integrated business planning definition english

What is Integrated Business Planning?

The origins of integrated business planning, how integrated business planning differs from traditional business planning methods.

• How Integrated Business Planning Aligns FP&A with Overall Business Strategy
• Strategic Role of FP&A

Enhanced Decision Making

• Benefits of IBP for FP&A Teams

1. Better Budget Processes

2. improved forecast accuracy, 3. agility and responsiveness, 4. cross-functional collaboration, 5. resource optimization.

• Key Elements of Effective Integrated Business Planning for FP&A Teams

Accurate Demand Forecasts

Scenario planning and sensitivity analysis, performance management, technology and data integration, cross-functional communication.

• How IBP Connects FP&A and Extended Planning & Analysis (xP&A)

IBP as a Bridge

Collaboration across functions.

• Future of FP&A with IBP and xP&A
• Embracing Integrated Business Planning in FP&A

Additional Resources

Integrated business planning (ibp) in fp&a.

Integrated Business Planning (IBP) enhances financial planning, forecasting, decision-making, and strategic alignment between finance and other business functions

Integrated Business Planning (IBP) is a strategic approach that aligns various functions within a company — such as finance, operations, supply chain, and sales — into a unified planning process. It’s designed to ensure that all business units work together towards common goals, improving decision making, resource allocation, and overall business performance.

Within Financial Planning and Analysis (FP&A) , IBP is a potential game-changer. IBP allows FP&A professionals to forecast more accurately, make data-driven decisions, and ensure alignment between financial strategy and the company’s broader strategic objectives. This alignment helps businesses achieve financial targets and drive sustainable long-term performance.

As businesses increasingly rely on Integrated Business Planning, FP&A professionals who can adopt this approach can make significant contributions and create strategic value for their organizations.

Key Highlights

• Integrated Business Planning (IBP) breaks down silos, unifies various business functions, and ensures alignment between FP&A and overall business strategy.
• IBP supports improved forecasting accuracy and scenario analysis so FP&A teams can better anticipate outcomes, optimize resource allocation, and deliver realistic and strategically aligned financial plans.
• Extended Planning & Analysis (xP&A) and IBP expand the scope of traditional FP&A to integrate cross-functional business insights, positioning FP&A professionals as significant contributors to driving strategic value.

Integrated Business Planning has its roots in Sales and Operations Planning (S&OP), a process that emerged in the 1980s. S&OP was initially developed to align production and sales, ensuring that supply met demand efficiently. The process focused primarily on balancing supply-chain management with market demand.

As businesses grew more complex, the limitations of S&OP became apparent. Organizations needed a more comprehensive approach that included financial and business strategies in addition to sales and operations planning. IBP emerged as an extension of S&OP, combining financial planning, strategic planning, sales, and operations planning into a unified process.

IBP stands apart from traditional business planning by breaking down silos, maintaining a dynamic and responsive approach, and ensuring that planning efforts are strategically aligned with the company’s long-term goals. This makes IBP a far more effective approach to modern business planning, particularly for organizations seeking to remain competitive in today’s fast-paced market.

How Integrated Business Planning Aligns FP&A with Overall Business Strategy

Strategic role of fp&a.

FP&A has evolved from a purely financial function to a critical player in shaping and supporting business strategy. FP&A teams are expected to go well beyond budgets and forecasts to driving strategic decisions that impact the company’s long-term success.

IBP as a Strategic Tool

Integrated Business Planning (IBP) empowers FP&A to connect financial goals with the company’s broader business objectives. By integrating financial planning with operational and strategic plans, IBP ensures that FP&A’s budgets and forecasts are aligned with the company’s overall strategy. This alignment helps the organization allocate resources more effectively, prioritize investments, and achieve strategic goals.

With IBP, FP&A teams can use cross-functional data and insights to provide more accurate and actionable recommendations. This data-driven approach enhances decision making across the entire organization, enabling leaders to make informed strategic choices based on comprehensive, integrated financial and operational information.

Benefits of IBP for FP&A Teams

IBP ties operational plans to financial outcomes, enabling FP&A teams to develop budgets that are aligned with the company’s strategic goals. This budgeting process ensures that financial plans are realistic and achievable, based on integrated data from various business functions. Creating budgets that are aligned with strategic objectives, managing financial resources, and setting financial targets that drive business performance.

IBP enhances the accuracy of financial forecasts by integrating data from various business functions. This comprehensive view allows FP&A teams to create more precise and reliable forecasts that reflect the current state of the business. By using up-to-date information, FP&A can anticipate financial outcomes more effectively, reducing the likelihood of surprises and improving overall financial planning.

The dynamic nature of IBP enables FP&A teams to quickly adapt to changes in the business environment. Whether it’s a sudden market shift, a new competitor entering the space, or an unexpected supply chain disruption, IBP allows FP&A to adjust financial plans in real time. This agility helps the organization stay resilient and responsive, making informed decisions that keep the company on track to meet its goals despite changing circumstances.

IBP fosters collaboration between FP&A and other departments, with key benefits in breaking down silos and ensuring that all parts of the organization are aligned. By working closely with teams across the company, FP&A can develop more cohesive and actionable financial plans. An understanding of financial implications by all departments leads to more effective execution of business strategies with teams working towards the same objectives.

Resource planning ensures the company has the necessary financial and operational resources to execute its strategy. For FP&A, this collaborative planning also involves aligning financial resources with capacity requirements to optimize resource allocation and manage cash flow effectively. Ensuring that financial plans account for resource constraints and capacity needs, thereby supporting efficient and cost-effective operations.

Key Elements of Effective Integrated Business Planning for FP&A Teams

Certain elements are especially critical to effectively implement and leverage IBP in FP&A. Key components include demand planning and forecasting, supply-chain planning, scenario planning, performance management, technology and data integration, and cross-functional communication. These are crucial for FP&A teams to effectively implement and leverage Integrated Business Planning within their organizations.

Integrating accurate demand forecasts into financial planning can directly affect revenue projections, budget planning, and resource allocation. IBP allows FP&A professionals to create more reliable financial forecasts that reflect real customer demand and market conditions, ensuring that financial plans are based on actual business conditions. This integration helps in aligning supply chain, production, inventory management, and sales efforts with financial goals, reducing the risk of over- or underestimating future demand and financial projections.

Example: You work in FP&A at a company planning to expand into a new market.

• As an FP&A professional, you collaborate with sales, marketing, and operations on demand planning to gain insights into customer demand in this market.
• By integrating these insights into your financial forecasts, you can develop an expansion plan that accurately reflects future demand.
• This holistic approach reduces risks and increases the likelihood of greater customer satisfaction and achieving the company’s financial objectives for market expansion.

Scenario planning within IBP enables FP&A professionals to prepare for various business conditions by evaluating potential outcomes based on different “what-if” analyses. By modeling various scenarios and sensitivities — such as changes in market trends, pricing fluctuations, or supply chain disruptions — FP&A can assess the financial impact of each scenario and develop contingency plans. This proactive approach ensures that the company is better prepared to handle uncertainties and make informed strategic decisions.

Example: You work in FP&A for a company that is evaluating whether to launch a new product line.

• Using IBP, you can perform scenario analysis and sensitivity analysis by integrating data from various departments, such as sales, marketing, and operations planning.
• You might create multiple scenarios — such as different market adoption rates or varying production costs — and assess how each scenario impacts the company’s financials, from revenue forecasts to cash flow and profitability.
• Additionally, sensitivity analysis can be used to identify which variables (e.g., cost of materials, pricing strategy) have the most significant impact on the outcomes.
• This comprehensive analysis allows leadership to fully understand the potential risks and rewards under different conditions and make decisions accordingly.

IBP plays a vital role in tracking and reporting financial performance against strategic goals. This component enables continuous monitoring of key performance indicators (KPIs) , variance analysis, and reporting, helping to keep the organization on track to achieve its financial objectives.

By continuously monitoring key performance indicators (KPIs) that are aligned with the company’s strategic objectives, FP&A teams can provide management team with timely insights into how well the business is performing. This ongoing performance management allows for quick adjustments to strategies and plans, ensuring that the organization stays on course to achieve its long-term goals.

Effective IBP relies heavily on the use of technology, advanced analytics, and integrated data systems. Advanced software tools that can aggregate and analyze data from across the organization are essential for FP&A teams to develop accurate demand forecasts, conduct scenario analyses, and monitor performance. Advanced analytics, combined with integrated data, ensures that all departments are working with the same information, reducing discrepancies and enhancing the accuracy of financial planning.

Encouraging collaboration and communication across departments is key to the successful implementation of IBP. When finance, operations, sales, and other departments regularly share information and insights, FP&A teams can ensure that financial plans are cohesive and aligned with the company’s overall strategy. This cross-functional communication improves planning accuracy and helps build a unified approach to achieving business objectives.

How IBP Connects FP&A and Extended Planning & Analysis (xP&A)

Extended Planning & Analysis (xP&A) expands traditional FP&A beyond finance, incorporating other business functions like operations, HR, sales, and marketing. xP&A creates a holistic approach to planning, aligning all parts of the organization with strategic objectives.

As companies increasingly value integrated planning, xP&A is becoming essential in modern finance. IBP is essential for connecting FP&A with xP&A, fostering integration, and advancing a more strategic approach to the business planning process.

IBP unifies financial, sales, and supply-chain operations and planning, enabling a seamless transition to xP&A. This integration ensures that all planning activities support the company’s overall goals, resulting in a cohesive approach to business planning.

By breaking down silos, IBP enables FP&A to work closely with other teams, leading to more integrated planning and decision making. This collaboration ensures that financial insights are incorporated into operational decisions and vice versa, enhancing overall operational efficiency and effectiveness.

Future of FP&A with IBP and xP&A

Embrace IBP and xP&A practices as your career in finance evolves. Position yourself to lead in a more connected, strategically aligned FP&A environment by developing skills in:

• Communication and cross-functional collaboration.
• Advanced analytics
• Strategic planning processes

Embracing Integrated Business Planning in FP&A

Integrated Business Planning (IBP) aligns financial planning with broader business processes and strategies, breaking down silos and enabling more dynamic and accurate decision making. By integrating demand forecasting, scenario planning, and performance management, IBP enhances FP&A’s effectiveness and serves as a bridge to xP&A, expanding FP&A’s influence across the organization.

As finance evolves, FP&A’s role will become increasingly strategic. Embracing IBP and xP&A is essential for staying ahead. Integrating financial insights with operational data, leveraging advanced analytics, and fostering cross-functional collaboration will position FP&A teams as key drivers of business success. Early career finance professionals who adopt these practices will be well-prepared to lead in this new era of integrated planning.

Thank you for reading CFI’s guide to Integrated Business Planning for FP&A. To keep learning and advancing your career, check out the following resources:

• Extended Planning and Analysis (xP&A)
• FP&A Modeling Best Practices
• FP&A Manager: Skills and Responsibilities
• See all FP&A resources
• See CFI’s FP&A Specialization
• Share this article

Create a free account to unlock this Template

Access and download collection of free Templates to help power your productivity and performance.

Already have an account? Log in

Supercharge your skills with Premium Templates

Take your learning and productivity to the next level with our Premium Templates.

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.

Already have a Self-Study or Full-Immersion membership? Log in

Access Exclusive Templates

Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.

Already have a Full-Immersion membership? Log in

• United States

Integrated planning: The key to agile enterprise performance management

Facebook Twitter Linked In E-mail this page

Table of contents

What is integrated planning, change as a given: the truth about plans, planning across the organization, the ultimate integrated planning solution.

• Need for real-time insights
• Integrated planning
• Agile and ready organizations
• Integrated planning drives better results

Integration is key to streamlined planning, budgeting, and forecasting. In order to adapt to today's quickly changing business conditions, you need an enterprise performance management solution that creates a single source of truth and delivers speed and agility to your planning process.

Did you know that 33 percent of critical information is delivered late?

The delay of critical information can cause a ripple effect that drives poor decision making and poor results. Today’s business simply cannot afford this type of cost in our customer-centric environment, where data is one of our most valuable assets. To stay ahead of the competition, businesses rely on a solution that can deliver acceleration, agility, and collaboration in every part of the organization.

Integrated planning ensures all parts of the organization are connected and planning is streamlined.

A must in the culture of “now.”

In virtually all industries, work has become more interactive and collaborative. More sharing is required, and more data is available than ever before. Success means integrating information across strategic and operational perspectives, as well as different functional and external sources.

Integrated planning mirrors the modern way we do business — it elevates the critical value of collaboration and cuts through data silos, driving more access to information and faster insights. Leaders use highly collaborative approaches to plan, budget, and forecast. Business planning requires accurate and complete data and buy-in across the entire organization, both from the top down and the bottom up. It sounds simple, but organizational silos are some of the biggest obstacles to accomplishing good work because they hinder critical decisions that strategically steer the business. And at the modern enterprise, silos are everywhere.

Integrated planning starts with a sophisticated planning platform that everyone in the organization can use, creating one source of truth. Data from diverse data sources such as ERPs, CRMs, and HRMs is unified, so users can access the information they need when they need it. Integrated planning helps ensure that plans, budgets, and forecasts are created with a holistic approach. Trends are easier to spot and quickly act on with more accurate and reliable plans. According to analysts at the Aberdeen Group , those organizations that champion data accessibility and collaboration between stakeholders promote organizational accountability and decrease time-to-decisions while increasing revenue. 1

The fact of the matter is that without effective communication, coordination, and collaboration between stakeholders, there is no way to improve organizational performance. 1

Bringing together people, data, and technology leaves organizations well-poised for optimal performance. Most importantly, integrated planning enables employees to be agile in responding to changing circumstances and able make the best decisions possible — all at the speed of modern business.

According to an Aberdeen study, 1 leaders who adopt enterprise performance management tools show a keen understanding of the importance of collaboration. They recognize that to make data driven decisions, they need to make all information accessible by integrating data and breaking down silos. Figure 1 shows steps taken by leaders to democratize data and drive more accurate forecasts.

Leaders put a high value on data integration and accessibility. They see the value of providing real-time data to decision makers and taking the guesswork out of forecasting. These strategies create comprehensive, actionable visibility into overall company performance and drive better results.

Gartner Predicts by 2020, at least 25 percent of large organizations will increase planning accuracy by integrating key operational planning processes with financial planning and analysis. 2

Do you have an integrated view of your data?

I do not feel confident in where to find comprehensive data, even for just my department

I have a good handle on my own departmental data (but only mine)

I have access to my data and that of other departments that impact my planning

IBM Planning Analytics helps Deutsche Bahn unite its global enterprise

Deutsche Bahn AG is a German railway company, and one of the largest IBM Planning Analytics customers with over 6,000 users worldwide. Deutsche Bahn uses IBM Planning Analytics to unite their wide-ranging operations across the globe, ensuring that the most accurate data is being used to create critical plans and forecasts that drive their business forward.

The truth about plans is that they always change. The goal of a dynamic, integrated planning approach is not to create a perfect, fixed plan. It’s to use all the resources available to create the most accurate, flexible and transparent plan possible, using a solution that does more than just plan — it analyzes data, reveals trends, and allows for real-time iteration.

Better, quicker access to data means faster and more informed decisions, laying the foundation for an organization to be agile and ready to pivot when changing business conditions demand.

If you’re reading this and thinking, “great, the finance team integrates all our plans, so we are off the hook,” think again. While we’d like to think that finance is the well-informed master of plans, miraculously weaving them together in perfect harmony and balance, that’s not always the case. In fact, it rarely is. Many, many finance teams rely on the manual collection of data into spreadsheets, which are often disconnected. Remember that much of an organization’s critical planning starts outside of finance and never gets communicated back up the chain or across the organization. There are simply too many top-down and bottom-up communication problems. Spreadsheets only complicate smooth communications. When a finance person is collecting and analyzing budget spreadsheets from across the organization, there is high risk for error in the process of combining and editing, causing confusion at the highest levels. Contradictory data can inhibit a clear picture of what is actually going on and identifying business drivers or detractors. Spreadsheets have proven over and over to be a highly imperfect yet highly common business practice.

With real-time access to data, companies take the guesswork out of planning, decreasing time involved in forecasting and increasing forecast accuracy. 3

Bye bye, silos. Hello, cross-functional planning.

A centralized, automated solution for performance data and planning allows coordination between different parts of the business and enables more streamlined, accurate plans. Leadership needs to understand what is truly driving the business — what causes increases and decreases in revenue or demand. At every level, access to a full range of data is critical to understanding how change (both internal and external) impacts the business. Though planning often starts with finance, other areas of the business can benefit from a dynamic planning solution as well. Let’s dive into a few use cases.

Supply chain planning

The term “operations” covers an enormous range of business activities. But one that’s almost universal is supply chain management. Supply chain planners are under constant pressure to reduce costs, increase efficiency and improve margins. Unfortunately, too many of them lack visibility into data and are misaligned with other teams. One centralized tool can help connect operational tactics with financial plans to allocate resources more effectively in response to market opportunities or competitive threats. This helps planners avoid mismatched data across multiple spreadsheets and enables them to pivot in the case of supply chain disruptions.

“ Our managers all have quick, easy access to the latest operational data via detailed reports that help them make better-informed decisions to improve the efficiency of the entire supply chain. ”

- Homarjun Agrahari, Director, Advanced Analytics, FleetPride

Learn more about supply chain planning

Infographic Webinar Learn more

Workforce planning

A company is only as good its people. That’s why it’s so important to hire and retain the right talent. Alignment between HR, finance and operations is crucial to ensure that the right people are in the right roles at the right time in order to meet organizational demands. This is rarely a simple task and too often it involves manual spreadsheet-based processes. Ensuring that departmental staffing targets are in sync with broader organizational objectives requires high levels of planning integration.

“ Our business is based on people. IBM Analytics is helping us manage that critical asset much more efficiently and effectively than ever before. ”

- Nadia Bertoncini, Coordinator of Governance, Projects and HR Analytics for Latin America, Natura Cosméticos

Learn more about workforce planning

Infographic Aberdeen report Learn more

Sales planning

Misalignment between finance, marketing and sales could lead to investment in the wrong initiatives, missed opportunities and inaccurate revenue forecasts that can severely hinder sales growth. And in a fast-moving market, manual processes and siloed systems are detrimental to agility. Decisions that are based on outdated information can lead to misguided sales strategies and thus lost sales and lost revenue. It’s critical to unite data under one roof for one single view to boost sales and effectively manage sales people.

