Planning

Over many years, the business management process of choice for many organisations has been Sales and Operations Planning (S&OP). S&OP was originated by Oliver Wight in the early 1980s and although the world has since adopted the language of S&OP, it has not always adopted the fundamental practices which have made it successful.

Practitioners of S&OP continue to find that the quantity, quality, and sustainability of business performance improvements depend on how the process is used. Those organisations which use S&OP as the primary process to manage the business get the most significant and wide-ranging results. For many organisations though, possibly even the majority, their S&OP process has not progressed as the business has matured and markets changed. As a result they have not experienced the true benefits it can bring.

Integrated Business Planning (IBP) is most simply described as advanced, or next generation, Sales and Operations Planning and represents the evolution of S&OP from its production planning roots into the fully integrated management and supply chain collaboration process it is today.

Global recession, political uncertainties, and the coronavirus pandemic have each put planning processes to the test. The arrival of the economic crisis, for example, was so swift, no organisation could sidestep it. However, those which operated integrated processes fared much better during the downturn than those that didn’t. They were able to continue to drive improvement throughout the difficult times and were then ready to meet demand as it returned.

So what are the differences between S&OP and IBP and how are those organisations which have made the transition benefiting?

The evolution of S&OP

To understand the benefits of IBP over S&OP it is helpful to understand the history of its evolution, as shown in Figure 1.

Although S&OP first started to emerge as a concept in the 1970s, the acronym did not enter the lexicon of business planning until the 1980s. This reflected the first real development of the process – gaining the previously non-existent co-ordination between the commercial and supply sides of the business.

Throughout the 1980s further evolution saw the balancing of supply and demand and a focus on inventory control, but it was not until the late 1980s that the crucial development came with the introduction of financial integration to the S&OP process. This is one of the critical success factors of effective S&OP and a key aspect of the evolutionary development towards IBP.

Oliver Wight added product and portfolio management integration to S&OP in the late 1990s and many business leaders describe this as one of the highest value changes they have adopted in the business planning process. Product management is a key aspect of many businesses – for some organisations annual product churn is 80% or more. With conventional S&OP, however, product management is not integrated into the process. This leaves a substantial aspect of the business as a discrete part of planning, often viewed as a separate ‘creative’ process and the domain of R&D or the marketing department.

By the turn of the Millennium, scenario planning had become popular with businesses. This represented a significant progression from simple supply and demand planning, looking instead at the impact of proposed changes on the wider business and making comparisons against strategy. What would happen, for example, if a price change was introduced, not just in terms of profitability but on different demand scenarios and so on?

The most recent development is increased collaboration at the front and back ends of the supply chain – consumers, customers, and customers’ customers, as well as suppliers – and its integration into the process. Part of the challenge with critical suppliers and customers is developing relationships based on trust, and trust can only be generated when people deliver to expectations and to promise. This is dependent on greater reliability in the numbers and IBP does this very effectively.

Over time, the focus of attention on S&OP has been shifting toward a better understanding of the external environment as well as ensuring alignment and synchronisation among the internal functions of the company, which was S&OP’s original objective. The shift toward strategic management is a key driver in the transition to Integrated Business Planning (IBP).

So at what point did S&OP become IBP? It is important to understand that the new name was not introduced to herald the invention of a new process, but to reflect the substantial changes in an existing one. Oliver Wight and its clients started to use the phraseology in the late 1990s. Up to then, organisations were operating what they still called S&OP, but it had become a restrictive nomenclature; to many, S&OP still meant getting sales and operations together to do some planning, even though the potential of the process had already developed way beyond that. In short, S&OP no longer accurately described what the process was capable of.

Consequently, S&OP was failing to even get the attention of the executive, never mind their ownership. Whilst S&OP does not resonate with business leaders, IBP does. This is because it addresses concerns within their worry circles such as integrating and organising people within their businesses. Naturally, most businesses have a disorganised element to them; the objective is to get everybody driving in the right direction and operating to the same plan as quickly as possible (Figure 2). The purpose of an effective S&OP process has always been to achieve alignment, but whereas S&OP was just about aligning sales/commercial with supply, IBP aligns sales, marketing, R&D, operations, logistics, finance, HR; even IT. Whilst it takes time for an organisation to mature into a full IBP process, it’s important to emphasise that you don’t begin with 1970s S&OP and progress to IBP; you start with the ‘latest version’.

