Integrated Business Planning takes it one step further than S&OP. S&OP looks at the alignment between supply and demand; or can operations deliver the demand.
In IBP the target is to realize the company’s ambition; what do operations, sales and marketing have to do to realize the company’s ambition. The IBP process is characterized by the following elements:
- The starting point is the company’s ambition
- The language is that of the ambition; usually euro’s
- Not Supply Chain, but the P&L owner (generally the General Manager) leads the process and finance, marketing and new product development have an important role, next to operations and sales.
- The horizon is 1-18 months, with the hot spot at 3-4 months
What are the benefits?
The benefits from IBP are mainly based on synergy gains from the focus of the entire organization on the company’s ambition. This improved collaboration and shared KPI’s lead to the following results:
- Structurally higher service levels
- Structurally lower stocks
- Increased stability towards the company’s ambition
- New product introduction integrated in the ambition
- Ambitious and shared KPI’s
What else do you notice?
Besides these hard and tangible results, organizations will notice changes in the way the organization operates:
- No longer alignment, but collaboration is the norm; not just between Sales and Operations, but throughout the entire organization
- The company is steered proactively on a tactical level. This means decisions to bring the company closer to the ambition are made systematically.
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