“ The sheer level of detail that IBM Planning Analytics provides is very impressive … We can calculate our sales and gross margins for each SKU in IBM Planning Analytics and generate insightful reports at the click of a button. As a result, senior managers can rapidly access the comprehensive information they need to make effective strategic decisions. ”

- Vince Mertens, Group Accounting and Consolidation Manager, Continental Foods

Learn more about sales planning

Marketing planning

Constantly changing customer preferences and rising customer expectations require marketers to interpret high volumes of data and respond appropriately. But siloed data systems give only a partial picture and hinder smart decision-making. In addition, marketing teams can be fragmented and often disconnected from sales. Siloed planning causes misalignment with overall marketing goals, driving misallocated spend on the wrong elements of the marketing mix. Manual, siloed processes reduce visibility into how marketing activities affect one another, how marketing and sales touches move a lead through the funnel and how marketing helps achieve overall financial and business goals.

“ We first needed a better handle on our sales data. With so many lines of business, channels, and franchisees, collecting and consolidating this information was something that we knew we could do better. ”

- Donald Neumann, Demand Manager, Grupo Boticário

Learn more about marketing planning

Ventana report Learn more Infographic

IT planning

With IT, you need a business case for every dollar spent. But balancing the IT needs of an entire organization with digital transformation objectives and constant technology innovation is no simple task, and often requires additional resources. That’s why it’s so important leverage a planning solution that keeps IT focused on the projects that matter, automates planning tasks, gives a clear view into resources available and helps measure ROI. It’s also critical to coordinate with both finance and human resources to ensure the right resources are provided for IT initiatives and projects.

“ A few years ago, my team probably spent around half their time just keeping everything running — now it’s around 10 percent. With the move to IBM Analytics in the IBM Cloud, we have 40 percent more time to focus on working with the business to add value. Instead of asking ‘how do I make it work?’ we ask ourselves ‘how do I make it better?’ It’s a quantum shift in mindset. ”

- Vimal Dev, Vice President – IT, Global Enterprise Applications Leader, Genpact

Learn more about IT planning

Learn more IBV report

Operations, sales, marketing, human resources and other departments and disciplines all have a need for fast, flexible planning and analysis. And all of them can use the same tools to provide insight and manage performance. When people in one part of the organization see how their decisions affect other parts of the organization, all of the activities will be better coordinated and drive better results. In fact, according to Aberdeen, leading organizations are those who align planning across departments at double the rate of laggards in areas like sales, marketing and finance.

Become a leader

With IBM Planning Analytics , you can break down silos and generate an integrated view of your departmental or organizational performance. The solution enables you to create more accurate forecasts, identify potential performance gaps before they occur and make resource allocation decisions quickly and intelligently. Using multidimensional modeling and scenario analysis, IBM Planning Analytics lets you drill down into your data to examine the ripple effects of alternative courses of action and understand how your decision will affect related areas of the organization and ultimately impact the bottom line.

Using what-if scenario analysis to make smarter decisions

With IBM Planning Analytics, you can build multidimensional models and perform “what-if” analysis to explore scenarios or test business assumptions. Creating and maintaining sophisticated models with advanced sandboxing capabilities is simple. Easily test business assumptions and model scenarios to immediately see the impact of alternative courses of action on before deciding to implement changes.

IBM Planning Analytics offers all areas of your business — finance, operations, HR, sales, marketing, operations, IT and more — the ability to solve problems today and respond to new challenges with agility tomorrow.

Click on any quadrant for more information.

Headcount and staffing planning

Salary and compensation planning

Successions planning

Corporate planning and, budgeting and forecasting

Strategy planning

Operational planning

Capital planning

Expense planning

Profitability analysis

Demand planning

Sales and operations planning

IT project planning

IT budgeting

IT portfolio management

Sales territory planning and quota planning

Sales forecasting

Sales capacity planning

Resource allocation

Marketing revenue planning and forecasting

Campaign optimization

Dive deeper into the solution

Find out if IBM Planning Analytics is right for you.

Download the white paper

Download and save the PDF version of this SmarterPaper.

Try the interactive demo

Experience an interactive demo to get a real taste of functionality.

Shortfall: CFOs worry that their teams aren’t ready to weather the disruption

Here are four issues that are holding back many finance organizations and possible solutions.

Integrated Business Planning

Succession planning

Corporate planning, budgeting and forecasting

Strategic planning

Captial planning

By Whitney Gillespie     April 16, 2024

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.

Related Resources

Integrated Business Planning: A Detailed Exploration of Strategy and Execution

✅ All InspiredEconomist articles and guides have been fact-checked and reviewed for accuracy. Please refer to our editorial policy for additional information.

Integrated Business Planning Definition

Integrated business planning is a management process that synergizes sales, marketing, finance, operations, and logistics to drive an aligned operational plan and business strategy, balancing demand and supply while also considering financial objectives and the allocation of critical resources. It embraces short, medium, and long-term business planning and assists in decision-making, reducing risks, and increasing profitability.

Importance of Integrated Business Planning

The crucial role of integrated business planning.

Today’s businesses exist in a world that is, to say the least, complex and full of rapid changes. In these circumstances, integrated business planning plays a pivotal role in navigating through the turbulent times by bridging the gap between the company’s strategic ambitions and their operational constraints.

As a unifying framework, the process provides a link between the top-level strategic planning and day-to-day operational activities. It eliminates silos between departments providing a holistic, transparent and real-time view of the business. By mapping all operations to strategic goals, it ensures that all decisions and actions are pulling in the same direction toward the fulfillment of those goals.

Aligning Strategic, Operational, and Financial Planning

With integrated business planning, synchronization becomes achievable at an elevated level. It enables businesses to align their strategic objectives with operations and finances, thus ensuring a smooth flow of processes. When strategy, operations, and finance harmoniously work together, it eliminates any disconnects, resulting in effective and efficient decision-making.

From a strategic perspective, the approach aids in prioritizing goals and developing responsive and realistic plans to achieve them. On the operations front, it identifies bottlenecks, assesses risk, and ensures that all operations are in line with strategic objectives. Lastly, the integration with financial planning leads to accurate financial forecasts, effective cash management, and robust financial control.

To put it another way, this integrated view of business planning is akin to a well-conducted orchestra. Each section of the orchestra, be it strategic, operational, or financial, knows its role, its tasks, and how it contributes to the overall performance of the melody; which in this case, becomes the successful completion of strategic goals.

The Outcome: A Resilient Business Model

In the face of evolving markets and shifting customer demands, integrated business planning empowers businesses to quickly identify, adapt, and respond to changes efficiently. The approach supports timely and informed decision-making, improves communication and collaboration, and nurtures a proactive business culture focused on future growth.

The process also provides a robust system that facilitates scenario planning and risk mitigation. It promotes informed and rational decision-making, thus creating a resilient business model capable of withstanding market uncertainties and disruptions.

In summary, integrated business planning offers a comprehensive, more intelligent approach to business management—one that aligns strategy, operations, and finance towards a common goal while driving performance and sustainable growth.

Core Components of Integrated Business Planning

At the epicenter of integrated business planning is demand. Understanding current customer needs and predicting future ones is key to running a profitable operation. This involves market research, analysis of historical data and forecasting. By getting an accurate approximation of demand, businesses can take proactive measures to efficiently meet those needs.

Supply Management

It’s not just enough to understand the demand. A business must have a competent supply management system that can meet the anticipated demand. This is achieved by coordinating all elements of procurement, production, and logistics to effectively fulfill customer needs. A successful supply chain management strategy incorporates everything from sourcing raw materials, managing inventory, production planning, to eventual delivery.

Product Management

Product management is a very significant part of integrated business planning. It’s the process by which a business decides what products to offer and how to position them in the market. Product managers work cross-functionally with other teams like marketing, sales, and engineering, to ensure that the product aligns with company goals and customer requirements. They also analyze market trends, competitive landscape, and customer feedback to inform product features and enhancements.

Financial Planning

Lastly, financial planning provides the fiscal framework for integrated business planning. It involves budgeting, revenue projection, expense tracking, and monitoring financial performance against these predictions. A detailed financial plan enables a business to execute its strategies within available resources, capitalize on opportunities and respond timely to market changes. Financial planning is indispensable for a sustainable long-term business growth.

Each of these components works seamlessly with the others in integrated business planning. While demand, product, and supply chain management ensures that the business retains a competitive edge in the market, financial planning provides the necessary oversight to ensure the business remains profitable while doing so. This alignment across all the key functional areas is what makes integrated business planning so critical to the success of a business.

The Role of Integrated Business Planning in Corporate Decision Making

In a dynamic business environment, integrated business planning helps corporations quickly adapt and respond. It operates as a navigational tool, guiding decision-making processes at various levels of an organization, from operational to strategic.

Operational Decision Making

At the operational level, integrated business planning aids in managing immediate and short-term decisions. It provides a detailed view of the current business operations- from sales forecasts, customer demands, supply chain management to available resources.

For instance, consider a rise in demand for a product. An operational decision might involve assessing the production capacity and inventory levels, which integrated business planning can readily provide by unifying data from multiple business functions. This allows the organization to react swiftly and efficiently to unexpected changes.

Tactical Decision Making

Tactical decisions contributing towards achieving short-term goals also benefit from integrated business planning. It aids in providing a firm ground that aligns operational decisions with corporate strategy.

Key functions like marketing campaigns, collaborations, or prodigious investments often hinge on the insights captured through integrated business planning. It not only allows companies to seize up-to-the-minute market opportunities but also helps in mitigating potential risks.

Strategic Decision Making

At a strategic level – where decisions have long-term implications and contribute directly to the achievement of an organization’s mission – integrated business planning is instrumental. It provides organizations with forward-thinking views, predicting future scenarios, and laying out a roadmap to achieve the desired goals.

For instance, making decisions about entering new markets, launching new product lines, or obsoleting older ones are all powered by the insights from integrated business planning.

Thus, integrated business planning is central to decision-making processes, underpinning them with a clear, synchronized view of business functions. It enables corporations to respond effectively and swiftly to business environment changes, maintaining their competitive edge.

Integrated Business Planning and Risk Management

Integrated business planning (IBP) plays a crucial role in managing business risks. It enables organizations to align strategic, operational, and financial plans to achieve overall corporate objectives.

Assessing and Managing Risks with IBP

With IBP, an organization can continually assess potential risks and adjust its plans based on a comprehensive and timely understanding of possible implications. This process reduces the likelihood of sudden impact from unanticipated events and enhances the resilience of the business.

For instance, IBP can help in foreseeing economic downturns and prepare for them by diversifying income streams or increasing savings. Similarly, if a company anticipates a shortage of raw materials, it may use IBP to develop contingency plans such as seeking alternate supply sources, redesigning products, or adjusting manufacturing schedules.

Identifying Opportunities

On the flip side, integrated business planning also plays an essential role in identifying opportunities. This comprehensive approach can uncover potential synergies, efficiencies, and strategic initiatives that would otherwise go unnoticed. Leveraging integrated data, businesses can identify market trends early, allowing them to deploy new solutions or services ahead of their competitors.

Consider an organization that notices an increase in the use of sustainable materials via integrated data analysis. With IBP, the company can assess the possible financial and operational implications of shifting to eco-friendly materials, then devise strategies to capitalize on this trend.

Holistic View of Business Landscape

Furthermore, the holistic view provided by integrated business planning assists businesses with identifying both threats and opportunities. By providing viably comprehensive, cross-functional views of the business landscape, IBP allows companies to anticipate changes, react effectively, and seize the opportunities these changes bring.

In conclusion, integrated business planning’s role in risk management is immense. It promotes resilience by enabling organizations to anticipate potential risks and build strategies to navigate them. It also encourages innovation by highlighting emerging opportunities, leading to improved competitiveness and sustainability.

Tailoring Integrated Business Planning to Different Business Models

Applying integrated business planning (ibp) to service-based businesses.

The successful application of Integrated Business Planning (IBP) in service-based businesses can prove to be unique due to the nature of service delivery and customer expectations. Unlike in a product-oriented business where the primary goal is to manage the supply chain, service-based businesses encounter market variability and require a flexible planning process.

IBP helps these businesses by providing a platform to align their operational plans with strategic goals. For instance, the nature of the service can dictate the planning horizon and the frequency of revising plans. A healthcare provider may need a more immediate planning horizon compared to a consultancy firm due to the unpredictable nature of medical emergencies. Hence, IBP can be tailored to accommodate these different planning horizons.

Adapting IBP for Product-Oriented Businesses

Product-oriented businesses, on the other hand, often have tangible inventory and a visibly structured supply chain. Here, IBP comes in handy to integrate various components like sales, operations, and finance to ensure the business stays on track to achieve its strategic goals.

By synchronizing all critical business units, the company can ensure demand forecast accuracy, reduce stockouts and overstocks, and optimize cash flow. For instance, in a manufacturing business, the use of IBP can be pivotal in decisions ranging from raw material procurement to production planning to order fulfillment.

Implementing IBP in Hybrid Business Models

A hybrid business model, a mix of service and product-oriented business, calls for even more flexible application of IBP. Hybrid businesses need to balance the complexities of both models, and this can be achieved by integrating decisions about service delivery and product supply.

The outcome is a more harmonized strategic plan that accommodatively factors in both the intangible and tangible aspects of the business. For instance, a software company that offers both software products (product-oriented) and software services (service-oriented) may use IBP to synchronize the timeline for product development and service delivery.

In conclusion, while the fundamental elements of IBP remain the same, its implementation can and should be tailored to the unique needs of specific business models. The flexibility of IBP lies in its ability to adapt and accommodate the diverse patterns of businesses, ensuring alignment of strategic goals with operational plans. This is what makes IBP not just an effective planning tool, but an innovative business methodology.

The Relationship between Integrated Business Planning and Corporate Social Responsibility

In the application of integrated business planning, it’s important to consider its impact on a corporation’s social responsibility (CSR) practices. Integrated business planning has direct implications, as it can form a strategic platform for organizations to proactively manage their social and environmental responsibilities, in addition to driving financial performance.

When considering a business’s social and environmental responsibilities, it’s clear that these elements can significantly influence planning processes. This is because businesses, especially those operating in sensitive sectors such as mining or manufacturing, must account for the potential social and environmental impacts of their operations.

Effect on Planning Process

Understanding this, the planning process under an integrated business planning model needs to not only focus on traditional economic factors, but integrate CSR into the heart of their business strategies in a structured and systematic way. This might involve predicting potential social and environmental risks and planning appropriate mitigation strategies, or identifying socio-environmental initiatives and integrating them into the business’s operating model.

Asset Utilization and ESG Compliance

Moreover, integrated business planning can allow businesses to better utilize their assets in the service of both financial objectives and CSR. For instance, a manufacturing facility might plan to use more energy-efficient technologies, demonstrating commitment to environmental sustainability, while also potentially reducing operational cost.

Furthermore, a solid integrated business planning can enhance a company’s efforts in Environmental, Social, and Governance (ESG) compliance. It allows the business to consistently align its operational activities and financial planning with its CSR policies and governance standards. This, in return, may improve the public image, customer trust, and overall market reputation of the company.

Aligning Business Goals with Societal Values

Ultimately, a key aim of integrating CSR into the business planning process is to ensure that an organization’s business goals are well-aligned with societal values and environmental sustainability. Doing so not only helps businesses to fulfill their moral and civic duties, but is also increasingly recognized as a powerful driver of long-term financial performance.

Software Tools for Integrated Business Planning

In order to successfully implement integrated business planning (IBP), businesses need to make use of a variety of software tools. These tools not only make the complex process more manageable, but they also increase accuracy, improve collaborative efforts and provide meaningful insights for better decision-making.

Popular Software Tools

One popular tool is SAP Integrated Business Planning (SAP IBP) . This tool is lauded for its real-time supply chain management features. SAP IBP offers features for demand planning, supply and inventory planning, sales and operations planning, and response and supply control.

Another widely adopted software is Anaplan . Anaplan’s platform helps businesses model and visualize their data, and is known for its capability to handle extremely large data sets, making it ideal for large organizations.

Oracle Demand Management Cloud is also worth mentioning. It provides predictive analytics to understand and manage demand, and it integrates well with other Oracle applications, making it an attractive choice for businesses already using the Oracle ecosystem.

Kinaxis RapidResponse stands out for its scenario planning features, allowing businesses to simulate and compare various situations and their outcomes.

Role of Technology in IBP

Technology plays a pivotal role in IBP, simplifying and enhancing the process. With the vast amount of data businesses deal with today, manually managing such processes would be time-consuming and prone to human errors. Software tools automate most of these tasks, ensuring accuracy and efficiency.

Moreover, these tools often provide data visualization features, converting complex data into easy-to-understand charts and graphs. This not only makes data more accessible to all stakeholders, but also aids in quicker decision-making.

One significant advantage of using these tools is the ability to collaborate in real-time. Multiple users can work together on the same data sets, breaking down silos within the organization. With everyone on the same page, the alignment between different business functions improves, boosts the overall business performance.

Lastly, with features like predictive analytics and scenario planning, businesses can better anticipate future scenarios and prepare accordingly, reducing the risk associated with unforeseen changes in the market or supply chain.

Thus, with the help of software tools, integrated business planning becomes a more streamlined, accurate, and collaborative process.

Implementing Integrated Business Planning

Essential considerations for successful implementation.

To ensure a successful transition to using integrated business planning, several key aspects must be considered.

Employee Training

A central aspect of this change-over is the training of employees. Your employees need to understand the principles of integrated business planning and how they can apply these principles in their day-to-day activities. This training could be delivered through workshops, seminars, or e-courses, depending on what’s most effective for your employees.

Ongoing mentorship and support are also beneficial, helping employees adjust to the new system over time. By providing continuous learning opportunities, you keep your employees engaged and motivated, thus enhancing the adoption of integrated business planning.

Technological Requirements

The transition to integrated business planning is not only about changing mindset, but also about updating your technology stack, as this approach often relies on advanced software solutions. The exact technology needed may vary depending on the scale of your business and the nature of your operations, but a comprehensive business planning software suite is usually a baseline requirement.

Additionally, you would need to evaluate your current IT infrastructure to check if it can support the new systems. It might be necessary to upgrade certain components to ensure seamless operation. Remember, your new software should be user-friendly to promote ease of use among your employees.

