Integrated Business Planning

 

INTEGRATED BUSINESS PLANNING (IBP) 

 

1. What is “Integrated Business Planning” (IBP)? Is a process by which commercial resources are translated into financial resources seeking to maximize profits and thus minimize risk. Also helps with safety stock reduction, service level improvements and an overall stock reduction; It is a decision-making process that realigns the tactical plans for all business functions in all geographies to support the company’s business goals and targets.

2. What is “Sales and Operations Planning” (S&OP)? Works as a plan that involves all areas of the organization and integrates marketing plans within the supply chain management process. This is done in order to achieve the objectives previously established and to observe their fulfillment or reformulation periodically.

 3. What are the similarities between IBP and S&OP? Mention and describe them.

Reach consensus on a single operating plan and allocate the critical resources of people, equipment, inventory, materials, time, and money to most effectively satisfy customers in a profitable way. Also executives of the management team hold themselves accountable.

 

4. What are the differences between IBP and S&OP? Mention and describe them. 

The key difference between S&OP and IBP is that IBP starts at the executive level: each month or planning cycle, the IBP process culminates in a Management Business Review in which the executive team reviews the latest projections, potential gaps in achieving business and strategic objectives, gap closing options as well as resource projections to execute the plan.

S&OP processes tend to support medium-term planning horizons that rarely extend beyond 18 months, IBP naturally has a longer time scale that readily aligns with long-term strategic planning, as well as supporting short- and medium-term operational requirements.

5. How does the IBP process work? Describe in detail.

Companies have annual budget cycles based on strategic plans and goals. The annual budget shows the expected income and expenditure for the year.

In the traditional S&OP business, businesses follow a monthly process to predict when a need will emerge in the next 6 to 2 months and the resources it will have to have to meet that demand. If a gap is found between expected demand and available resources, this usually leaves enough time to balance supply and demand and actual customer orders to be dispatched. In IBP, the relationship with the financial performance management cycle is very important. Budget and financial projections should be relevant and integrated with the early stages of the S&OP cycle.

 

6. What are the challenges of IBP? People on the physical supply chain side of a business often speak a different language than the financial side. Supply chain managers often talk about units, products, product families, and finance managers often talk about money, currencies, and so on.

7. Which are the most common difficulties/problems when implementing IBP? Mention them and provide examples. 

• ·   Loss of Control of Software and Services: A sound strategy for software updates and solid testing strategy for both Integration, Browser and the Excel Add-In and any extensions made will help alleviate this issue and bring change into the business in a stable and sustainable fashion.
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• Security: Users who require access to the business data must authenticate themselves and their identity must be verified by SAP Cloud Identity or an on-premises identity provider, depending on the actual system landscape.
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• ·   Lack of Customization: Organizations are used to changing systems at will to make an exact fit for the way that they work.

 

8. What are the advantages and disadvantages of IBP? 

Advantages

●  Alignment and accountability. All stakeholders agree on one plan—and understand their role in accomplishing the goals of that plan.

●  Better decisions and actions. The structured process that comes from a well-built IBP approach enables companies to focus on making better-informed decisions and taking the best action based on those decisions.

●  Increased visibility. IBP enables companies to incorporate insights from supply chain projections, financial projects, and strategic plans. And the more insights incorporated into projects, the better informed a company’s decisions will be.

Disadvantages

·   If the S&OP process was not yet implemented or stable, IBP is a too big step to make

·   Targets and forecast are mixed

·   Information not available

·   Discussion about numbers instead of the underlying assumptions

 

9. What is the importance of IBP nowadays?

IBP helps organizations to take data from supply chain projections, financial reports, and strategic plans and incorporate them into their business plan. The ability to gather data in this way gives businesses more insight into how each part of the supply chain is working individually and as a whole; and this translates into better company performance, correct data, and lower risk.