As consumer behaviours change within an ever-evolving digital landscape, business planning processes are also developing to aid organisations under pressure to deliver on price, choice, and convenience. Enterprise Business Planning, or EBP, develops the principles of Integrated Business Planning to provide a 21st century solution for creating a competitive advantage. EBP is not a single solution but a set of super solutions for businesses operating IBP at the highest level of technology. It incorporates digital planning capability, linking the global strategy and execution across multiple time horizons.

What are the key factors to consider in establishing a successful IBP process?

1: ownership.

Ultimately, everybody in the organisation needs to be committed to IBP (Figure 3), but that commitment begins at the top. It is critical the business leader not only supports the IBP process, but takes ownership of it and leads it. If IBP is to be the process that runs the entire business, by definition, the business leader must be committed to it; if you fail to gain executive backing for your IBP process, the process is destined to fail. Nevertheless, the evidence suggests that many organisations do not grasp this fundamental principle: a survey conducted by Ventana Research shows that 70% to 80% of organisations which operate an S&OP process do not do so at the executive level; and Oliver Wight’s own poll shows that in half of some of the world’s best known organisations, the business leader does not lead the business management process. It’s not about getting the business leader to sign up to a process, it’s about the leader saying, ‘this is my process, who’s going to sign up to it?’ This isn’t playing with words. It’s transferring from the ‘dollar and cents’ page to the hearts and minds of the executives – they should be saying ‘this is what we use to run the business; to grow the business; to add value to the business’.

2: Business horizon

Another fundamental of IBP is the horizon (Figure 5). Many organisations still don’t look beyond the next three to four months, or at best the end of the financial year. Successful IBP requires the business to look out over 24 months; indeed most organisations look out over 36 months or more, but 24 months is the minimum requirement. It’s critical too that it’s a rolling horizon and the forward view is continually updated with no stop/start or annual budgeting process, which the rolling forecast renders redundant. Organisations with a greater level of maturity in their IBP process use it to compare performance against strategy – the 36 month rolling plan – and are able to ask themselves whether they are headed in the right strategic direction; are the things they’re doing going to help them deliver against their strategy?

The business horizon

• Identify significant problems and opportunities
• Time to determine the most effective response
• More effective annual planning

Important too is focus – it’s no good having a long-term horizon whilst still focusing on the short-term. Similarly, although we can, and should, learn from the past, that is only a small percentage of the IBP process. As a rule of thumb, at least 70% of time in planning review meetings should be spent looking beyond the next quarter, but our research shows that still only half of organisations do this.

The purpose of the IBP process is not to manage the short term but to focus beyond that (Figure 6); to look at the things which are heading towards the business from further out. IBP demands the business articulates where it wants to be – not just this financial year but the next few years too – and to see the financial gaps between the bottom-up ‘latest plan’ and the top-down business plan that has been financially committed to. It is still all too common for companies not to know what they are trying to achieve until just a few weeks before the financial year begins; this makes it very difficult to succeed. People are striving to deliver something but don’t know what is expected. There is an obvious relationship between the focus of the planning process and ownership of the process – if the focus is on the short term, the executive will not be interested in the process, and if the executive is not involved, the focus can only be on the short-term because those who are involved can only make short-term decisions.

Of course the long-term focus of IBP does beg the question, what about the short-term? And it’s a particularly pertinent question given continued economic and market volatility.

There is, and always will be, a need for different planning horizons (short, medium, and long-term) to be used at different levels within an organisation. Of course short-term planning and re-planning is an essential component of operational execution; without excellence in these areas organisations will fail to deliver the optimum results, both in regard to customer service and cost. But that is not the purpose of IBP. We call the short-term weekly governance process Integrated Tactical Planning (ITP). This process defines a way of executing the IBP plan whilst managing and communicating the changes that inevitably happen. The outcome is more time for senior managers to spend on strategy and the longer-term horizon.