Embracing Cultural Change

Implementing integrated business planning can bring about a significant shift in your company culture. As an approach that emphasizes collaboration and transparency, it requires a shift away from organizational silos. Employees at all levels need to get used to sharing information and making collective decisions.

Promoting this cultural shift can be challenging. Clear, effective communication will be crucial. Explain the advantages of the new system, engage employees in the planning process, and make sure everyone understands their responsibilities. Celebrating small victories can also help to promote positive feelings towards the change.

By paying attention to these critical aspects – employee training, technology, and culture change – you can lay the foundation for a smooth transition to integrated business planning.

Share this article with a friend:

About the author.

Inspired Economist

Related posts.

Accounting Close Explained: A Comprehensive Guide to the Process

Accounts Payable Essentials: From Invoice Processing to Payment

Operating Profit Margin: Understanding Corporate Earnings Power

Capital Rationing: How Companies Manage Limited Resources

Licensing Revenue Model: An In-Depth Look at Profit Generation

Operating Income: Understanding its Significance in Business Finance

Cash Flow Statement: Breaking Down Its Importance and Analysis in Finance

Human Capital Management: Understanding the Value of Your Workforce

Leave a comment cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Start typing and press enter to search

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.

Would you like to learn more about our Operations Practice ?

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.

Transforming supply chains: Do you have the skills to accelerate your capabilities?

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.

Explore a career with us

Related articles.

To improve your supply chain, modernize your supply-chain IT

Supply-chain resilience: Is there a holy grail?

• Recognition

Integrated Business Planning

Embracing change: the power of integrated business planning.

In today’s dynamic business landscape, conventional planning processes riddled with departmental silos often hinder visibility and efficiency. However, a transformative shift is underway. Forward-thinking companies are embracing digital transformation and adopting Integrated Business Planning (IBP) to empower their activities with enhanced coordination and collaboration. This blog delves into the definition of IBP and explores the substantial benefits it’s brings to organizations in a modern setting.

What is Integrated Business Planning?

IBP is considered a best practice approach that seamlessly integrates financial and operational data from across the organization. This strategic method allows companies to optimize their output by connecting strategic plans with sales, operational, and financial plans. The result is enhanced visibility of the intricate relationships between resources, capabilities, and results. Through IBP, organizations collectively develop a comprehensive go-to-market plan that reflects contributions from every department.

Main objectives of Integrated Business Planning

IBP establishes a framework to achieve the following key goals:

• Align company plans and resources with corporate strategy: IBP ensures that all parts of the business are aligned with the strategic goals, focusing on financial performance as much as on operational capabilities.
• Improve visibility and collaboration across the business: By bringing together various functions—such as sales, production, logistics, and finance—IBP fosters collaboration and transparency across departments.
• Enable more accurate and forward-looking decision-making: With a unified view of business data and forecasts, companies can make more informed decisions, anticipate market changes, and react proactively.

Core elements of Integrated Business Planning

IBP consists of a series of interconnected processes that work together to create a unified business plan:

• Product and portfolio management: Managing the life cycle of products and aligning the product portfolio with market demands and strategic objectives.
• Demand planning: Estimating customer demand to guide supply chain and business planning.
• Supply planning: Ensuring the organization can meet the demand plans with optimal resources.
• Financial review and integration: Tying operational planning to financial planning and analysis to ensure that business plans are financially viable and aligned with financial goals.
• Strategic business planning: Aligning all business plans with the company’s long-term strategic goals, including financial objectives.
• Integrated reconciliation: Harmonizing plans across the business to ensure alignment and commitment from all departments.

Key benefits of Integrated Business Planning

IBP offers a multitude of advantages, including:

• Enhanced agility: Respond faster to market changes and capitalize on new opportunities.
• Improved financial performance: Make data-driven decisions that optimize resource allocation and profitability.
• Better risk management: Proactively identify and mitigate potential risks that could impact your business.
• Increased collaboration: Break down departmental silos and foster a culture of teamwork.
• More accurate forecasting: Gain a clearer picture of future demand and supply to optimize inventory levels.

While IBP requires a mature planning process with the right technology and tools, successful implementation also depends on strong leadership, clear communication, and a collaborative culture across all levels of the organization. It’s a strategic approach that, when executed well, can significantly enhance a company’s performance and competitive edge.

Challenges of traditional business planning processes

Conventional planning activities are often disjointed, especially across the supply chain. The use of disparate spreadsheets and standalone business intelligence solutions creates isolated pockets of knowledge, hindering a holistic approach to planning. While some firms implement Sales and Operations Planning (S&OP) principles, true unification across the entire organization remains elusive. This fragmented approach leads to inefficiencies and suboptimal performance due to:

• Limited visibility into departmental activities and their impact on the financial bottom line.
• Disconnection between strategies and operational activities, resulting in delayed responses to market changes.
• Lack of a collaborative approach and accountability, fostering business silos rather than a unified team.
• Multiplicity of point solutions and applications across divisions, increasing costs and data disparities.

Overcoming these challenges requires a shift towards a unified planning process. IBP offers a comprehensive framework that breaks down departmental silos, integrates financial and operational data, and fosters a culture of collaboration. By implementing IBP, organizations can gain a clear view of their business, make better decisions, and achieve their strategic objectives.

Integrated Business Planning vs Sales and Operations Planning: What’s the difference?

IBP and S&OP are both strategic processes used by companies to align various functions within the organization. While they share similarities in aiming to improve business performance through better planning and alignment, there are distinct differences in scope, focus, and depth.

Here’s a comparison between the two:

Key differentiators

• Breadth: IBP takes a more comprehensive approach, encompassing the entire organization’s planning processes. S&OP has a narrower focus on aligning supply chain operations.
• Time horizon: IBP has a longer-term perspective, considering market trends and setting strategic direction. S&OP prioritizes short-term efficiency and meeting near-term targets.
• Financial emphasis: IBP integrates financial planning with operations, ensuring financial viability. S&OP gives less weight to financial considerations, focusing on operational costs.
• Decision-making: IBP empowers decision-making across all levels, while S&OP primarily supports operational-level choices.

IBP builds upon the foundation of S&OP. It extends the principles of supply chain alignment to encompass broader financial and strategic planning. While both processes are valuable, IBP offers a more holistic and future-oriented approach for businesses seeking to optimize performance across the entire organization.

Case in point: Coca-Cola European Partners

Automating 90% of financial data input, slashing data transfer time from 24 hours to 15 minutes, and enabling digital, driver-based planning from production to delivery.

Coca-Cola European Partners (CCEP) leveraged IBP to transform their supply chain finance function. They implemented driver-based planning, which integrates financial and operational data, enabling them to make data-driven decisions and optimize resource allocation. IBP also improved collaboration across departments by providing a single platform for all users to access and analyze data.

This resulted in:

• considerable savings in time: a 90% reduction of manual tasks
• improved efficiency of data transfers: from 24 hours to 15 minutes
• a streamlined consolidation process: just one-click to incorporate 48 plants and 85 warehouses

Overall, IBP increased transparency, streamlined processes, and empowered informed decision-making at CCEP.

The future of business planning

The era of disjointed planning processes is giving way to the transformative power of IBP. Companies adopting it can unlock improved visibility, collaboration, and efficiency—setting the stage for sustained success in today’s rapidly evolving business landscape.

For further insights, explore our complimentary whitepapers and reports on the benefits of an IBP process.

From the author

Advancing beyond S&OP: Is IBP the right approach for you?

As businesses mature and markets fluctuate, the need for adaptable planning processes increases. Transitioning from…

Unlocking value through Integrated Business Planning: the experts share their thoughts

Tired of siloed departments and disconnected planning? There’s a better way. Integrated Business Planning (IBP)…

Be the first to comment on this post Cancel reply

Your email address will not be published. Required fields are marked *

The 2024 Intent Group Guide on IBP

A comprehensive resource for organizations considering Integrated Business Planning

No products in the cart.

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.

Related Posts

• Your Flux Analysis Step-By-Step Survival Guide
• How To Do Account Reconciliation Without Pulling Your Hair Out
• Taking Vertical Analysis To The Next Level
• Your Unconventional Guide To Managing Working Capital
• The Easy Way You Can Calculate Free Cash Flow
• Crafting Your Business Plan Financials: A Step-by-Step Guide

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.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

To provide the best experiences, we and our partners use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us and our partners to process personal data such as browsing behavior or unique IDs on this site and show (non-) personalized ads. Not consenting or withdrawing consent, may adversely affect certain features and functions.

Click below to consent to the above or make granular choices. Your choices will be applied to this site only. You can change your settings at any time, including withdrawing your consent, by using the toggles on the Cookie Policy, or by clicking on the manage consent button at the bottom of the screen.

Oliver Wight Integrated Business Planning (IBP) consultants

Oliver wight has developed a world-class integrated business planning program to help businesses integrate functional plans, deploy business strategy, and steer business management for growth and success, oliver wight ibp services and solutions.

IBP consulting

IBP solutions

IBP workshops

Explore our Integrated Business Planning services and solutions below.

Integrated Business Planning maturity self-assessment tool

Before embarking on any performance improvement program, it is essential to identify your organization's true level of maturity. The Oliver Wight Maturity Model characterizes an organization as being in one of four key phases of maturity:

Co-ordination

Business Process Control

Integration

Assess your business maturity in Integrated Business Planning using our free online self-assessment tools.

Start your self-assessment

IBP consulting services

As Integrated Business Planning (IBP) consultants we deliver comprehensive IBP consultancy services, designed to transform your strategic planning processes and ensure your business achieves its full potential. Our approach to IBP consulting is tailored to each organization's unique needs, providing expert guidance and practical solutions to improve planning execution, and overall business performance. 

Our consulting approach incudes:

A diagnostic assessment of your current S&OP or IBP process

Change management guidance

Developing an IBP process tailored to your organization and its needs

Action plans to address issues and take advantage of the opportunities identified

IBP process assessment and validation

Demand planning

Supply chain optimization

Financial integration

Scenario planning

How we work with you

Initial assessment - understanding your business

Process design (1. Benchmark, 2. Analyze, 3. Educate, 4. Discuss, 5. Design, 6. Commit, 7. Transfer, 8. Coach)

Knowledge transfer - educating your people and gaining commitment

Process implementation and integration

Hands-on coaching and support (IBP training sessions and workshops)

More about how we work with you

Oliver Wight IBP virtual workshops

We provide transformative virtual workshops on Integrated Business Planning (IBP) designed to help your organization succeed in a dynamic business environment. Our public workshops are designed to provide leaders and their teams with a deep dive into the principles and practises of IBP, ensuring your business stays competitive and adaptable. 

Whether you're new to IBP, looking to enhance your current processes, or considering significant investment in IBP technology, this workshop will provide the knowledge and insights needed to navigate and succeed. Tailored for executives, decision-makers, and managers already involved in or planning to adopt IBP, as well as those facing challenges in aligning their organization or improving efficiency. 

Join us to empower your team, align your strategic goals, and prepare for a successful future in an ever-changing world.

Find out more about our virtual workshops .

Looking for help with IBP software?

Oliver Wight IBP Powered by Board is a holistic solution combining Oliver Wight's industry-leading Class A and implementation change management processes, with Board market-leading software. Fully align people, processes, and technology, and embed IBP and its benefits for years to come. This offering combines IBP technology and process in one package for rapid time to value. You will benefit from Oliver Wight consulting and education + Board Intelligent Planning Platform + specialist implementation services.  Find out more about Oliver Wight IBP Powered By Board.

Still have questions about IBP? Visit our IBP FAQs .

How you can benefit from integrated business planning - leverage ibp solutions to unlock your full potential, and sustain competitive advantage..

Assess the effectiveness of your current S&OP or IBP process

Reduce costs and drive efficiency

Increase revenue

Upskill your team

Manage change effectively

Reveal opportunities for improvement

Enhanced strategic alignment

Reduced inventory

Improved decision-making

Increased agility

Long-term sustainability

Achieve Class A effectiveness

Improved customer service

Why bother with IBP services? IBP consulting can help organizations with a range of issues. Do any of the following sound familiar?

You are constantly in ‘fire-fighting’ mode

You have a misaligned management team

You are continually missing the financial plan

You are experiencing rapid growth and can no longer manage effectively using an informal process

Your budgeting process is ‘painful’

You are struggling to get on top of service issues

You cannot keep up with growth in demand

You have excessive inventory

You are experiencing excessive rework and cost

Departments or sites are working in silos

There is no ‘single source of truth’ or ‘single set of numbers’ to run the business

You feel like you never have time to look at the strategy

There is poor deployment and execution of the strategic plan

You have poor employee engagement

You feel like you are not getting a return on the effort put into your existing S&OP/IBP process

How we can help - working with an IBP consultancy like Oliver Wight to integrate a business strategy can provide significant value.

A diagnostic assessment of your current S&OP or IBP process, including its effectiveness and identifying any performance issues

Transfer of our knowledge to your people so they can create and manage an effective IBP process

Change management – plan, monitor, and support the implementation of change and its impact on your people

Facilitate the design of an IBP process to best fit your organization and its needs

Scoping of an action plan to address issues and take advantage of the opportunities identified, including resourcing, timelines, and performance improvement expectations

Coach IBP process users as you introduce the new ways of working

Assess and validate that your IBP process has achieved a Class A level of effectiveness – firmly embedded as the ‘way you do things’ and delivering the benefits you wanted

Integrated Business Planning (IBP) is a common-sense process designed for effective decision-making and led by your leadership team. True business integration means senior management can plan and manage the entire organization over a 24-36 month horizon, aligning strategic and tactical plans each month, and allocating critical resources, people, equipment, inventory, materials, time, and money; to satisfy your customers in the most profitable way. IBP represents the evolution of Sales and Operations Planning (S&OP) from the supply and demand balancing process developed in the early 1980s. Today it is a process that drives the alignment of all functions across an organization, models and creates readiness for alternate outcomes, drives deployment of strategy, and enhances collaboration across supply chains.

Integrated business planning resources to help you improve.

White papers & case studies

Videos & webinars

Get in touch

Upcoming courses.

12 Nov 2024

Virtual (English)

Integrated Business Planning – Introduction, Overview, and Current Best Practice

More information +

11 Feb 2025

10 Jun 2025

09 Sep 2025

11 Nov 2025

Integrated Business Planning

Latest white papers & case studies.

Deploying Strategy with Integrated Business Planning – Management Business Review

Deploying Strategy with Integrated Business Planning – The Integrated Reconciliation Review

Doom looms or opportunity awaits

Deploying Strategy with Integrated Business Planning - Connecting Strategy to Execution

Assumptions Management Part 2: Structural Integrity

Navigating the decision: behavior, empowerment, and integration to support the information revolution

From complexity to simplicity: The power of aligning people, process, and technology

Assumptions Management Part 1: Controlling your future in an uncertain world

Five key factors to speed up your successful IBP journey: Intelligent solutions meet your integrated process.

Gehen Sie Fake News nicht auf den Leim.

Transformer son S&OP en IBP

Navigating Uncertainty: Is Your IBP Process Fit for the Future?

Latest books

The Transition from Sales and Operations Planning to Integrated Business Planning - Second Edition

The Oliver Wight Class A Standard for Business Excellence

Le Standard Classe A d’Oliver Wight pour l’Excellence en Entreprise

Der Class A Standard für Business Excellence nach Oliver Wight

El Estándar de Clase A para la Excelencia Empresarial de Oliver Wight

Orchestrating Success: Improve Control of the Business with Sales & Operations Planning

Enterprise Sales and Operations Planning

An Executive's Guide to Achieving Class A Business Excellence

Latest videos and webinars

Oliver wight ibp powered by board - core capabilities.

Dive into the world of Oliver Wight IBP Powered by Board as we reveal how our unique solution seamlessly combines people, processes, and technology, giving you a smarter approach to business planning

Oliver Wight IBP Powered by Board - Portfolio Review

Discover how targets, strategy and priorities within the Portfolio become easier than ever by viewing the Product Master Plan, Innovation Funnel and Critical Resource Plan all in one place

Oliver Wight IBP Powered by Board - Demand Review

Discover how the Demand Review Facilitator dashboard can provide visibility of actual and planned performance, highlighting changes and issues through alerts based on agreed materiality criteria.

Oliver Wight IBP Powered by Board - Supply Review

View and implement planning adjustment parameters for critical supply constraints across the end-to-end supply chain.

Oliver Wight IBP Powered by Board - Integrated Reconciliation

Visualize multiple scenarios to assist understanding and aid in better resource planning. Filter out the most important information from the IBP cycle for easy presentation creation.

Oliver Wight IBP Powered by Board - Management Business Review

Discover how you can easily view organization's KPI scorecard and visualize gaps versus commitments

Balancing Planning (IBP) and Execution (ITP) in Rapidly Changing Socioeconomic Environments

Flavio Pietrocola, Oliver Wight Partner, explains how to find the right balance between Planning (IBP) and Execution (ITP) in this disruptive and rapidly changing world.

How to steer a company through the D-VUCAD world? (in German)

This podcast episode discusses how to steer companies through volatile, unpredictable times and what modern control instruments and technologies there are that companies should use.

Managing Change through Effective Implementation of Integrated Business Planning

Oliver Wight Partner, Gary Connors explains the five common failure modes in implementing Integrated Business Planning and how to manage changes through IBP.

Moving to E2E Supply Chain Management with IBP coordination

Watch the video to see Oliver Wight's CEO Les Brookes explains how to drive End-to-End supply chain transformation with IBP.

Eminox Ltd: What was it like working with Oliver Wight?

Oliver Wight Partner, Dawn Dent spoke to Eminox's Managing Director Mark Runciman, who shares his experience of working with Oliver Wight.

The Digital Supply Chain podcast

Supply Chain Resilience with Integrated Business Planning - a chat with SAP and Oliver Wight.

This website does not support Internet Explorer. Please, switch to Edge, Chrome, or Firefox browser to view this page.

o9's Next-Generation IBP Solution for Food & Beverage

AB InBev’s E2E Planning Journey with o9 Solutions

S&OP Counseling — The Continuous Battle Between Sales and Supply Chain

Integrated supply chain planning and logistics and scheduling optimization for manufacturers

Next-generation Integrated Business Planning (IBP) with o9

Integrated Planning: Interactions between Commercial and Supply Chain

Next-generation integrated business planning (IBP)

Driving greater efficiency in decision-making and execution at PepsiCo

Solving Supply Chain Challenges with the o9 Digital Brain

Building the Next-Generation Enterprise Platform

Transformation in the Capital Goods Industries

True End-to-End Visibility in Discrete Manufacturing

What is integrated business planning (ibp).