ITP runs in parallel with IBP, feeding the individual process reviews. Companies who mistakenly use the monthly IBP process to synchronise the short-term are losing out on two fronts: it is impossible to resynchronise the short-term quickly enough, and they are missing the opportunity to use the process to regularly synchronise the medium to long term.

The role of IBP is to align all the individual functions of the business (marketing, operations, R&D etc.) to the direction in which the company is heading; the plans it has to get there; and the things it is doing based on ‘current reality’.

4: Managing behaviours

As we’ve already discussed, the first challenge in implementing an IBP process – or transitioning from S&OP to IBP – is for the leadership team to take ownership of the process and commit to a new style of running the business. Then comes the sizeable challenge of overcoming the traditional thinking of operating in functional silos, and to integrate all key areas of the business. Critically, IBP aligns behaviours. One of the most common behaviours in organisations is under-promising and over-delivering because people know that will get them a better bonus or a pat on the back from the CEO. Where people are pressurised into this particular behaviour, they are encouraged to commit to things they don’t believe in. Those behaviours have to change, and the only people that can drive that change are the members of the executive team. Without change, people will start second guessing, and that leads to the creation of multiple sets of numbers, which means by the time you get to the short-term, it’s impossible to determine what is going to happen. The truth is that short-term volatility is often a result of people not paying attention to what is really going to happen or being in denial because they don’t have a definitive set of numbers to work to. It isn’t uncommon for the executive team to dismiss the bottom up numbers from their people, because they refuse to believe the truth of the fact that the plan isn’t going to be delivered; by over-writing the bottom-up plan they create the short-term volatility themselves. What is important for the leadership team to realise is that IBP is not a process for gamesmanship. Sandbagging or overly-optimistic projections are inappropriate and harmful to business performance. IBP is about communicating and discussing reality ‘as we know it’. With IBP, management is expected to either execute the consensus plan or communicate that the plan cannot be met. The principle of ‘bad news early is better than bad news late’ applies.

Keys to success

As the chart in Figure 7 shows, effective IBP requires the interaction of people and behaviours with processes and tools. We need these tools for IBP and there are a number of good IT tools on the market, which are very effective at supporting people in an IBP environment, not just for basic planning but their capability to financialise plans. But the hardest thing to achieve is behaviour change and if you don’t tackle it you will fail. Behaviour change comes from involving the right people at the right time in the right process, which is designed to achieve the right things.

The importance of product & portfolio management

As discussed previously, product and portfolio management are key components in the development of S&OP into IBP. In the product management review, the focus is on product planning: analysing the product lifecycle; understanding where products are in that lifecycle; and optimising the portfolio to determine which products should be introduced or phased out. The review should analyse the product funnel in terms of the health of the pipeline – split by innovation or renovation, depending on the type of industry you’re in – plus how well projects are being managed. Its purpose is not to analyse individual projects but to understand how the business is performing against the overall pipeline; how to manage the pipeline and project status; and how to prioritise.

The key output of the product management review is an updated product plan: changes within the pipeline and portfolio need to be communicated to the rest of the business – what are the new opportunities and vulnerabilities for the demand plan; what are the key changes in supply requirements; and is alignment to the business and product strategy assured? The product management review provides an understanding of what this means in terms of the financial projections; what revenue is coming from ‘new’; how healthy is the pipeline and portfolio; and what should be rationalised in the product tail? The outcome of the review is therefore a clear understanding of the current product and portfolio management plan within the company. Most importantly, there is now clear visibility of the activities being undertaken within this core process of the organisation and the impact of these on the business plan and strategy.

The Oliver Wight Integrated Business Planning model

Figure 8 is the process model used to depict the IBP review cycle. There are five steps in the monthly process. These are not a series of discovery meetings but a continuous process of orchestrating those who are business-accountable to review, present, and communicate progress and change. The reviews must be action-oriented, and they demand rigorous preparation to identify issues and scenarios for consideration in advance of the meeting. Then decisions can be made, and revised plans agreed, before they are made visible across the entire integrated process. The meetings are diarised from the outset and those involved have to prioritise the dates – nothing should be more important; after all, this is the management process running the entire business. The cycle begins every month with a product/ activity/ portfolio management review (depending on the nature of your business). Moving then, to the demand review (revenue and volumes). Next to supply, which needs to respond to the demand plan – in effect, a formal request from sales and marketing to the supply chain to make the relevant materials and capacity available, at the time they anticipate the customer will require them. At this point demand is understood and product management has been reviewed, so the key goal for supply is to deliver at the right cost. The fourth step is the integrated reconciliation process, which focuses on the gap between current performance, and the strategy and business plan; its purpose is to make sure good decisions are made at the fifth and final step, the management business review, which is the domain of the leadership team. In matrix organisations, there could be multiple IBP processes which run concurrently (never sequentially) up through the organisation.

Integrated reconciliation

This is where S&OP truly transcends into an integrated planning process. It is fundamental to IBP that appropriate decisions are always made at the lowest possible level. Gaps and their implications should be identified and understood at the product, demand and supply reviews, so the leaders of those reviews can make decisions and put forward recommendations to bridge those gaps. Thus, the business is continually optimised and re-optimised. This comes together at the integrated reconciliation review, so decisions and recommendations can be made to shape the agenda for the management business review. Another key requirement of integrated reconciliation is to understand the status of strategic activities and other programmes that do not naturally fall out of the product, demand, and supply reviews but which have a significant impact on the business (an ERP system upgrade for example); to know where they are, if they are on budget, and whether there is enough resource to manage them.

The role of finance

It is typical of conventional S&OP processes that finance is not at the table, and that financial plans and S&OP are not fully integrated. Whilst with S&OP, operational plans will come from the demand, supply, and product steps, there is often a parallel but separate financial planning process which results in multiple sets of numbers, lack of trust, sandbagging, and bias. Research from Ventana shows that only 52% of organisations have any sort of meaningful integration of plans, whilst our own study reveals that just 16% have fully integrated plans, whilst 42% have integration with financials.

With IBP, finance must have a role throughout the entire process. Within the reviews, as well as supporting processes, finance has to ensure everybody understands the financial implications of the bottom-up plans and the overall health of the business: in the demand review what is going to be sold to customers in terms of revenue and margin; for supply, what is the cost of fulfilling demand? And in the management review step, finance must be able to make a full assessment of business health over the rolling 36 month horizon – and identify gaps compared to the financial plan, the business plan, and the strategy. This assessment should include P&L projections, revenue margin, the cost implications of plans, cash flow, and income. An important side issue is that, when there is credibility in demand, supply, price, and cost data, finance is free to do value-added financial analysis instead of just forecasting.

Information and documentation

The importance of documentation, information, and written plans is ever increasing, and this is an essential deliverable from the IBP process. Deciding which information is critical to IBP should again start at the top. The key is for the executive to understand which information they need in order to make real decisions that help influence the future performance of the business. Real understanding of markets, customers, internal capabilities, as well as strengths and weaknesses is vital to allow the formulation of a quantitative and qualitative plan with a clear understanding of the impact they will have, so the management team is in a position to truly optimise the business.

How is the success of IBP measured?

Ultimately a successful IBP process will bring a substantial return to the bottom line, but success is also measured through the execution of the business plan in a cohesive and efficient manner, right across the organisation – so the predicted results for the business can be achieved. IBP allows the leadership team to get a realistic view of where the business is planning to be, and make real decisions ‘now’ to influence that position. This enables top line growth as well as cost efficiency through early action in preventing loss of business and exploiting new opportunities. Many executives speak of control of the business; understanding the business; visibility of expected business outcomes; and business growth. Also, once the business is under control, IBP becomes the perfect foundation for the deployment of continuous improvement activities, so the executive can focus on eliminating waste too.

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How Integrated Business Planning helps you set, track, and achieve targets in CPG

Integrated Business Planning (IBP) is a strategic framework that is being increasingly adopted by companies in the consumer-packaged goods industry. It supports these companies to align their business objectives with operational capabilities. At its core, IBP in the CPG context involves a comprehensive target-setting and planning process that encompasses all aspects of an organization’s operations, from volume forecasting to financial outcomes. 

The significance of integrating targets into IBP can hardly be overstated. It ensures that all functional areas of the business are working towards common goals, facilitating strategic alignment and performance tracking. By embedding targets into the IBP, companies create a cohesive roadmap that not only outlines their aspirations but also provides a clear path to achieving them. 