In this video, we will discuss the concept of integrated business planning. We will explore the following topics: - What is the definition of integrated business planning? - What are the benefits of integrated business planning? - What are the challenges of integrated business planning? - What is the future of integrated business planning? Integrated business planning (IBP) is a holistic approach to planning that brings together all of the different planning processes within an organization. This includes demand planning, supply chain planning, financial planning, and commercial planning. The goal of IBP is to ensure that all of these planning processes are aligned and that they are all working towards the same goals. This can help to improve decision-making, reduce costs, and improve customer satisfaction. There are many benefits to IBP, including: - Improved decision-making: When all of the different planning processes are aligned, it is easier to make informed decisions about the future of the business. - Reduced costs: IBP can help to reduce costs by eliminating duplication of effort and by ensuring that resources are allocated in the most efficient way possible. - Improved customer satisfaction: IBP can help to improve customer satisfaction by ensuring that products are available when and where customers need them. However, there are also some challenges associated with IBP, including: - Complexity: IBP can be a complex undertaking, requiring the coordination of many different people and processes. - Resistance to change: Some people may be resistant to change, especially if they are used to working in silos. - Technology: IBP requires the use of sophisticated technology, which can be expensive and difficult to implement. Despite the challenges, IBP is a valuable tool that can help organizations to improve their performance. The future of IBP is bright, as new technologies are making it easier to implement and manage IBP.

Chakri, so there are a myriad of business planning processes. What is your vision of integrated business planning? Simon, indeed there are a myriad of planning processes out there before we define integrated planning or integrated business planning. Let's talk about what planning means in general in vernacular, right? If you're planning a wedding or if you're planning a trip, there's a set of coordinated decisions that need to be made. Planning is that process of making coordinated decisions. In the context of an enterprise, there are hundreds and thousands of decisions being made across the enterprise. There are commercial decisions related to new products, marketing, sales. There are supply chain decisions across all the supply chain activities of the enterprise related to positioning of material and capacity and then fulfilling customer demand. There are financial decisions related to setting budgets and targets, allocating resources and the forecasts that you commit to external stakeholders. All of these decisions need to be made in a synchronised fashion. But for practical purposes, because of functional organisations, these have evolved into functional planning processes. Within supply chain you have demand planning processes, you have demand supply match processes that are aligning the supply chain. You have commercial planning processes that are driving the commercial decisions and your financial planning processes that are setting the budgets and the targets. So these are functional planning processes, but they are largely operating in silos today. The impact of those functional silos, functional planning silos, is your commercial decisions and supply chain decisions are not synchronised and the result is service level issues, inventory issues, excess costs in the supply chain, lower ROI on marketing and sales spend. So there's a significant amount of value leakage happening because these dots are not getting connected. Dysfunctional planning silos are not getting connected and integrated planning is about bringing all these planning processes and connecting them to really respond to market risks and opportunities. Number two, they're also planning silos across what we call planning cycles. In a company, you have daily planning cycles for operational planning, you have weekly planning cycles, monthly planning cycles for operational tactical planning, and you have strategic planning cycles which are more annual. And if these planning cycles are not getting connected and often strategy is deviating from execution or rather execution is deviating from strategy. So it's very important to connect your monthly, weekly, and daily and annual planning cycles as well. So that's the second level of integration that we are talking about where planning cycles have to be connected. Finally, the third is the decision making technology stack. Historically, there's been a number of technologies that are used to aid the decision making. There are data stacks, there are reporting stacks, reporting technology. There's technology for planning the future, there's technology for insights and learning and algorithm development. But if you think of it, all of these are in aid of decision making. They are making the life of the business user very complex driving adoption to be lower. So in the in the future of planning, as we drive more and more intelligent planning, more and more automated planning, more and more automated decision making, we see this technology stacks having to be completely transformed to really bring them together into an integrated planning stack. So that's what our definition of integrated planning or integrated business planning is, bridging all the functional silos of planning, bridging the silos across the planning cycles from strategic to operational and bridging the technology stack in aid of driving up user adoption and making more and more intelligent automated decision making.

Overcome constrained supply with digital operating models

Learn how digital operating models help industrial manufacturers manage supply and demand

View our related articles, white papers, use cases & videos

Transformative ibp - driving consequential decision-making across functions.

10 Steps for Setting Up an Effective Transformative IBP Process

The 5 screens that solve your biggest IBP challenges UG

The 5 screens that solve your biggest IBP challenges

One supply chain platform for integrated downstream operators.

10 Steps for Setting Up an Effective Transformative IBP Process UG

Tackling meat processing complexity with next-gen planning.

Learn why one of the world’s largest CPG companies uses IBP

Supply Chain Trend

Shaping the world of s&op and supply chain.

A new definition for Integrated Business Planning

In one of my  S&OP pulse check surveys, I asked participants the following question;

‘Do you believe there is a difference between S&OP and IBP? ’

The answers made me realize I actually don’t know any widely acknowledged definition for IBP. And I have been reading, researching, writing and practicing IBP for many years. As far as I know there is no agreed standard definition. I think we need one. Why bother, besides solving my own existential problem?

Because when there is no agreed definition or standard, there are no clear rules. Without rules anything goes.  Anything can be called IBP. Any software vendor can call their solution IBP. Or any consultancy can knock on your door with an IBP maturity model. Any scholar can tell you he is teaching you IBP.  I see this happening all around me.

This is not a great way to build a foundation, or govern, educate and make progress with an important principle like Integrated Business Planning. Personally, I regard IBP as mature S&OP, so yes I do think IBP is different. I also prefer the IBP abbreviation as it is a more inclusive definition. It doesn’t just mention sales and operations and leaves planning open for the whole enterprise. But defining IBP as mature or advanced S&OP is not enough to be clear about what IBP is.

Shortcomings in existing IBP definitions

There are many different IBP definitions, one of them being ‘advanced S&OP’. At  Wikipedia we can find this first definition: ‘ Integrated Business Planning is a planning process that integrates across two or more functions in a business or government entity referred to as an enterprise to maximize financial value .’  This definition calls out IBP as a planning process with the goal of maximizing financial value in an enterprise.

A second definition comes from an Oliver Wight   website :  ‘ Integrated Business Planning  (IBP) is the business planning process for the post-recession era, extending the principles of S&OP throughout the supply chain, product and customer portfolios, customer demand and strategic planning, to deliver one seamless management process. ’

Although Oliver Wight has done a lot to explain and market IBP to the masses, I do have some problems with this definition.

• It calls out a timeline, the post-recession era, which I believe is confusing (which recession, in what country and when?) and unnecessary.
• It shows a bias towards supply chain and S&OP terminology, from which I believe IBP has to unshackle, as you can read in the Rise and Fall of S&OP .
• It tells us that it is a process only and calls out some steps in that process.
• It tells us the end goal is one seamless management process, so the process itself.

A third  definition is ‘ Integrated business planning (IBP) is a strategy for connecting the planning functions of each department in an organization to align operations and strategy with the organization’s financial performance .’ This definition works well, doesn’t focus on process, explains the cross functional nature and links strategy and financial performance. It correctly calls out the need for alignment, however it doesn’t tell us what we do with the outcome of our aligned plans.

The focus on process in the first two definitions shows a lack of system thinking, as we all know IBP is more than just a process. Furthermore the goal of IBP can’t be the process itself, it should have a business objective, like maximizing financial value in the first definition. IBP needs to be holistic, calling it a process only undermines a holistic approach.

Integrated Business Planning as a system

As I wrote in this blog , IBP requires system thinking. System thinking was defined by Senge, Lannon-Kim in 1991 as;  ‘ System thinking is a discipline for seeing wholes, recognising patterns and interrelationships and learning how to understand those interrelationships in more effective, efficient ways’. In this context, IBP can be described as a ‘planning system’, however, using the word ‘system’ in an IBP definition, might get confused with IT-systems.

We can also think of IBP as a planning philosophy, which requires indeed a process, but a whole bunch of other things to make it work seamless.  In the Oxford dictionary a definition of philosophy is; ‘ a theory or attitude that acts as a guiding principle for behaviour ’. I prefer to regard IBP as a planning philosophy, with system thinking as the theory or attitude that acts as the guiding principle. Almost everything in the business needs to be connected to make a feasible and accurate periodic projection of the budget or the strategic intent.

Integrated Business Planning objectives

We might forget it in our busy day to day lives, but the ultimate goal of any business is to achieve its purpose and envisioned future. A strategy is a set of decisions, priorities and long term plans to achieve its envisioned future. The budget is the first year of the strategy. The supply chain is just one of an enterprise its functions we need to execute a strategy. There are many other functions, so there is no need to call out the supply chain in an IBP definition.

If we want to support a company’s vision through planning, any definition needs to be in the context to achieve the envisioned future, strategy and budget goals of an enterprise. IBP provides us a forward view to tell us if we’re likely to achieve the budget, strategy and envisioned future. These are ultimate goals for IBP and hence are included in my definition.

IBP Validity and Reliability

Just any guess of the future isn’t good enough. Before any educated guess or plan for the future is presented we need to make sure there have been some checks and balances to make sure it has some validity. If we project stock, working capital or an EBIT number, we need to have a degree of confidence that this is really what we’re looking at.

Once we have validity and we agree and are aligned on what we’re looking at, we need reliability of any projection we make. We like to see the projected stock, working capital or EBIT number within an acceptable range.

We need to have validity and reliability about our expected budget and strategy performance, or the whole purpose of IBP falls apart.

A new IBP definition

In IBP the periodic review is often monthly, but financial and strategy literature often suggest quarterly periods to review a rolling forecast and strategy progress. Hence we don’t like to call out a specific time period. Executives are the main responsible for vision, strategy, budget and decision making like resource re-allocation and need to be called out. We also like to create some form of alignment during an IBP cycle on the information presented to executives. Following these explanations, here is my working definition of IBP.

Integrated Business Planning (IBP): A holistic planning philosophy, where all organizational functions participate in providing executives periodically with valid and reliable information, in order to decide how to align the enterprise around executing the plans to achieve budget, strategic intent and the envisioned future.

We then can only hope that, armed with this information, the executives make good  decisions and set the right priorities to lead to company to its envisioned future.  Will this definition be the final acknowledged one? No way, but I hope it will bring us a step closer to define and agree what IBP is in a few sentences.

I encourage you to comment on this ‘open source’ definition.  It has already been updated many timest based on some of the feedback in the comment section.

70 thoughts on “ A new definition for Integrated Business Planning ”

Neils, Jon Kirkegaard here keep up the great work ! You hit on why OW and others jump on term IBP as it lets them broaden scope and provide shallow depth on their offering (generally a software product, cloud service or generic consulting process).

In our experience at DCRA with helping clients drive significant change S&OP is a real asset to lever as it is difficult to “fake”. It is very focused and the introduction of time phased MPS /DPS material planning into a manufacturing or virtual manufacturing really creates a value add future projecting financial system grounded in the concept of inventory. We often describe it as a process of “Selling what you make and making what you sell”… in essence asking these questions continually to achieve the risk reward balance desired.

Real S&OP is almost impossible to manipulate by operators or financial engineers and becomes an organizational truth all roles and begin to trust and thus build trust and collaboration through numbers !

The real issue is S&OP is difficult to SELL. We generally do not introduce S&OP initially with clients we sell a process we call Total Order Fulfillment and use a variety of tools to achieve. Most often we introduce S&OP after initial wins of value creation as THE long term organizational philosophy and process that will help the client KEEP gains already achieved !

Fantastic points here. Being a SaaS company in this industry is quite a challenge, and one of the biggest reasons is because of the loose use of IBP to define tools, services, etc. One company claims they do “IBP” when, in fact, their service is completely different from another company’s service. How can we expect companies to adopt IBP if we don’t even have a clear idea of what it is? (Furthermore, if those software vendors offering “IBP” are so extremely different!)Your statement here is spot-on: “Anything can be called IBP. Any software vendor can call their solution IBP.” It’s refreshing to hear people speak to this issue.

Not sure how I’ve missed your blog previously, but I’m excited to explore more of your existing work and to see what you have to say in the future! Would love your feedback on what we do / offer, should you find a free few minutes (Company: River Logic).

Again, many thanks for sharing your thoughts on this topic!

Thanks for your kind comment Jon.

I agree with you sometimes we don’t need to talk about S&OP or IBP yet. One of my clients is a successful and very profitable business. However, they are very immature in their planning capability. We agreed not to use any acronyms like S&OP or IBP, but first build some basic underlying planning capability and knowledge.

cheers, Niels

Thanks Shannon, you nailed it with ‘How can we expect companies to adopt IBP if we don’t even have a clear idea of what it is?’ Crazy stuff, but as long as there is no governing body, it will stay like that. The IBP Wild West!

Although I don’t know your product, I think there is a big future for things like prescriptive analysis. It can provide the future bandwidth of our plans. Within this bandwidth we than can decide how much risks we want to take to move the business forward. Once we agree what we talk about (validity), big data, smart analytics and even artificial intelligence will provide the reliability of our forward projections.

We than only need AI to make the decisions and the executives can go home 🙂

Hi Niels, I like your work on building a solid an widely agreed on foundation on S&OP and/or IBP.

I think your latest definition is a good start. What I don’t like about it is that with this definition it’s a purely informative process. In my opinion IBP should be a decision-making process.

It’s about: align where we can and address where we can’t, meaning that the final decision is being made by the GM/CEO based on reliable and valid information.

Regards, Rik

Thanks for your feedback Rik.

I agree with you that IBP is about making decisions and I considered to include it in my definition My logic not to was the following:

We can provide good decision making information to executives every IBP cycle.Regardless of what information we provide decisions or no decisions will be made by the senior team. I facilitated over a 100 IBP meeting where I’m sure sometimes the information was there, but decisions weren’t made.

Is that still the accountability of IBP? I first thought it wasn’t. But it is when you include good decision making and follow through as part of the BP system thinking and the behavioural or cultural IBP capabilities needs that come with that. You can also assume that an IBP manager needs to have the capability to influence the senior team to make a decision.

So yes I agree with you!!!!! How about this definition??

IBP: A holistic business planning philosophy that provides executives periodically with valid, reliable and aligned information to decide how to steer their enterprise to meet budget, strategic intent and the envisioned future.

In my point of view the decision is preferably a team decision, not just the GM/CEO. Although the GM/CEO will be held to account for any decision being made. That comes with the job.

Thanks again

Thanks for sharing this with the group Niels!!! I fully agree with your views within it and like the holistic planning philosophy part. A possible improvement on it may be to add additional clarity on the collaborative execution from the different functional areas of the business to achieve the plan being some individuals may say IBP needs to more than just a philosophy to advance the company forward. There also could be a sentence on how it’s continuously monitored and adjusted through each planning cycle as more information is gathered. The difficulty in writing this definition is trying to cover the major elements of IBP in a short paragraph when entire books are written on it struggling to capture them all.

Hi Niels, Thanks for you reply. I totally agree with you, and the definition looks better now. Rik

Another great article! The working definition is a great way to open dialogue.

With regard to the “business” part, to me that alludes / restricts to a “for profit” organisations, where as many NGO’s or even government organisations would benefit from applying IBP, hence “organisation” would be more inclusive. The other great benefit of the holistic nature of IBP is that is links Strategy to Execution, as opposed to being merely a feed into the executive team. The definition would be benefit from capturing the fact that the outcomes / decisions made by the IBP process, create a way (set of plans) for the entire organisation to meet the budget and strategy.

Furthermore, I think the “valid and reliable information” part is a great element, given they are a function of the people, processes and systems that have gone toward providing it. It talks to the maturity of the IBP process.

With regard to the question whether there is a need for a governing body for IBP, I’m not so sure. I’m convinced that a challenging force to the current establishments, i.e. Oliver Wight, Gartner, APICS, etc. would create a following. But do we really need another organisation that stands up to say they hold the IBP / S&OP truth, so they can market it? Perhaps the nature of IBP, which as you pointed out is more of a philosophy, if more suited to be “open source”.

Hi Steve, thanks for your input

Getting ‘different functional areas’ or ‘cross functional’ in there is a good idea. Continuous monitoring comes partly back in ‘periodically’, but maybe words like calibrate, adjust, re-focus can improve the definition

Collaboration is an overused word I believe. If functions communicate or cooperate well it already does miracles. Collaboration for me means there is a common goal, you are prepared to share resources and most importantly there is an INTENT to make the other function better. To grow the other function. I will use the word ‘participate’ for now.

Here is the updated definition: Integrated Business Planning (IBP): A holistic planning philosophy, where all business functions participate in providing executives periodically with valid, reliable and aligned information, in order to decide how to re-focus the enterprise to achieve budget, strategic intent and the envisioned future.

Maybe ‘align’ is better than ‘re-focus’ and we get rid of the ‘aligned’ before information.

bye the way, I keep track of the definition history, so we can always go back to where we started

Hi Freek, thanks for your nice comment. I was thinking about governing like SCOR is governed for supply chain process. But maybe the IBP definition should be open source as it will evolve. Well…the open source definition is starting right here!

Agree, the definition should be valid for any industry and type of company. Especially companies that never heard of a ‘supply chain’. There is way to much bias in current IBP talk.

You are exactly right. Validity & reliability talks about maturity (reliability more so). Understanding the risks in end to end supply chain, plan scenario’s around that and understand the impact on the P&L is not a must to start IBP. However, it will improve the reliability of the projected P&L.

Getting the word ‘execution’ in there is a good idea. In the end IBP needs to lead to the execution of the plans proposed to deliver budget and strategy.

Here is the updated definition: Integrated Business Planning (IBP): A holistic planning philosophy, where all organizational functions participate in providing executives periodically with valid, reliable and aligned information, in order to decide how to re-focus the enterprise around executing the plans to achieve budget, strategic intent and the envisioned future.