In this blog post, we will explore the nuances of IBP within the CPG industry, highlighting the importance of target integration for strategic alignment and the impact it has on performance tracking. From setting actionable targets to translating volume forecasts into financial realities, we will explore the key components that make up an effective IBP strategy.   

1. CPG target setting: defining clear and actionable goals   

To effectively translate corporate targets into tangible results, it’s essential to understand that these targets typically stem from broad organizational goals. For instance, a company might aim to expand its market share or increase revenue for specific product categories within certain regions. To turn these broad goals into actionable targets , consider the following steps:   

• Specify metrics : Begin by defining the metrics that will measure success. Are the targets focused on sales volumes, revenue, market penetration, or other quantifiable indicators? Clear metrics are crucial for monitoring progress and understanding the impact of your efforts. 
• Segmentation : Dissect the overarching targets into smaller, more manageable objectives. This could involve setting specific goals for different departments, product lines, or geographical markets. Such segmentation helps in aligning the broader corporate goals with the day-to-day operations of various teams. 
• Develop action plans : For each segmented target, draft a detailed action plan. This should include the allocation of resources, setting timelines, as well as outlining the key activities necessary to achieve the objectives. A well-structured action plan serves as a roadmap, guiding the teams towards the desired outcomes.   

Assigning accountability   With the targets segmented and action plans in place, it’s crucial to assign accountability for each objective. Ensure that there is a designated team or individual responsible for the achievement of each target. Clearly defined roles not only foster accountability but also ensure that there is a consistent and dedicated effort towards advancing towards the targets. This approach not only clarifies expectations but also empowers individuals and teams to take ownership of their contributions to the company’s success. 

By following these steps, you can ensure that your corporate targets are not just aspirational but are grounded in a framework that promotes action, accountability, and measurable progress.   

2. Incorporating targets into the Integrated Business Plan (IBP)   

Integrating targets into the Integrated Business Plan (IBP) demands a comprehensive approach. This ensures all business functions align and collaborate effectively towards shared objectives. Here’s how to achieve this integration: 

• Departmental alignment : The traditional planning model in large-scale manufacturing firms is characterized by departmental silos, disparate planning spreadsheets, and lack of cross-functional collaboration. This lack of integration creates a disconnect between strategic, financial, and operational activities, making it hard to understand how the business will meet its targets. Therefore, for effective planning, it is imperative to ensure that all CPG departments—be it marketing, sales, demand forecasting, or finance—are in sync and aligned with the overarching goals. Such alignment is essential as it ensures that each department’s efforts contribute effectively towards the broader business strategy. 
• Resource allocation : Allocate resources such as budgets, personnel, and technology strategically, based on the priorities of the targets. Effective resource allocation empowers each department to have the necessary tools and support to achieve their segmented goals.   

By incorporating targets into Integrated Business Planning (IBP) with an emphasis on aligning departments and strategically allocating resources, CPG companies can forge a cohesive strategy. This strategy capitalizes on the strengths of each department, ensuring all efforts converge on achieving corporate goals. Such an integrated method not only coordinates efforts across the organization but also heightens the efficiency and impact of available resources.   

3. Volume-to-financials forecasting   

Developing a comprehensive Integrated Business Plan (IBP) involves a critical forecasting component that bridges product volumes and financial outcomes. Here’s how to approach this: 

• Volume forecasting : Start with detailed volume forecasts at the most granular level for each product category. While this level of detail is often unattainable without specialized software due to the extensive workload involved, it is crucial for accuracy. Leverage historical sales data, current market trends, and forward-looking sales projections to create forecasts that are as accurate as possible. The granularity of these forecasts matters significantly, as they serve as the cornerstone for all subsequent financial planning. To enhance reliability over time, consider integrating human expertise with self-learning AI capabilities for increasingly refined predictions. 
• Financial translation : Once you have detailed volume forecasts, the next step is to translate these into financial projections. This involves considering various factors such as pricing and promotional strategies, cost structures, and operational expenses. Understanding the financial implications of volume targets is crucial for setting realistic and achievable financial goals. 
• Single source of truth : It’s essential to maintain a unified system for tracking and reporting both volume and financial forecasts. IBP connects data from across the business, creating a go-to place for all the latest information. This ensures that there is consistency and accuracy in performance evaluation and decision-making processes. It also facilitates clear communication across departments and helps in aligning efforts towards the company’s financial objectives.   

By following these steps, you can ensure that your IBP is not just a plan, but a dynamic tool that accurately reflects both the operational and financial aspects of your business. This integrated approach to demand forecasting will help in making informed decisions that drive the business towards its strategic goals.   

4. Tracking performance vs. target in CPG 

Establishing robust tracking mechanisms is crucial for the success of an Integrated Business Plan (IBP). Here’s how to set effective milestones and key performance indicators (KPIs): 

• Establishing milestones : Define clear interim milestones that pave the way towards achieving your IBP targets. These milestones should act as checkpoints that reflect progress and guide the business forward. 
• Key performance indicators : Develop KPIs that are directly aligned with the IBP targets. Ensure that these KPIs adhere to the following criteria: 
• Specific : Each KPI should have a clear definition of what is being measured. This removes ambiguity and ensures everyone understands the goals. 
• Measurable : Utilize quantifiable metrics that allow for tracking progress in a tangible way. This could include numerical targets, percentages, or other data-driven measures. 
• Achievable : Set goals that are realistic and within the realm of possibility. This encourages motivation and maintains morale as CPG teams work towards these targets. 
• Relevant : Align KPIs with the broader business objectives to ensure that they contribute meaningfully to the company’s overall strategy. 
• Time-bound : Assign clear deadlines for achieving each KPI. This creates a sense of urgency and helps in prioritizing efforts.   

By adhering to these principles, you can ensure that your performance tracking is not only effective but also motivates and guides the teams towards the successful implementation of the IBP. Regularly reviewing these KPIs and milestones will also provide insights into areas that may require additional focus or adjustment. This approach allows for a dynamic and responsive approach to business planning.   

5. Regular review and adjustment   

Performance reviews : Conducting regular performance reviews is a cornerstone of maintaining a dynamic Integrated Business Plan (IBP). These reviews serve as opportunities to evaluate progress against targets, analyze data trends, and identify any deviations from the plan. They are also essential for making informed adjustments to strategies, ensuring that the business remains on track to meet its objectives. 

• Data-driven decisions : Decisions should be based on reliable data from the unified IBP system. This approach ensures that performance optimization and target achievement are efficient and grounded in factual insights. 
• Monthly business review cycles : The performance against targets should be reviewed as part of the regular monthly business review cycles. This frequency allows for timely interventions and keeps the business agile. 
• Risks and opportunities outlook : As part of the review process, a comprehensive outlook on risks and opportunities is essential. This involves identifying factors that may threaten the delivery of targets (risks) and those that could potentially enhance performance (opportunities). Standardized calculations are key in this process, ensuring consistency and accuracy in assessing these factors. Additionally, the automated inclusion of these calculations into the overall forecast is crucial, as it streamlines the process and integrates risk management into the proactive planning strategy. Understanding these elements is crucial for proactive planning and risk management.   

Continuous improvement  

Promoting a culture of continuous improvement is vital for long-term success. Encourage teams to actively seek opportunities to refine strategies, enhance efficiency, and realign actions with evolving market dynamics and consumer preferences. This mindset drives innovation and adaptability, which are key in today’s fast-paced CPG business environment. 

By incorporating regular review and adjustment processes, companies can establish a feedback loop. This loop not only keeps tabs on performance but also improves responsiveness and adaptability. 

“Rising complexity isn’t tenable. Now is the time to take drastic action—in the form of a tech-driven end-to-end planning transformation.” — McKinsey & Company  

How Visualfabriq helps CPG companies achieve their revenue growth targets   

Visualfabriq aids CPG companies in reaching their targets by providing an innovative SaaS solution that encompasses Revenue Forecasting & Optimization. This tool simplifies the journey from strategic planning to operational execution and evaluation, with an emphasis on commercial elements. It offers commercial leaders a complete perspective of their P&L , fostering accurate and consistent decision-making through an in-depth forecast , constructed from diverse inputs and managed and optimized within the software. Furthermore, its powerful evaluation capabilities enable ongoing tracking of performance against targets. As a result, it assists CPG teams in pinpointing successful strategies and areas needing enhancement, promoting a cycle of ongoing refinement and adjustment.   