A mouth full, but not bad may I say! I’ll update this in the blog

Interesting article. At Oliver Wight we developed the term Integrated Business Planning to describe a process with the following characteristics

• A process, led by senior management that, on a monthly basis, evaluates and revises, time-phased projections for demand, supply, product management, strategic projects and the resulting financial plans • Typically a rolling 24 month horizon • A decision-making process that realigns the tactical & operational plans for all functions within an accountable organisation entity, in support of the organisation’s goals and targets • Drives consensus on a single operating plan, to which executives hold themselves accountable • Allocates the critical resources – people, equipment, inventory, materials, time and money – to most effectively satisfy customers in a profitable way

This is the definition that we use in our Oliver Wight education materials and presentations.

Whilst a great many advocates and practioners of S&OP and IBP sit in the Supply Chain space the process outlined above is a “whole of business” process not a supply chain one.

Your call for a standard definition is an interesting one. At Oliver Wight, as you know from your time leading the IBP implementation at a client organisation, we have developed a maturity model for IBP and defined in detail the required process characteristics and behaviours required for excellence in IBP in The Oliver Wight Class A Checklist for Business Excellence (Sixth Edition). So, in our view, a definition exists. Whether everyone agrees with that definition is another matter.

For those who are seeking an even tighter definition than the one that we developed I offer some words of caution. Every organisation is different. Most organisations have common issues but if we prescribe too exactly the process or system that an organisation should use to address those issues then we potentially risk the engagement with the organisation’s people in the “new way of working”. As you know, “the people stuff” makes or breaks IBP implementation or improvement.

We are starting to see organisations outside of the traditional cohort of manufacturing such as medical, retail, scientific, service, government and military adopting the principles of IBP outlined above and making significant improvements to their results. Organisations will continue to develop new and exciting ways of doing things and together we will further evolve the IBP process definition as we have done since we pioneered S&OP in the early 1980s.

If anyone would like further information please feel free to visit the Oliver Wight Asia Pacific website at http://www.oliverwightasiapacific.com or contact me at [email protected]

Your call for a standard definition is an interesting one. At Oliver Wight, as you know from your time leading the IBP implementation at a client organisation, we have developed a maturity model for IBP and defined in detail the required process characteristics and behaviours required for excellence in IBP in The Oliver Wight Class A Checklist for Business Excellence (Sixth Edition). So, in our view, a definition exists. Whether everyone agrees with that definition is another matter but hundreds of organisations around the world have successfully used it as a reference for business transformation efforts in this area

We have for a while now been seeing organisations outside of the traditional cohort of manufacturing such as medical, retail, scientific, service, government and military adopting the principles of IBP outlined above and making significant improvements to their results. Organisations will continue to develop new and exciting ways of doing things and together we will further evolve the IBP process definition as we have done since we pioneered S&OP in the early 1980s.

Hi Stuart, thanks for the follow, your comment and for joining the conversation. Much appreciated.

I understand indeed the value Oliver Wight has brought to the development of IBP. And I know you got a lot of things right. I also see a lot of opportunity for improvement in a system approach to IBP but too little open conversation about IBP innovation.

One of my objectives in over 5 years of blogging about IBP, is to start these open conversations. My style is to operate in the area of ‘caution’ as you mention. Of the beaten track. Challenging the status quo. Not unsimilar to my IBP presentations you have seen at several conferences. It is in these areas of caution, where we might feel uncomfortable, that we scratch the surface and explore new things. This is where the exciting stuff happens and where we find opportunities and new ideas to innovate.

My goal however, is simply to get better, know more, develop mastery and share my knowledge with anybody who has an interest and likes to listen. Reading through the results of my 2015 S&OP Pulse check, a survey I have conducted for 5 years now, I see a lot of confusion in what S&OP and IBP is. I also see a need for addressing behaviors, a thirst for more innovation and standardization.

These are real and serious needs and concerns in a worldwide planning community, which we need to address. Not by just repeating the same stuff, but by listening to the planning community and answer with thought leadership and innovation. We all have a role to play in this. I do my little piece through my blog.

Thanks for again triggering a very relevant and quality discussion.

Would like to share some words that I use in my current definitions of S&OP / IBP / E2E BP:

1)”Tactical”: since the processes bridge strategy and execution. I find it quite common that people get muddled between these process and for me the re-focus or “course correct” is very much a tactical exercise. Neither operational (changes too small for exec too notice) or strategic (e.g. we merge our ship with a competitor), but tactical – we course correct / refocus our ship.

2) “Continuous improvement” to me implies that there is a structural element of a mature process, next to the monthly fine-tuning. I.e. reviews of past plans v. actuals can be used to trigger various short term actions or multi-month improvement projects to structurally improve the capability of the value chain to support budget, strategy, etc. On the other hand if these is too wordy to add, it could be left to the footnotes.

3) The big one. A sky ball way over there in left field. In extensive discussions with my last customer we decided the answer between S&OP v. IBP was NEITHER, and in fact it was “E2E BP” – End To End Business Planning.

* Benefit of E2E BP: more obviously broader than supply chain than either S&OP or IBP. The advent of focus on product planning (thanks to PLM software), customer planning (thanks to Salesforce) and also supplier collaboration (SRM programs), mean a truly end to end value chain perspective is required. I don’t see mention of customer or supplier in the OW explanation of IBP above (albeit likely implied) – yet in the end both of these folk are fairly important in achieving budget and strategy.

* Cost of S&OP: several software providers in the field (inc. big fish JDA) provide S&OP as a separate, discrete module, which is used following on from demand planning and supply planning modules. So to retrospectively label the end to end process S&OP is confusing to companies who use this software. I have also witnessed it is confusing to S&OP managers who are not sure whether they should be involved in every/some/none of the demand/supply planning meeting in the organization or just the true S&OP meetings (where the balancing, allocation, capex scenarios, etc are performed, inc. final MBR meeting).

* Cost of IBP: still has the image of being just S&OP (and by hence, as above, supply chain) linked to strategy and finance and hence does not automatically capture the imagination or buy-in of product development or marketing executives. As the indeed regard it as S&OP on steroids, “advanced Sales & Operations planning” or worse, “advanced supply chain planning” and hence not directly relevant to them. The “integrated” in IBP also suffers from the most common economic application if it, in “vertical integration”, which over-emphasizes the vertical connection from strategy to budget to supply chain mental image that many have of IBP, which obscures appreciation of the even greater number of horizontal connections at play… product, supplier, customer, etc.

Another key reason is consistency with the arguably more mature terminology used in IT. There integration testing refers to testing the data flows across two systems. And end to end testing refers to testing the data flows across all planning systems in the domain. There are even long discussions on IT forums as to how “integration” testing is a more limited subset of “end to end” testing. So I would argue our IT friends would also relate easier to E2E BP, as this process terminology coincides with their existing system terminology. And ultimately the process – whatever we call it – is surely benefited when the standard terminology of process and system are aligned!

Also if you use E2E you could possibly drop the word “holistic” as this is now directly implied in the title and does not require this constant footnote reminder of: yes that includes you too portfolio managers, pricing managers, marketing managers, key account managers, etc. It is perhaps this lack of direct understanding of the intended holistic nature of S&OP and IBP that has provided the constant threshold block to wider acceptance of the holistic, tactical and end to end business planning processes behind it.

You are attracting a good conversation on S&OP / IBP and you are an excellent moderator of “the value proposition”. As I mentioned in my first response keep it up… turn it up ?

What I find extremely sad – but inspiring at the same time is S&OP has the potential to really really improve peoples lives globally. For all the nonsense business concepts, motivational games, consulting, even TQM and Six Sigma they all fall really short in capturing full extended enterprise performance / measurement. So often efforts are designed to show benefits for the control area for the management sponsors but across the supply chain are just taking from one side to give to another.

S&OP is not like that . It trully forces looking at big process not small pieces and it truly works to remove waste, improve the language of true collaboration (time phased material) and although always the same concept and algorithm can be applied as loosely or as tightly as the culture / business can support (data, decision making)

What would be fun to explore with you – is very clear real hard hitting examples how S&OP can and does really change the world. We started a bit of this at our blog https://soptime.wordpress.com/ and sopbook.com sites but really need to bring it home to average business person as potential is enormous – free up capital for new jobs – free up capital for innovation – focus and pool manufacturing resources to be more production / specialized (e.g. Boeing 787 plane mfgr vs. 10 years ago… everything high tech now) – Improves, streamlines executive communication in average firm in marketing, sales, operations, mfgr, supply chain, CEO office – Great tool for rooting out fraud – Great tool to push back on Wall Street financial engineering mickey mouse games that do nothing but long term damage – Core enabler for what we at DCRA often refer to as “Assembly Coordination” to enable cost reduction and build to order change of a broad swath of the products in the market (from automobiles, Apples to X-ray machines) – The real GREAN energy and efficiency benefits so often touted but S&OP through elimination of cross company has potential to really be unsurpassed delivering on hype credited to a lot of nonsense and generic concepts

So who wants to get off the “Who Moved My Cheese BS” of best practices and naming, credit for names and get on to real value creation that improves lives in all economies ? In our client experience the real hidden opportunity is how it can greatly mporve average employee / execs professional satisfaction to know they are truly pulling a synchronized oar in powering the company boat !

Hi Conrad, thanks for your contribution. Here my comments on some interesting thoughts

E2E business planning: I really like that term. It says a lot by itself. Your explanation also makes me think that E2E value chain planning, or just value chain planning, might be a good descriptions as well. Traditional S&OP started in between the 4 walls. We’re beyond that now and have to plan across a horizontal and vertical network. Value chain planning already says that it goes beyond the enterprise. I think you’re making a good case for E2E BP and we have to keep those in mind for sure.

Continuous improvement: for me this simply applies to almost anything. A business has to keep getting better to stay relevant, so I see it more as a footnote indeed.

Tactical: I agree that we have to spend most of our time in the tactical horizon, so beyond the operational horizon. So IBP is mostly, not only tactical. If disaster strikes, an unforeseen competitor enters the market or a large customer walks away, we might have to change gear and operate more in the operational horizon. Furthermore calling out budget & strategy as goals to achieve already suggests we have to operate in the tactical horizon.

The word re-focus is not the best part of the definition I think. It implies, that there was no focus in the first place. Re-align, re-direct could also be possible. My thinking is that as communication is seen as top 3 importance in strategy execution in several articles (HBR, McKinsey) the outcomes of an IBP cycle has to be used by executives to communicate how ‘the ship’ is being redirected.

thanks. I’m happy to be the moderator and I think we all have to ‘turn it up’. I’m just the guy that asks silly questions and starts crazy conversations.

You mention something I can very well relate to. I like to believe that IBP can help to improve peoples work life’s, not just improve business performance. For me the underlying purpose of IBP, is to make people understand each-other and communicate and collaborate. I even believe it can lead to higher work satisfaction.

I wrote the purpose of IBP in a blog over 4 years ago https://supplychaintrend.com/2011/05/20/the-purpose-of-integrated-business-planning/

In my yearly S&OP pulse checks, participants indicate that the main cultural change due to S&OP/IBP is ‘better understanding and communication between functions’. So that is what (supply chain) people believe.

However, no CEO will invest in IBP just to improve understanding & communication. We need some hard wins to show too (most of those hard wins like reducing waste will be because of better understanding and improved communication). I think there are enough examples of hard wins around. Just maybe explained with a bit too much marketing spin around it, which undermines the message and raises doubt in the readers’ mind on how real this is.

Thanks for your feedback. And a couple of feedbacks on your feedback:

* Horizons to me are divided into short, medium and long term. Strategic, tactical, operational (and even executional) are attributes of “cycle” not of “horizon”, i.e. as you imply tactical decisions may impact any part of the planning horizon. The same also applies to strategic decisions. By adding the word “tactical” to the definition we would clarify the depth of analysis regularly – cyclically – intended to perform and even more importantly, intended not to perform in S&OP/IBP/E2E BP.

I.e. we delve into issues and impacts higher than an operational nature (e.g. how to address an individual customer’s pending order for a product on short stock), but also lower than a strategic nature (e.g. M&A, redefine strategy, enter new markets, open new channels, enter new products, etc).

A key danger of S&OP/IBP/E2E BP is when it aims to perform all levels of decision making and therefore ends up doing none of them well. This is where my clients have found that the word “tactical” provides a welcome clarity of focus, in the cyclical sense. Particularly when they are operating multiple cycles within cycles, as virtually all companies do. They need to clearly know what makes this cycle distinct from the others in their process mapping designs.

* Agreed re-focus could be improved, as it implies no matter how many cycles and meetings we’ve had in the past, we still haven’t achieved a focus. Perhaps “decide how to re-focus” could be substituted with “continually focus”?

In my experience running a well oiled S&OP/IBP/E2E BP, we already had focus but each month we need to ensure we maintained that focus and made effort to keep that focus in the light of changing circumstances, market dynamics, etc. I think if we “re-” anything, we imply a recurring type of deficiency which conflicts with and hence undermines the overall aim, and is overall too negative.

* Good that you mentioned “value chain planning” I have liked this naming before and in fact understand Oracle already use that term. It’s another variant! On the one hand it seems more straight to the point and less nerdy (!) than either IBP or E2E BP, in implying the “why” we are planning: to add value! Rather than planning for the sake of planning by planner with nothing better to do in their lives, which both IBP or E2E BP tend to imply…

‘We’re planning for the sheer and simple joy that our planning can be more collaborative, consensus integrated and E2E than ever before… customer value? What’s that got to do with anything?? – we’re just planners, planning away until we reach our – well planned for – pension age… if one day our customer base evaporates and our ship sinks, at least we will have experience the not considerable satisfaction of knowing that we sunk it together, in a cross-functional, collaborative, integrated and end to end manner’.

So you – and Oracle – may have in fact personally sold me back on VCP.

On the other hand value chain planning quickly brings to mind mental images of value chain strategy, so the key here would to be keep that distinction very clear. In VCP we should *not* intend to review the optimal incentives per function across the mix of business strategy components (as I have published before: innovative quality, attentive service, agile delivery, or lean cost), but instead to fulfill the chosen strategy. At least until the next strategic cycle update.

* The definition may require some footnotes to make it clear, standard, acceptable. #1 of those, is – what remains of S&OP? Is it rendered “obsolete and old-fashioned” or a “weak, deficient version” of IBP / E2E BP / VCP or an integral process component – and in IT terms: module – within the overall IBP/E2E BP/VCP tactical cycle?

* For any proposal to become a standard, it requires sufficient stakeholder engagement to get it there. Aside from the loosely termed “project mgmt” community, the two key parties to me appear to be: Oliver-Wight and the key IT software providers.

Great to see OW already commenting here… but I sense the consensus is not yet there. Even if they may not have intellectual property rights to the term IBP, I do sense they have a strong sense of ownership of it. And of course rightly so, since they originated it.

As I mentioned before, the IT community has it’s own rather more mature, tried and tested terminology which by the highly detailed nature of the work they do is forced to be more specific than a consulting brochure. Hence I would be interested to hear an IT view of IBP as a process. Does performing integration testing and E2E testing on an integrated business planning process make sense, or confuse, or do they see the process as being an end to end business planning process? Or has the world’s 2nd largest software company (Oracle) come up with the optimal naming years ago – VCP – and patiently waited for the rest of us to finally catch up with them?

Either way, the risk of not achieving consensus is that potential customers are bombarded with different visions from OW, IT software providers and project managers, and hence give the maturity level 4-5 vision up and settle for the safe bet of a mere ERP upgrade! I have witnessed from close hand an overwhelmed multi-billion dollar global company make such a decision. And worse still, walk away convinced that this was the best result they could have achieved.

This is why many of us think a standard definition, shared across all key stakeholders, will benefit all stakeholders, by greatly clarifying the messaging and hence greatly enhancing the market potential of future IBP/E2E BP/VCP implementations.

Best regards, Conrad

Thanks Conrad, it took the re-focus out and made it ‘align’. I then took the align away from the information.

Integrated Business Planning (IBP): A holistic planning philosophy, where all organizational functions participate in providing executives periodically with valid, reliable information, in order to decide how to align the enterprise around executing the plans to achieve budget, strategic intent and the envisioned future.

I just was in contact with Dean Sorensen this morning. He send me an interesting article that soon will be published in Foresight. He makes some good arguments that contribute to this conversation.

Niels – excellent discussion. As you know – I view IBP as marketing hype – devised to give consultancies permission to go back into the corner offices with some shiny new object. IBP is a hoax. IBP is by definition, nothing more than mature S&OP. Further, if your organization cannot understand that the expression S&OP is broader than just sales and operations – then there are a host of other issues needing to be addressed. What is REALLY needed is more depth on S&OP not some marketing redefinition. We need people to write and discuss how to make S&OP more effective, how to enable change with S&OP … how to leverage it in other industries and sectors…. as so on … Most discussions on the IBP subject … to me … are mostly mental self-pleasure.

Marketing hypesters depend (prey?) on uneducated consumers.

I noticed that OW weighed in … I have my old train the trainer materials from OW. One slide has “S&OP is Integrated Business Planning”. Yep … I still agree.

So while I appreciate your attempt to put bounds around the IBP expression – to me it lacks integrity to use it … and does more damage than good.

Thanks Patrick, I know and understand your position. One of the reason I think it is better to move on from S&OP is because it is riddled with supply chain jargon and bias (so is IBP still). This it where it has its roots of course. But this is also holding back a more end to end development and I think it is a main reason for a lack of innovation.

I make this argument in my article ‘the rise and fall of S&OP’. S&OP lives in a supply chain bubble, with no serious academic research and one they it will be replaced by an other end to end business management method. Most likely from a financial or strategy angle, as there is a lot more serious research and conversation happening.

However, you’re right to say we need more depth. That’s why, besides pitting out some of these challenges, I also try and contribute with my vision on where S&OP has to go (The Rise and Fall of S&OP, 6 ultimate signs of S&OP maturity and many others) Cheers, Niels

IBP is …. to me … nothing more than a weasel word expression. Weasel words or expressions are so non-specific or generic as to cause confusion themselves. The supply chain jargon will always exist in IBP, or S&OM or SIOP or S&OP … or any other future variants of the name because you are looking at the long term impacts of supply and demand plans. Calling it IBP does not remove those issues. Further, if an S&OP lead cannot lead or persuade their organization around a unified process name — then they are not skilled enough of a leader to run S&OP. Let’s call it what it is … it was a marketing ploy invented by a consulting organization to sell more consulting services. Only the naïve or uninformed think otherwise.