By adopting Visualfabriq’s AI-powered revenue management software suite , businesses can ensure their Integrated Business Planning is well-informed and strategically sound. Additionally, it remains adaptable and attuned to real-time data and insights. The smooth integration of revenue forecasting and optimization within the IBP framework empowers CPG organizations to implement their strategies effectively and meet their revenue targets.  

To see Visualfabriq in action and understand how it can radically transform your business planning,  booking a demo  is a great next step. 

CPG trends insight: Top 5 game changers for revenue growth management in 2025

Strategic Revenue Management in CPG: The key to reliable business growth 

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EY and Sigma Healthcare transform pharmacy supply chain with SAP Integrated Business Planning for Supply Chain solution

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Sydney, Australia – 6 August 2024 – Ernst & Young, Australia (EY) and Sigma Healthcare collaborated to streamline their supply chain operations through the implementation of SAP® Integrated Business Planning for Supply Chain (SAP IBP) solution. This transformation has significantly improved Sigma's operational efficiency, optimised inventory management, increased customer service levels and satisfaction across its extensive network of pharmacies and ordering of over 16,000 products from nearly 400 vendors across the globe.

Sigma Healthcare, a leading wholesale and distribution business in the pharmaceutical industry, faced challenges with manual supply planning processes that were time-consuming and prone to human error. To address these issues, Sigma turned to EY for its highly skilled experience implementing SAP IBP, a solution that seamlessly integrates with Sigma's existing SAP S/4HANA® system.

Katherine Boiciuc, EY Chief Technology and Innovation Officer, Oceania , remarked: “The transition to SAP IBP has been a game-changer for Sigma Healthcare. By leveraging the EY team’s proficiency in SAP implementation, Sigma has not only streamlined its supply chain processes but also set a new standard for operational excellence in the pharmaceutical industry. This project exemplifies how technology can drive significant business transformation and deliver tangible benefits.”

The implementation of SAP IBP has been important in helping to yield impressive results for Sigma Healthcare:

• Enhanced customer trust: Being able to consistently and repeatedly deliver high service standards was a critical milestone in significantly boosting customer trust and satisfaction.
• Increased employee satisfaction: The planning team now spends only 2-3 hours per day on supply planning tasks, allowing them to focus on refining processes and other value-adding activities.
• Reduced inventory: Inventory levels decreased by 20%, minimising wastage and optimising stock management.
• Improved availability: Product availability increased by 5%, ensuring that customers have access to a wider range of essential medicines.
• Enhanced forecast accuracy: Forecast accuracy has improved by 5%-10%, enabling better long-term planning and decision-making.

Martin Hawkins, Chief Information Officer, Sigma Healthcare , expressed his satisfaction with the project: "Since implementing the Response and Supply module of SAP IBP, we have seen improved metrics across the board, including reduced inventory, increased availability and greater efficiencies. This transformation could not have been achieved without the hard work and dedication of both the EY team and our Sigma Operations Planning Team. The new system has also improved our ability to forward plan for events such as supplier closures and public holidays, further enhancing our service to customers.”

Speaking at SAP Australia and New Zealand’s flagship customer event SAP NOW ANZ, Angela Colantuono, President and Managing Director, SAP Australia and New Zealand said: “At SAP we believe technology has a critical role to play in helping organisations to become resilient and sustainable enterprises. By turning to SAP Integrated Business Planning, Sigma Healthcare is not only empowering its workers through simplified processes, but improved planning has enabled it to remove excess inventory and wastage and increase stock availability to more effectively support its community pharmacy network."

The success of this project highlights the importance of strategic collaboration and the adoption of innovative technologies in driving business growth and operational excellence. Sigma Healthcare is now better positioned to support its network of pharmacies and deliver high-quality healthcare services to communities across Australia.

For media inquiries, please contact: Tim Madin EY Regional Strategic Communications Leader, Oceania tim.madin@au.ey.com +61 2 8295 6773

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