Haha I like your clarity Patrick. Love it and thanks for your contribution.

We’re not too far apart, I just still think a good definition gives us an opportunity to leave the supply chain bubble so we can more easily engage other functions like marketing, strategy, finance. All those functions we need so hard to make it work better and start innovating and planning with a vision and strategy in mind

Hi Niels and Patrick,

Good to see some familiar names adding their perspective. And by this I also include OW whom I personally have enjoyed working with and also picked up some useful tips from. 😉

I actually agree with both of you: * S&OP IS inadvertently supply chain biased due to its name (for example only implying but not stating the role of portfolio, finance, strategy) BUT * IBP has – perhaps unintentionally – morphed into a vague and hence elitist hype (it excludes ‘integrating’ merged companies and system ‘integrations’ yet requires both of these integrations as pre-requisites to it’s own brand of ‘integration’).

Anyway I’ve long considered that the debate between S&OP versus IBP will NEVER be directly resolved between these two candidates. The fight has already gone beyond 15 rounds (i.e. years) and neither fighter is establishing a clear dominance nor showing signs of throwing the towel in. It’s becoming like the decades long debate of old horseman last century as to who was the greatest ever horse Man O War or Phar Lap? Until a 3rd horse named Secretariat arrived to put that issue to bed.

Question is can we resolve this S&OP versus IBP nexus in a similar, fact (rather than emotionally) driven way? I believe we can. By examining these phrases as well as two major alternatives, through the dual lenses of English grammar and IT module naming conventions.

The Four Candidates: – S&OP – IBP – E2E BP (End to End Business Planning) – VCP (Value Chain Planning)

Test 1: English grammar Nouns: Sales & Operations, Value Chain Adjectives: Integrated, End to End –> Recommendation: let’s “plan” (verb) a clear noun likes Sales/Operations or Value Chain, not an abstract adjective like an Integration (of what?) or an End to End (from where to where?)

Remaining candidates: – S&OP – VCP

Test 2: IT module naming conventions Relevant examples of IT module names include Product Lifecycle Management, Demand Planning, Supply Planning, S&OP, etc –> Recommendation: S&OP is a widely accepted, clear and stand alone module offered by several IT companies to distinguish it from other stand-alone module offerings. The name S&OP absolutely deserves to live on, but as the specific module that supports those Pre-SOP/Reconciliation and S&OP/MBR type meetings that follow on from portfolio, demand planning and supply planning. However we should NOT expect IT companies to reuse the same term to signify both a single module as well as an entire suite of related modules including itself. (I should know – I already tried it on the inside of an IT vendor, prior to their global suite naming launch).

The Winner: – VCP

VCP meets the criteria of being both a clear noun and a distinct naming suitable for use by IT vendors to cover a suite of separate modules including S&OP. VCP is already used as such by the world’s 2nd largest software company Oracle (whom I incidentally until now have zero affiliation with) and who apparently sell a suite of 15 VCP applications, ONE of which is called S&OP. (As I found here: https://docs.oracle.com/cd/E26401_01/doc.122/e48791/T578797T578800.htm )

In conclusion I would summarize: * S&OP is a modular process and tool that leads to integrated business planning. * VCP is a suite of multiple modular processes and tools – including S&OP – that leads to integrated and end to end business planning.

>> Niels, Patrick, and others – what are your thoughts?

Conrad .. interesting discussion…

If IBP made sense – it would not raise a debate. (at least with me) I would be all over it. However, when something otherwise well designed is changed … one must ask the question Why ? And … if there is no difference between S&OP and IBP … (except one is a more mature version) … again one must ask Why ? The answer is obvious – with everyone “saying” they are doing S&OP (even if unproductively) — it is impossible to get into the corner office. You need to create difference (even if there is none) to get executive mind share. IBP is different if only in name. Hence my hoax comments.

Now … if you drew a line in the sand … and said S&OP is an aspired to level of planning maturity that is less inclusive by design … you may have an intellectual leg to stand on …

As an example – if we all agree that S&OP is not an all in / all inclusive planning process … then IBP might have some legs … or turn the words around so that you have “achieved Integrated Business Planning” at Level X of S&OP maturity …a form of planning Nirvana …. you might convince me to use the expression…. but selling a mature S&OP process as something different is disingenuous…

There … I have done their marketing for them … you’re welcome 😉

Finally, as I view systems as a tool to execute planning – VCP is a stretch to me … but I understand where you are going.

Good points Conrad – thank you!

Great discussion gentlemen

@Conrad; thanks for dissection this language wise. With my grammar, I wouldn’t be able to that. I don’t think we necessarily need an IT naming convention, but it comes in handy and I actually like VCP. I still prefer to give IBP a go first though.

@Patrick; do I read correctly that you would accept IBP under certain circumstances, ie if we all agree that IBP is a level of X S&OP maturity (The S&OP nirvana)? What changed your mind?

Ok then. I just wrote an article about that. I hope it get published, but it might be too much out there. The approach is simple tough. The nirvana for any company is to achieve its purpose and envisioned future. Planning will have to support reaching this.

I use a model from Collins & Porras from 1996 that describes what makes up the envisioned future of a company. I describe in the article how planning can support visibility, decision making and alignment on how to reach this envisioned future, whilst staying true to its purpose. If planning can do that, it supports the ultimate goal of a company, its nirvana or its envisioned future.

IBP back on the table for you Patrick, if I get this article right?

@Patrick: indeed I think that’s were IBP got stuck in the middle, trying to cover two things at once: trying to sell itself as – in your words – as both a “mature S&OP process” as well as “all inclusive planning process” that includes S&OP as one element. As Abraham Lincoln famously said: “it was not best to swap horses when crossing streams.”

Firstly I do not think S&OP – narrowly defined to cover one process – will be “killed off” soon by any number of consultants or practitioners. That bird has long flown. It would be akin to killing off “inventory optimization”, “order promising”, “supply planning”, “PLM” or “demand planning” which have, like “S&OP” all become accepted as industry standard process elements and system modules.

The only question that remains in my mind is whether IBP is the most appropriate naming for the “all inclusive planning process”? This is something that I could conceive of.

A quick look at the As-Is world reveals: * Oracle uses “Value Chain Planning” ( https://docs.oracle.com/cd/E26401_01/doc.122/e48791/T578797T578800.htm ), * JDA uses “Supply Chain Management” ( http://www.jda.com/solutions/solutions-index/ ) * Infor have moved from “Supply Chain Planning” to “Integrated Business Planning” and now back to “Supply Chain Management” ( http://www.infor.com/solutions/scm/ ).

Incidentally all three vendors offer S&OP as distinct modules within their planning suites, with no sign of any IBP module in sight.

Based on this, I would suggest our role as consultants and practitioners is to achieve consensus – from a process view – as to which umbrella term for “all inclusive planning process” – and also for business transformation programs – makes the most sense.

>> Is it Integrated Business or Supply Chain or Value Chain… Planning, or even something else?

@Niels, Patrick, OW, others: do you see scope for IBP to allow S&OP to “live on” as a separate process/module and instead be considered as the umbrella term for all value chain processes/modules?

Or do either SCM or VCP fulfill this need better, by virtue of being based upon tangible, easy to visualize and understand, nouns?

Or should we still press ahead against the odds and persuade the majority of multiple IT vendors to switch from S&OP to IBP modules and the majority of global organizations to rename their S&OP Managers as IBP Managers?

The proponents of IBP have not created the intellectual line in the sand…or a real point of difference…. and I am sorry but a mature S&OP process is not anything more than a mature S&OP process. I am not sure I have changed my position. However, if I were the collective marketing group for these folks I would position IBP as a Nirvana like level of planning enlightenment. Not just a highly functioning process. … Real “IBP” as it were – is a level of engagement and participation in the process that goes beyond the functionally necessary… it is a driving force in the organization …

To me, S&OP is still the noun and IBP is the “verb”. I loved the OW Slide heading .. that was “S&OP is Integrated Business Planning”.

I would only enhance the wording a bit to be a touch clearer…. “A mature S&OP process will lead to integrated business planning”

In my company we do not call the S&OP process … S&OP… we call it SEC (Sales Estimating Committee) … I am not bothered by the name IBP — I am bothered by the disingenuous portrayal of IBP as something new and fresh. It is old thinking repackaged.

Thanks guys, our positions are clear. 3.5 years ago I tried to describe the planning nirvana in https://supplychaintrend.com/2012/02/06/the-four-phases-of-ibp-2/ , a blog later published in a finance – yes a finance – magazine

I’m now finalising an article that takes my concept even further and provides a planning framework to support a company’s vision.

My plan is to engage the strategy community with this article. Strategy is trying to solve the same problem as us with the office of Strategy Managenent (OSM), a concept proposed in 2005 by Kaplan & Norton. Those communities don’t know IBP and S&OP even less so.

If we start talking to other communities we need to have a good definition for what we’re trying to achieve or look like fools. I can’t start talking to them about SEC, SIOP or S&OP my gut says. They will say WTF???

My article doesn’t use IBP, it just mentiones integrated planning. I will however use the definition as it stands now, as I think it is the best definition to describe what we’re trying to achieve

Thanks for all your input. I believe we need more of these discussions

You have a great blog going here Niels! The one topic I have seen touch above but not gone into too deep is if IBP replaces the S&OP process at companies in the maturity journey or is it an additional business process? I just can’t see having them both on a monthly cycle with the amount of limited resources and volume of meetings most organizations have these days. If it’s an additional process, I could not see both of them being held monthly. Would the IBP process be a quarterly one? Has anyone seen both in place at one company? I’d be interested in hearing the group’s perspective on this.

Thanks Steven, I don’t think we need different names. What we probably do need is different operational rhythms otherwise the scope becomes to big in a month. For example review your operational plan monthly, your rolling forecast to EBIT bi-monthly and your strategy quarterly. This will also be industry specific.

The strategy guys (McKinsey, Kaplan & Norton) often suggest a quarterly rolling forecast and strategy review. In supply chain we’ve gone the other way around and I read about real-time S&OP or on demand S&OP. That’s the wrong direction for me.

The Office of Strategy Management (OSM) as proposed by Kaplan & Norton in 2005 describes integrated planning as I see it and it comes close the definition we came up with in this blog.

Have a look at the slideshare from this Strategy Phd. http://www.slideshare.net/ArnoudvanderMaas/building-the-strategy-management-office?qid=852655de-9125-4c7f-92d1-8aeecbc13c03&v=qf1&b=&from_search=1

Based on OSM, he talks about the strategy management process in 5 steps. The last 3 steps are what I want to achieve from integrated planning perspective and what I described in the four phases of IBP. https://supplychaintrend.com/2012/02/06/the-four-phases-of-ibp-2/

He also suggest 3 types of meetings; strategy review meetings, execution review meetings & operations review meetings. Again this is what I believe integrated planning is. He describes the same, just from a strategy perspective.

No offence to the supply chain background of S&OP, but we have to get out of our same old supply chain bubble and started talking to these type of guys to get this thing further. That’s why I reached out to this person.

Alot of long worded responses done with what appears to be good intentions but what is missing in all this WHAT IS PROBLEM you are attempting to solve ?

I would state the REAL underlying problem in 90% of the clients we see at DCRA Inc. is they believe GAAP or IFRS accounting via their ERP systems are the way to manage a global manufacturing supply network – period. The know but don’t fix the fact that these ERP systems are grossly manipulated, backwards looking and do not not the ability to time phase material plans cross organizations without huge buffers of inventory and capacity.

They also are reinforced by the training of most accountants who focus on overly precise metrics to drive controls but miss the accuracy of the whole system. My favorite is the warehouse manager so proud of how much inventory he stores, accountants proud of how he so precisely measures said inventory but the system missing that the warehouse could largely be bypassed by flow of inventory to customers. (e.g. Radio Shack vs. Amazon)

Thus what you need is in reality an “alternative financial and operational measurement system” that will be recognized and utilized by major players in an enterprise.

If you believe the above is the REAL problem then we can intelligently decide how best to make the introduction to invoke CHAGE ? How to engage those who think they already have it all figured out with ERP, what to call the program, the change initiative, the systems, how to measure, how to prove, how to get top down and even more important bottom up support !

In our experience at DCRA Inc. and my experience decades prior with large strat consulting and leading supply chain technology providers this program is best defined in business terms of strategic advantage, cashflow, working capital consumption and customer service improvements ! Then slip in an elegant measurement system that is very difficult to corrupt and vary narrowly defined ( S&OP with time phased material planning) under the cover of darkness. Show some results and momentum will win the day.

Starting with either S&OP or IBP as the initiaitve is a looser in 99% of the cases I have seen – period. And yes 99% of the so called S&OP technologies are also losers as they are big, complicated, expensive, IT investment traps as they are there only to cement in the change you make but are not slick partners in change management to redefine thinking and build support !

See more ideas, case studies and approaches at sopbook dot com.

The more things change the more they stay the same

Hi Jon, You make a very good point to ask what the problem is. The problem is a simple question and the same for every company in the world. How do we fulfill our vision?

The question I’m trying to solve here is; ‘what is the best way to continuously plan, monitor and control my strategy and budget, in order to support the achievement of a company’s vision?’

Or maybe even shorter

‘how can planning support the implementation of a company’s vision?’

This can then be followed by; How do we call this? What would be its definition? etcetc

With all respect for your good intentions I would still say the whole S&OP / IBP conversation comes across to much as a solution looking for a problem to solve.

I personally and professionally am a 100% supporter of the “magic” an S&OP culture followed by true S&OP enablers can and will accomplish. Problem is have NEVER seen a business person looking for S&OP. They are looking to specifically – create more profit – take less risk for more return – spread their working capital further – Improve customer service – Strategically leap around competitors – Create profits even in a “sign wave” style up and down market – expand their fulfillment and sourcing using 3rd party resources but maintain control – etc.

The reality is a tightly crafted time phased enabled forward looking planning process (S&OP) can and will support if not drive much of these problems are documented and goals set in stone. But cannot be sold as S&OP but more a business improvement effort defined by the measurement of results. Not so sure about the broader, much more vaque, must more corruptible IBP definition as I think I am 100% agreement with Patrick and others that state it is a ploy to sell more confusing software and consulting ?

So my recommendation to those who think S&OP is the anwer start the dialog with PROBLEMS and Goals to solve – put a stake in the ground or real results no platitudes like benefits of planning. Planning is a process like Order fulfillment, like financial reporting and when presented as a solution looking for a problem not anchored to real ROA, real financial and other measurements can be more a distraction then a solution.

In my experience 90 percent plus of business decision ONLY engage when you say … (as an example) take this path and can cut out 50% of your working capital and improve customer service satisfaction from 90 to 99% and expand your product breadth to strategically out maneuver you 3 largest competitors !

Jon, we’re taking different angles here. I’m not trying to solve a problem for my or your customer. I wouldn’t dare to bore them with this conversation. I’m more taking a theoretical approach.

IBP doesn’t have any scientific or academic leg to stand on. Somebody just came up with this terminology and now everybody is using it without understanding what it is. A whole world is created around it.

I find that unbelievable and unacceptable. That’s not how we make progress in this world. IBP doesn’t exists in the academic world or any other world outside the supply chain world. And even in the supply chain world we don’t agree what it is. A bit of a joke to be honest.

I want an unbiased, academically sound, maybe even peer proven definition for something that connects a company’s vision, strategy, budgeting and execution through planning.

I looked for it but have not been able to find it. The aim of the blog was to have a go at that definition. Once I find it, I’ll shut up, I promise 🙂

No need to apologize you are providing a solid service to the dialog !

I think we are saying same thing as to us the huge benefit of the S&OP term is it grounds itself to a type of problem (demand and supply balancing issue) and thus is much less vulnerable to distortion. It is also the part of global manufacturing and distribution that is generally not done or not done with a scientific method. In most companies is a mess of overriding and statistically invalid guesses !

S&OP thus is slipping in a time phased MPS / DPS with a properly designed planning bill of material into the clients CURRENT demand and supply process. Our experience this is a HUGE winner and is VERY defined and measurable ! In essence EASY once the client sees the huge whole in the center of his bridge that he needs to fix. Our approach to the technology to support this is it works with ANYTHING and does not require client to uproot his basic demand and supply process… just add science and quantitative analytics to the question and answer dialog and reduction of cycle times to ask and answer the question. Can I make what I sell and can I sell what I make ?

IBP as a term could be “Bob” or “Sam” or EIS (Executive Information System). It is so broad and so wide it can be and is widely interpreted to mean “WIHTS” is IBP. Or Whatever I Have To Sell is Integrated Business Planning.

So you are right defining IBP is an “academic exercise” 🙂

There is a brilliant point in all this …. and it is about the lack of academic standards in S&OP. The fact that there are no academic standards – allows anyone to come in and change the definition or name of S&OP. This hopefully will change.

Good point ! So lets define S&OP ! Lets define it very narrowly so it can work ? So it can be a driver for value and change ?

You can see my narrow definition above… restated here

“S&OP thus is slipping in a time phased MPS / DPS with a properly designed planning bill of material into the clients CURRENT demand and supply process. Our experience this is a HUGE winner and is VERY defined and measurable ! In essence EASY once the client sees the huge whole in the center of his bridge that he needs to fix.”

Unfortunately Jon – this needs to be primary research done by academics, and then submitted to peer reviewed journals. I know of people that have done so in the past, without success. There are currently efforts underway (I have been asked to review some of the work) … but submission and acceptance is the process to get this the proper level of academic review.

If defined by academics I would suggest really needs to be defined from a finance / cashflow / working capital management perspective first – and then the S&OP planning process tied back to finance and operations.

For example to continue discussion something like the following. I will post a more detailed examples, user manuals, job guides on our blog soptime /and or sopbook.com

So here you go a draft to chew on ! My contribution to clearing the confusion for ALL

In the world business now operates (Flat) there are often grey boundaries between enterprises that are often described as the “extended supply chain”. In this “flat” world the ability to match resources of supply with true demand can get buffered, not counted, wasted, over ridden in many forms using traditional accounting or even specialty enterprise tools creating enormous waste, missed orders etc.

Thus in this flat extended enterprise there is an amplified need for a current and forward horizon planning, operational, measurement system that can measure (inventory, cashflow, working capital consumption, order book etc.) not just across functional groups within AN enterprise (eg sale / manufacturing) but increasing cross enterprise / function (order fulfillment to contract manufacturer to component supplier) across financial business entities.

We at DCRA Inc. define S&OP as this financial and operational planning and process most companies and especially cross enterprise virtual fulfillment / manufacturing operations require and unfortunately majority lack.

We at DCRA Inc. define S&OP as that enterprise to cross enterprise process that uses a scientific based time phase lead time algorithm in their manufacturing and distribution planning which is driven by an operational planning bill of material. The planning bill of material is not the same as an engineering bill of material it is generally the components of or finished good said enterprise controls. Thus are the functional building blocks of a complete order of an item, group of items or build to order product.

{insert simple planning bill with exploded time phased component diagram here} Figure 1

The S&OP planning process can run at ANY frequency or as “real time” as the appropriate, demand, supply, inventory, lead time information can be synchronized. The more often the more strategic and lean the enterprise can run ! More profit ! {insert Figure 2 planning frequency diagram here} Generally a weekly S&OP plan with updates to address major disruptions is state of the art but by no means is it optimal. S&OP REQUIRES technology enablers for this time phase planning process but is NOT and should NEVER be considered a TECHNOLOGY or software or cloud software PRODUCT. Optimally done the technology enabler should be capable of seamless linking to ANY and all existing enterprises existing order, fulfillment, manufacturing execution,accounting, order management, financial planning, transportation and other functional processes a business currently utilizes.

This concept of the S&OP technology enabler being compatible with ANY other enterprise system is not an academic point it is critical to SUCCESS as with an extended supply chain / virtual business there is NEVER the ability for one organization to dictate ONE common SYSTEM. Additionally even if they used the same “product” the instance would be an asynchronous loosely coupled nature and thus would be impossible to reconcile disjoint plans. So this we all use the same ERP plan is a non starter and should be avoided from day 1 and specifically identified by the S&OP definition.

So there is a START ! But is a start and a definition we developed 20 years ago, have applied very successfully to many clients, patented key parts of the enablers. Run the S&OP in all sorts of industries and at all sorts of planning cycle times. I think it is also a definition most I have met who have really deployed a real S&OP success agree with ! Those selling an OLAP product, and ERP module, a supply chain CLOUD or a general consulting solution don’t generally like as it does not let them call their product S&OP ? Most of these folks want to use S&OP as a strategic entry point to trap you into their oozing blob of function and never let go ! Be careful !

We find it is unfortunately contrary to the economic interests of many if not MOST who want to sell you and S&OP product (software, cloud etc.). We think this is because there is not a true definition of S&OP and because it does not fit typical VC, big software, IT synchronous system models that every software company product business models and their financial backers cling to ! To be clear it is not Microsoft WORD ! S&OP really requires a SOLUTIONS approach that defines a process, coaches the process but also introduces technology to save people time and consistently apply science to the decisions.

We KNOW from experience leadership of an organization MUST be informed so they can properly pick the path the plan to proceed with ! You have to pick… do you want financial, operational success then you have to use a SOLUTION definition of S&OP very much like what we define here.

If you want to plug a product into a hole and declare functional success you could do whatever you want and call it whatever you want ! – but it will NOT create the value of S&OP ! It will not be S&OP and from what history has show often ends up being a huge distraction with a negative ROA and serves to confuse and divide the top down bottom up cooperation in a a business vs. unite them into a team !

Jon –

All good thoughts – but I am not an academic or talking head. I think we need to an SCM professor somewhere and have them publish a paper on S&OP as a process (with definitions)….

I described the lack of academic background in my article ‘the rise and fall of S&OP’. I send it to the journal of business forecasting.

It was their opportunity to share this lack of solid S&op foundation with the global planning community and guide a proper conversation. They found the article ‘interesting, but not renewing’. A missed opportunity.

We have to make that noise so that an academic gets interested and steps in to this mess

Great to see we are all aligned on the need for clarity/renewal of core problem and solutions. I think Toyota Production System said honestly confronting a problem is the first step in solving it. That’s always my favorite moment in any group discussion. In my observation S&OP has traditionally been viewed a “too practical” subject by academicians, which unfortunately most of whom have also had minimal real world experience with, and hence barely any of them touch it. Following this thread I still don’t see any hard arguments against S&OP as a key sub-process and “VCP” (Value Chain Planning) as the umbrella process characterized by adjectives like Integrated, End to End and Collaborative. I also think the word “Value Chain” is a powerful noun as it immediately calls into mind the link to Porter’s value chain strategy (and more modern variants thereof such as Treacy & Wiersma and my own expansion of that), without needing to resort to long-winded footnotes to explain that, yes, of course your tactical plans are intended to support your strategic plans, as well as drive lower level detailed planning. I also made a rough draft for an academic paper on this similar hot topic and based on that plus these discussions would propose the following: GOAL: to materialize the organization’s vision. METHOD: by optimizing the four-tiered cycle of Value Chain Planning as follows: i) develop and review – strategic value chain plans ii) plan and monitor – tactical value chain plans (which includes S&OP as one component, alongside portfolio/customer/demand/supply, etc plans) iii) schedule and maintain – operational value chain plans iv) execute and control – real-time value chain plans

Incidentally the four planning tiers I note here I also proposed and were accepted as the naming convention on the relevant global BI reports by the world’s #2 largest beer company some years back. That said, if anyone has logical arguments, questions, comments, etc over their use, please feel free to shoot.

You are correct in describing S&OP within a broader VCP or full Business Process Framework. We have swim lane diagrams for various industries and outsourced industry models defining these processes we use often to define context. To define ISO 9001 certifications in and around this discussion and to evaluate technologies in support of said processes.

However, I would amplify “in my experience” of all the processes S&OP is exponentially the highest value for many reasons. So it sort of makes sense it is the harder one to make happen !

Good thoughts, good frame work and in your approach I guess I really do not see much need for the IBP term. IBP as a term does not add to clarity and focus but rather seems to detract ? Others may and will disagree and as always the discussion Niels and all of you have participated in is excellent !

I have some very solid relationships supply chain / MBA / Industrial Engineering faculty at various schools and maybe we can get some academic partners to participate ! I have actually worked with several of them over last 10 years to encourage them to create an entire specialty around S&OP.

The phenomena is they see the need but contrary to what you would think they follow industry practice rather then engineer and design practice from first principles and research. Enough time has passed now and there is so much business interest in the value created by S&OP etc. timing should be good to make it happen ?

To Patrick’s point a leadership voice of objectivity linked to value creation in and around S&OP is needed !

Jon Kirkegaard President DCRA Inc. http://www.sopbook.com

Conrad, I like the four steps you describe. I wrote an article ‘how to plan with a company’s vision in mind’ that covers the first two and send it to the JBF. After they respond I can share it with you guys. I don’t know many academics, but will reach out to some I’m connected with. As Jon said previously, let’s keep pushing

Hi guys, I updated part of our conversation on wikipedia under ‘Criticism’. I refer to Patrick’s IBP is a hoax, Dean Sorenson answer to that, the lack of academic definition from my article on the rise and fall of S&OP and the IBP definition we came up with in this blog

@Niels: good job on updating wikipedia!

@Jon & Niels: value academic input, but note also the existence of the industry process taxonomy called APQC, from “idea to market”, “market to order” and “order to cash” business process fame. The academics may feel pressured to try and trump this long standing and widely recognized taxonomy. Last version I checked I didn’t recall S&OP (or IBP) being called out as a part of it… if that’s still the case, perhaps the case could be made to lobby for it’s inclusion?

Also in the context of APQC, I am quite certain the use of the term S&OP to describe all tactical, collaborative, integrated planning activities including but also beyond sales and operations will not hold APQC nor academic sway. It’s like using a key component like “V12 engine” to label an entire Ferrari. It quickly leads to confusion of non-experts – and sometimes even experts!

Hi Niels –

Should you add the IBP as a Hoax article reference to the Wiki … I don’t update Wiki’s … but it might add more color to the overall criticisms

@ Conrad, great suggestion to lobby for Integrated Planning Process to be included in APQC.

With regard to the call for adamic input, any critical thinking on the subject would be welcome. Having said that, there is enough empirical evidence around, in my view, to confirm the need and benefits of IBP without the validation from the academic world.

An area of research on the topic, that I see is would be beneficial, is to outline the requirements on an organisation to meet a particular level of maturity of planning. If the highest level of S&OP (IBP) is like running a Formula 1 team. That requires highly sophisticated equipment using specialised fuel, a team with a racing culture, in-depth knowledge of race tactics, equipment tuning and racing skills, that runs like clockwork. Oh and the financial means to back it up. And the lowest level of S&OP is taking the bike around the track. Each level has it lap times (the speed to review how the vision materialisation (nice one Conrad!) is tracking and what the plan is to plug the gap) If the requirements per level of maturity would be outlined and understood by an organisation embarking on the IBP mission, expectations would be met a lot more and I would dare say, with it comes a higher adoption rate of IBP. Which I assume is the ultimate aim for the call for academic research?

@ Conrad good thinking on the APQC, I don’t know that very well myself

@patrick under criticism there first reference I make is to your article ‘IBP is a hoax’

I never updated a Wiki in my life until yesterday

@Freek: a commendable idea, but since Gartner already claims to “own” the maturity levels, I think in reality academics are afraid to burn their fingers trying to compete there, or with APQC’s process definitions. For example, I’ve seen the resume of one business process professor with over 100 published articles – but not a single one of them on S&OP or IBP!

@Jon: I agree the planning puzzle needs more analyzing. I also think the puzzle never makes complete sense until it’s dissected into the cycle I mentioned, and which incidentally supply chain “Shaman Lora” also often refers to, e.g. here: http://www.supplychainshaman.com/supply-chain-2/e2e-really/ The cycles need to be distentangled so you know what frequency and granularity with which to approach any planning issue.

@All: in the end, the planning puzzle is quite clear in my mind at least. Each company has it’s own variations, but the main planning processes are usually more similar than different. I guess the main issue is to agree on high level naming conventions and secondly break up the micro elements into discernable, bite size pieces instead of the tendency promoted by some advisors to give every MRP run or sales order confirmation a vague blanket label like “S&OP” or “IBP”.

ps? Incidentally Lora applied the umbrella term “E2E planning” in her article, not S&OP or IBP…or VCP for that matter.

@conrad thanks for your ideas and contribution. Good stuff

The planning puzzle is getting pretty clear in my mind too. The four steps as mentioned by you and Lora have to be part of that. They are not new, but they need to be incorporated in both a top down and bottom up description.

I just wrote an article from a top down perspective which discusses a very high level framework on what it means to plan with a company’s vision in mind. I’ll hear in a week or so if JBF wants to publish it. If so, we might be able to leverage that in the conversation we’re having.

I actually don’t think it needs a lot more analysis. I think we know 99% of the stuff. All we might need is some empirical validation, agree definitions and a framework. Preferable for me an academical push. Getting agreement is the main issue.

We are early adapters in this conversation. Our job is to keep pushing it until it reaches critical mass, the tipping point and there is no way back and the whole planning world wants a revolution!

Well all fascinating dialog … seems like we all agree there is not enough clarity or attention / education to business leaders of S&OP ?

Seems to me best way to reign in the 90% of business leaders / excecs to S&OP is to speak in their business value measurement terms !

That is why I sort of 100% believe the real value of S&OP is an alternative financial system that is more simple, not easily financial engineered and forward projecting not historical in its design.

I had quite the busy week but will reach out to a few university engineering / supply chain programs for interest ! What I have found in the states is the following paralax with university programs as they look to “follow the money” not do real research.

1. Proper home for alot of this is in an Industrial Engineering program but very few think enterprise let alone extended enterprise ? Hau Lee at Stanford does a Don Ratliff used to at Georgia Tech ?

2. MBA programs are to focused on financial engineering vs value creation. Finance junkies get it cold but want to go to leveraged finance not operations ?

3. Supply Chain programs for most part are 90 percent focused on warehouses, and transportation sort of teaching the basic skills to work in these fields and S&OP just to “intergalactic” for them to comprehend.

So in my experience speaking to about 20 programs about interest is you need a two part sponsor 1. An MBA finance Wharton type focus on the need an education on how to evangelize the need… sell it to the top down owners / shareholder fiduciaries etc. 2. A partner engineering program into algorithms with IE or manufacturing / Systems engineering to run the program… manage the tools and train the bottom up users

S&OP is to much for most professionals to handle singularly as requires both the top down finance skills and lingo and bottom up operational clarity and integrity as well as the analytical skills as well unflappable mental toughness to persevere through the obstacles that are thrown at you.

Probably more reason why a “clear” definition of S&OP in terms of metrics and process will help many?

Jon Kirkegaard http://www.sopbook.com

Hi Niels, Patrick, Jon & Co.,

Just a quick heads up to see if anyone noticed a rather interesting update to the IBP wiki page as follows “In return to this criticism, it has been pointed out that IBP is not a marketing hoax, but an important part of Enterprise Performance Management (EPM) system.”

The comment had a footnote direct link to an article by Dean Sorensen, an IBP-er who has apparently approached IBP from the finance side rather than the operational side (in contrast to most contributors to this discussion). He interestingly sees S&OP as a key plug-in to EPM (Enterprise Performance Management) systems sold by numerous vendors. EPM in turn focuses on reporting on financial and strategic (balanced scorecard) indicators to Executive management.

Reviewing some of Dean´s published content I uncovered four distinct capabilities which, from an S&OP viewpoint, are not covered by S&OP but are relevant for the MBR meeting (the last review meeting of “advanced” S&OP, where operations and finance and strategy meet)… 1) Integrated variance analysis 2) Scenario planning based on a full set of financial statements 3) Balanced Scorecard KPIs 4) Pro-active financial risk management, inc. foreign exchange exposures

Based on Dean´s rather thorough analysis, as well as his highlighting of the reality that many Executives tend to first turn to EPM systems rather than S&OP systems for business guidance, he makes a stronger case that IBP equals EPM + S&OP, at least from a systems stand point. And that IBP requires both inputs to realize strategic objectives.

In fact I would also argue that Dean presents the most compelling case I have seen to date for “IBP” (no disrespect intended to anyone). Even a hardline S&OPer like me is tempted to accept that the *paradigm shift* from S&OP to IBP may be feasible.

I think until now this proposed *paradigm shift* has been far to vaguely specified before now, often via marketing brochures full of motherhood phrases, which has rightfully triggered the strong reactions of those not wishing to be sold snake oil. After all, best practice S&OP always has been integrated with finance and strategy to some degree, e.g. evaluating demand plans in both units and dollars.

The question now is whether the proposed step up in the degree of integration with finance and strategy – as listed above – warrants a name change and general operational side acceptance of a *paradigm shift* in the S&OP process.

… Any takes on this?

ps, here is the direct link to Dean´s article… http://www.industryweek.com/software-systems/integrated-business-planning-not-just-marketing-hoax

@ Conrad – and with respect to Dean’s comments.

Variance analysis — everything from ppv to operational variances to profit … etc. would be handled in S&OP under the proper step or MBR or IR. Nothing new here. It simply requires in-depth knowledge of S&OP

Risk (currency, commodity etc etc .etc) IR or proper step meeting .. reporting to executive review.

Balanced Scorecard … really? … new to S&OP? Holy cow do people not understand the process.

Scenario planning should always take into account financial impacts…. new to S&OP … nope.

There is a home …. in classic definition … for most planning activities in S&OP….

It does not matter what you call it if you don’t understand what it is …. everything mentioned is part and parcel of S&OP. Sorry for pooping on this parade…

Conrad, I wrote the whole wiki paragraph under ‘criticism’ referring Dean, Patrick, myself and this conversation.

I’ve been in contact and have shared ideas with Dean for over 3 years. He sought my input for his ‘IBP collaborative’. I know he is releasing a news article as I had a pre-read.

I always thought Dean’s strength is his financial angle as the IBP conversation is too supply chain biased. So I see him as a real ‘asset’ to take the IBP conversation to the finance community. Less for the strategy community. I think thats again a different angle then what I’ve seen from Dean

@ anonymous First of all I would appreciate if you sign with your name. A decent thing to do in a conversation like this.

I agree with you that all the things you mention are not new to S&OP. Although a strategic BBS as defined by Kaplan & Norton is not really part of classic S&OP and not a lot is written about it. Properly integrating that can be a good start to align, measure and Control strategy progress. Dean’s perspective to bring IBP under the umbrella of EPM is new as far as I know and although maybe too financially focused it is an angle I like. If we add to that angle of ‘the office of strategy management’ as proposed by Kaplan & Norton, we include strategy execution better.

And that’s exactly my argument. We need to start having conversations with the finance and strategy community to take IBP further. Or, as I dramatically mention in ‘the rise and fall of S&OP’, it will loose relevance and die!

Hi Niels and anonymous,

When I (and I think Dean) refer to Integrated variance analysis, I also mean for “non-operational” cost centres such as facilities (rent, utilities, security, cleaning, etc), business travel, lease cars, as these were all aspects that occupied management concerns during my time in Finance.

As for treasury management issues (perhaps a clearer umbrella term for managing forex, commodity price risk, liquidity, funding, etc), this is a probably even more core concern of management yet really doesn´t touch stripped down S&OP at all as again it´s largely non-operational.

Both of the above are why I think we need to be clearer and more unanimous that the last meeting review in S&OP be merged with “MBR” and not merely Executive S&OP or Global S&OP as the apparent majority use now. Because otherwise management still needs a separate MBR to address the above issues and you have parallel processes, splintering and ineffiency. So in that sense perhaps Dean is correct in suggesting S&OP feeds into EPM – at least at the MBR stage.

As for Office of Strategy Management, I´ll have to re-read that, but wonder if it´s widely applied yet and/or whether it has – or requires – software tool support?

One common strategic theme that I have noticed missing in many large companies – invariably to their bottom line detriment – is lack of clarity on strategic KPIs versus the competitive capabilities priority of quality (Q), cost (C), delivery (D) and service (S). E.g. for one company I worked for I translated the apparent business strategy into Q > S > D > C for my staff, so they very clearly knew how to make “trade-off decisions” in their day to day work. Funnily enough, once they knew what the goal-posts where, my team then proceeded to break every supply chain KPI record in corporate history and maintain that for years. Even with only Gartner maturity level 2 systems support.

I further note QCDS thinking is heavily emphasized in procurement certificates (e.g. CPM), but I see precious little of it elsewhere, not even in boardrooms. And then I see one quality oriented company flounder due to chronic quality issues being subjugated a lesser role behind endless marketing campaigns, another quality oriented company flounder due to not upgrading a critical component until products started exploding – first in reality and then in the media – directly causing the loss of market leadership – and a delivery oriented provider flounder due to staff incentives which place fee per hour revenue (directly incentivizing slowness) above the agile delivery required to generate references and new customers, subsequently losing major market share, etc. And then I scratch my head.

Anyway I will have to check whether QCDS thinking is part of the Office of Strategy Management. Because I do not know of a more direct way to translate strategy into execution than this.

Apparently I did something that made me anonymous.

@ Conrad – you wrote a lot from strategy to non-operational costs to treasury functions, to procurement and total quality. So … I agree…. and again … it can all fall under S&OP. That does not make IBP a worthy moniker. What happens in the Executive Review is pretty much at the discretion of the leadership team – and I have witnessed countless morphs of the agenda …

In fact, many of the serious implementers or practitioners in S&OP will suggest that you find a monthly “business review” meeting, and begin to convert that meeting into an S&OP Executive review.

Of interest to maybe only me … is the “right sizing” of the S&OP process. Too many companies try to do a full sprint when they lack personnel, systems or process maturity or size. I am not a believer that every company benefits from an overwrought and over thought S&OP process. Sometimes a mid maturity process is the right goal given the supply demand and financial characterics of the company. … it makes all of this super high maturity process description everyone is describing accessible only to a few hundred large multi-nationals.

@ Conrad. I’m a big fan of being approximately right rather than being precisely wrong. In the longer term horizon we don’t need to calculate all those variances in detail. The finance function loves that and give them the opportunity to support that with a system and they will get lost in all their ppv’s and real time reporting. Rather have a good conversation on the top 3 risks and opps in the business. The office of strategy management is a paper written in 2005 by kaplan & norton and available on-line. It is not the final answer to properly include strategy in a periodic management review, but it has overlap with IBP and therefore a great conversation starter with the strategy community

@Patrick and @Niels, thanks for these great answers! And… do I even detect a convergence here between the concepts of “right sizing” and “roughly right”? Anyway, sometimes by taking an argument to an extreme, e.g. considering when and where to analyse facilities/travel cost variances and treasury exposures, new truths can be revealed. My 2015 takeaway is this: each organization can choose whether to “loosely couple” or “tightly integrate” their S&OP with its Strategic S&OP Review, a.k.a Deming’s ‘Plan’ and EPM processes (inc. BS review) with its Mgmt Business Review, a.k.a Deming’s ‘Check’. If loosely coupled the processes retain their separate names, if tightly integrated – and that especially means systems – then IBP is the accepted naming. So the theory is clear enough. However, back here on planet Earth I note Patrick says only the largest of companies could aim for such a full integration, a.k.a. high maturity. Now with my experiences of three Global 500 companies, not one of them aimed for an IBP as per the definition above. Even though two of them literally millions on their business transformation programs, with armies of ARIS modelers, S&OP/IBP consultants, IT implementers, ERP specialists, BI gurus, Cloud/System Integrators, etc. I additionally worked with a fairly ambitious IT company which, when nudged by a noted S&OP/IBP consulting group, fainted at the thought of creating this IBP platform as a pre-defined feature. So, I would even question whether any company has yet achieved Maturity Level 5 of S&OP/IBP (as defined above)… and if so, were the incremental benefits versus Maturity level 4, actually worth the cost in time and effort? So… perhaps in the future, if and when the system integration is pre-built into available softwares to support all of this, then true level 5 IBP maturity will be a reality and the however small or large incremental benefits will be realized. But until such times, the vast majority of companies – even the Global 500 – are likely best served by a well designed & implemented S&OP process, a well designed & implemented and with well designed & implemented “core” process/system touch points between them, i.e. “loosely coupled”. I.e. importing Budget targets from EPM into S&OP, monetizing demand plans in S&OP and exporting them to EPM and inviting Finance staff to assess S&OP capex scenarios against projected KPI suites. That’s it. For me at least.

Happy new year guys and thanks for all your contributions. It’s very useful for me and I also really enjoy these thoughts and little debates, so thanks again

My motivation is and always has been to understand things better and make things better. I like to write and share thoughts. If that contributes together with your comments a tiny bit to help somebody, that’s great and all I wish for

My blog views doubled in 2015. Let’s keep doing that for a couple more years and we might make an impact 🙂

Thanks again Cheers, Niels

Dear Neils,

Thanks a lot for sharing this valuable information.

We have been implementing S&OP for years. While, to further improve the company’s performance, we have evolved S&OP to SIOP with more focus on inventory optimization. Now, we are considering to make a proposal to the top management to evolve the SIOP to IBP, like others companies.

However, the existing difficulty is, we could not explain the difference between S&OP and IBP to Top management well. We could not provide expected merits by evolving S&OP to IBP. With this headache, we would ask for your great support. That is, could you please explain more or provide some cases, survey result to show the difference between S&OP and IBP?

As you mentioned, 47% replied there is difference in your survey. What is the evidence for their conclusion? Could you please show such information？

Regards and thanks, Hui Wang

Thanks for your comment Hui. Whatever abbreviation your company uses to describe integrated planning, I wrote a blog describing 6 elements of highly mature integrated planning.

https://supplychaintrend.com/2015/10/13/the-6-ultimate-signs-of-sop-maturity/

Once you master these elements your business has a periodic check on the budget, strategy, resource allocation, business risks and use effective behaviours.

These elements must entice your senior leaders. If you need further help, don’t hesitate to contact me at [email protected]

Me and my business partners can help you establish these advanced S&OP elements anywhere around the globe.

Cheers, Niels

Pretty good article!

I work for an organization that has the S&OP implemented, and we have some particular points on the execution and planning processes that fits better the current company’s business approach. I could say it is an IBP, once we have most of the elements highlighted in this article. I think one problem on discribe the differences between S&Op and IBP is that organizations sometimes started executing the first, take this one (S&OP) to the next level, but they are not able to realize it.

Thanks Wilson Junior,

I just had a conversation with a multi billion dollar in industry. To them, I described IBP as:

“An integrated governing model that continuously aligns, plans and measures your company strategy, with the aim to improve execution, company performance and employee engagement.”

As long as the aspiration of a business is to continuously plan, execute and measure their strategy, they are trying to get to IBP

• Pingback: The Components of Integrated Business Planning | Fwdtimes

Leave a comment

Discover more from supply chain trend.

Subscribe now to keep reading and get access to the full archive.

Type your email…

Continue reading

• Already have a WordPress.com account? Log in now.
• Subscribe Subscribed
• Copy shortlink
• Report this content
• View post in Reader
• Manage subscriptions
• Collapse this bar

Integrated Business Planning

Today’s market requires businesses to plan more rapidly and assess multiple scenarios at once. We help connect leading technologies and bespoke methodologies through integrated business planning to break down silos and unlock new routes to savings and growth.

Mike Ballestrin

EY Canada Finance Consulting Leader

KB Brinkley

EY Canada Integrated Business Planning Leader

What EY can do for you

Business, markets, expectations and technology have all changed. These monumental shifts necessitate a new framework for business planning, one that’s more integrated than ever before.

Integrated business planning is about connecting what finance and the business are doing, so the organization can react more quickly to any number of external changes, shocks or disruptions. That collaborative approach accelerates speed to impact.

We’ve created a distinctive, integrated approach to business planning that can set your organization apart. Our approach is scalable to meet the specific needs of any given business, at any stage on the growth journey. We work with organizations to build a customized integrated business planning framework that:

• Dismantles operational silos and aligns processes so functional groups can make better decisions around strategic direction and tactical execution
• Employs machine learning, AI and proprietary EY accelerators to deliver up-to-date insight
• Empowers clients to better understand the state of play
• Surfaces insight to help decision-makers buy, invest, manage and save
• Creates a sustainable, transparent and controlled method of planning ahead
• Cultivates shared planning ownership between finance and operations
• Leverages world-class strategic alliances to help organizations abandon outdated, manual ways of working and embrace new possibilities

Our IBP services include:

• Full-service process and technology implementation
• Upfront collaboration session to define and align key business objectives with stakeholders across functions
• EY wavespace session to co-create an action plan and build out the future vision for your organization on IBP
• Rapid assessment to baseline performance, applying advanced EY tools and building transformation business cases
• Prioritization and implementation of use cases to realize benefits of IBP 

Applying integrated business planning is key to navigating market complexity and long-term financial health. The best-performing companies merge operational and financial planning to foster agility and drive valuable bottom-line results. By bringing together better tech, better thinking and better cross-functional teaming, we can tailor our approach to your specific industry or business journey. This is how we empower clients to overcome today’s challenges, drive material improvements to financial performance, scale up and set ambitious new organizational and growth goals.

EY alliance and ecosystem relationships for integrated business planning

Our roster of key alliances and partnerships enables accelerated transformations tailored to the most specific industry and business journeys.

Our latest thinking

Like what you’ve seen? Get in touch to learn more.

Connect with us

Our locations

Legal and privacy

Accessibility

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

EY | Assurance | Consulting | Strategy and Transactions | Tax

EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

© EYGM Limited. All Rights Reserved. 

EYG/OC/FEA no.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

Welcome to EY.com

In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services: Functional cookies to enhance your experience (e.g. remember settings), and  Performance cookies to measure the website's performance and improve your experience . , and Marketing/Targeting cookies , which are set by third parties, allow us to execute marketing campaigns, manage our relationship with you, build a profile of your interests and provide you with content or service offerings in accordance with your preferences. 

We have detected that Do Not Track/Global Privacy Control is enabled in your browser; as a result, Marketing/Targeting cookies , which are set by third parties that allow us to execute marketing campaigns, manage our relationship with you, build a profile of your interests and provide you with content or service offerings in accordance with your preferences are automatically disabled.

You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.

Review our  cookie policy  for more information.

Customize cookies

I decline optional cookies

Integrated Business Planning (Advanced Sales & Operations Planning)

Disconnected plans and strategies breed sub-optimal performance in companies.   

For more than 30 years, business leaders have used Integrated Business Planning to connect strategy to portfolio, demand, supply, and resulting financial plans.   

The result: Improved business and financial performance. The foresight to adapt to changing business conditions. Leadership and management teams operating with unity.  

Discover how mature your Integrated Business Planning Process is with our online self-assessment tool.

What is Integrated Business Planning  

Integrated Business Planning is a decision-making process to align strategy, portfolio, demand, supply, and resulting financials through a focused and exception-driven monthly re-planning process.   

The result is a single operating plan, over a 24+-month rolling horizon, which senior executives hold themselves and their teams accountable for achieving.    

Done well, it is the formal way that the business is  managed,  and strategy is connected to execution. Integrated Business Planning eBrochure

How We Help    

Prior to joining Oliver Wight, our  team of experts  led IBP implementations where they were employed. They know what it takes to  develop an effective IBP process .  They also know how to utilize IBP to drive business and financial results.   

We offer the following  IBP  services:  

• Advising, coaching, and mentoring on how to utilize the process to drive results  
• Education and workshops to further understanding of best practices  and how to design the process
• Diagnostic and progress assessments to identify needed areas of improvement . These assessments  address  executive decision-making,  people skills and behaviors, process, and  information that supports IBP.

Value of  Integrated Business Planning

IBP connects company functions and executive teams so that they are operating to one aligned plan. That means the business  plans  and strategies are executed with  no surprises at year-end.  

With a ligned innovation, demand, and supply plans ,  companies grow sales revenue  while at the same time  lowering operating costs . Companies realize more opportunity in the marketplace and an increase in market share by streamlining these plans. The supply organization better anticipates capacity needs, which  improves its ability to fulfill orders on time.   

M ore credible information  is  given   to  the  Board and The Street.  That builds   trust  that the leadership team   will  deliver on their promises and goals.  

What Clients Say    

“Because of the way the process allows us to look ahead and be proactive, we can also see billions of dollars of opportunity cost savings way into the future. Our ROI will be measured in billions of dollars every year for the next decade.”   Jim Dwyer, U.S. Army Materiel Command –  US Army Materiel Command  success story    

“The IBP Management Business Review is one of the most valued activities for me. In ninety minutes, each month, we gain insights on the business challenges. We get visibility of gaps and how to close them. It helps inform me of the risks and opportunities in the business. It’s how we make sure we’re being responsive to customers and driving growth in revenue and profits.”  Tom Pigott, Chief Financial Officer, Marzetti and Lancaster Colony Corporation –   Marzetti  success story  

Insights on  Integrated Business Planning  

Integrated Business Planning – eBrochure

White papers    

Webcasts and Videos  

• How do you plan for something that you can’t predict? Lessons from Coronavirus  
• Should you throw  out  your Integrated Business Planning process in the current environment of uncertainty?  
• Integrated Business Planning Is Key to Making Annual Planning a ‘Significant Non-Event’  
• Hello Finance – Are You Engaged?  
• Hey CFOs – Are You Seeing the Right Stuff?  
• Getting Executives Out of the Weeds to Focus on the Business  
• Three Powerful Traits of Large, Successful, Consumer Goods Companies  
• The Three Key Challenges That Middle-Market Businesses are Facing  
• How To Leverage Millennial Traits Through IBP  

• All Products
• Supply Chain Management
• SAP Integrated Business Planning

SAP Integrated Business Planning for Supply Chain

What is SAP Integrated Business Planning for Supply Chain?

Plan for a sustainable, risk-resilient future with the SAP Integrated Business Planning for Supply Chain (SAP IBP) solution. Speed responsiveness and stay ahead of change with supply chain analytics, what-if simulations, alerts, and more.

Powered by SAP HANA, this cloud-based solution combines sales and operations planning (S&OP), forecasting and demand, response and supply, demand-driven replenishment, and inventory planning.

Automated, tightly coordinated supply chain planning processes

Advanced machine learning algorithms and planning capabilities

Native integration with SAP Supply Chain Control Tower and other solutions

2023 annual customer report for SAP IBP

What were the highlights for SAP IBP over the past year? Dive in to find out.

Read the report

Key benefits

Predict demand through ai-powered algorithms.

Improve short- to long-term forecast accuracy through AI-powered algorithms, statistical modeling, demand sensing, and automated outlier correction in your sales history data.

Empower planners with multilevel supply planning

Create an effective supply plan for your entire network by modeling across locations and multilevel bills of material. Boost agility with response management.

Foster collaboration in one unified S&OP process

Integrate financial and operational planning in one S&OP process. Run simulations of demand and supply changes to prepare for supply chain disruptions.

Key features

Forecasting and demand management.

Demand planning

Advanced demand sensing

Robust statistical models

Time-series analysis

Response and supply planning

Multilevel planning

Supply planning

Rough-cut planning

Response management

Sales and operations planning (S&OP)

Real-time planning

Simulation and comparison of scenarios

Collaboration

Performance monitoring

See how customers are succeeding with SAP

Forecasting demand for the future of mobility.

See how ZF Friedrichshafen meets demand for its intelligent products with an integrated ecosystem of planning applications.

Optimizing inventory and service levels globally

Explore how Hyundai Mobis is reducing excess inventory and being more responsive to customer needs.

Enhancing sustainable production with data forecasting

Learn how DMK Group unified data processes on one platform so business units can track inventory data.

Building an intelligent digital supply chain

Learn how Microsoft harnessed big data, machine learning, and IoT to build a connected and predictive digital supply chain.

Product awards

Sap integrated business planning wins "top rated" award from trustradius, what are analysts saying about planning and the sustainable, risk-resilient supply chain, building visibility with supply chain planning.

Read the Oxford Economics research into building visibility and collaboration in supply chain planning to avoid risk.

Tapping the power of AI for supply chain planning

Read what IDC has to say about how forward-thinking companies are using AI to make sense of their data and conquer supply chain complexity.

Frequently asked questions

What is sap ibp.

The SAP Integrated Business Planning for Supply Chain (SAP IBP) solution is a cloud-based supply chain planning solution that scales to accommodate business growth and integrates with other SAP and third-party systems. It integrates key aspects of the planning process including demand, supply, inventory, and sales and operations planning (S&OP). Designed to help you streamline planning and improve performance, SAP IBP supports data-driven decision-making and simplified collaboration to increase operational efficiency. This is accomplished with help from advanced analytics, artificial intelligence, and powerful optimization algorithms that enable real-time visibility, better forecasting, and faster decision-making across the entire supply chain.

Which modules are part of SAP IBP?

• Demand management: SAP IBP integrates historical data, market trends, and advanced predictive analytics so that you can generate more accurate demand forecasts.
• Response and supply planning: SAP IBP takes capacity constraints, lead times, and inventory levels into account so that you can optimize production and distribution plans and more efficiently meet customer demands.
• Inventory management: SAP IBP helps you maintain optimal inventory levels by balancing the trade-offs between carrying costs, stockouts, and service levels.
• Sales and operations planning: SAP IBP provides a unified platform for collaborative planning, allowing different departments to align on strategic goals and operational plans.
• Demand-driven replenishment: SAP IBP supports DDMRP for strategically positioning inventory buffers in the supply chain to absorb variability and uncertainty.
• Supply chain control tower: SAP IBP supports the real-time supply chain visibility and enhanced analytics you need to quickly respond to changing market conditions and customer requirements.

Who uses SAP IBP?

More than 1,000 companies worldwide use SAP IBP to streamline supply chain and planning processes. Ranging from large multinational corporations to medium-sized enterprises, these companies span a wide range of industries, including manufacturing, retail, consumer goods, pharmaceuticals, automotive, aerospace, and many others. Some of the key users of SAP IBP include:

Supply chain managers: They use SAP IBP to optimize supply chain processes, improve visibility, and monitor and control inventory levels.

Demand planners: They use SAP IBP to forecast customer demand accurately, align supply with demand, and improve overall customer satisfaction.

Sales and operations planners: They use SAP IBP to align sales, marketing, and operations teams to execute integrated business plans and achieve financial targets.

Inventory managers: They use SAP IBP to optimize inventory levels, minimize carrying costs, and improve working capital efficiency.

Executives and decision-makers: They use SAP IBP to gain insights into the overall health of the business, make data-driven decisions, and drive strategic initiatives.