Integrated business planning generally revolves around consolidating multiple data sources and predictive analyses to effectively allocate critical resources.
IBP is important when working towards a fully informed, final product, or end-year target. Effective IBP will bring together resources such as insights from sales, operations, and customer initiatives, and utilize them in a way that will encourage business growth and boost corporate performance.
Ultimately, it is a goal-oriented operation planning model for businesses to ensure all analyses and plans have the same long-term targets in focus.
But how do IBP and financial planning work in practice? In this article, we will discuss some of the leading benefits, and the staggering of stages companies should consider.
What Are the Benefits of Integrated Business Planning?
There are many wide-reaching benefits to integrated business planning. From sales and operations to chain management, even the finest detail of business operations could stand to benefit. Here are just a few insights into how, as well as why-
- Businesses get a clearer insight into where they are heading - Transparency is crucial in all lines of planning. Firms will be able to combine sale operation planning, supply chain planning, and more. These advanced analytics could help companies make better-informed decisions on long-term business goals.
- Businesses will be able to make decisions with wider-reaching positive impacts - The more data is available; the better-informed decisions will be. It is a case of harnessing data management to create clearer correlations.
- Communication will be more transparent - Teams and analysts will have easier access to far-reaching plans and analyses. It also means there will be less time spent negotiating and analyzing plans. Therefore, specialists can spend more time implementing strategies with confidence.
Planning Stages to Consider
While production chain planning, performance management, and other data will differ from company to company, there are a few clear stages to keep in mind when planning IBP. All integrated tactical plans will follow a simple skeleton of sorts. Essentially, it is a case of keeping planning and control tight, concise, and simple to understand.
Here are the five main stages in the planning process, which companies should consider when putting IBP into practice.
1. Gain an understanding of how supply chains will react to demand. Research how demand planning tactics align with customer and inventory projections.
2. Actively build a plan for supply and demand. Look for potential gaps and solutions at this stage, avoiding any negative customer impact. Ideally, a two-year plan will be a good forecast to start with.
3. Start to work closely with all teams and departments. These may be internal, external, and even overseas. To improve forecasting, it is crucial to look at ways people can come together and communicate.
4. Then, it is important to start integrating and applying plans. This is where businesses will need to ensure there is an agreement and understanding of IBP across all channels. This can be a long process, however, accuracy and understanding are key.
5. At this point, it is time to implement plans. During this stage, an IBP system will ensure that all suppliers, teams, and chains will be working from the same action plan.
Tips for Successful Integrated Business Modeling
Of course, the above skeleton is just an ideal scenario. Successful integrated business modeling will vary from company to company. However, there are several ways to help the IBP process along. Here are just a few tips to assist companies when setting up their first integrated solutions.
- Be clear on what IBP is going to do - For all teams and parties to understand the purpose of a plan, transparency is important. Companies and analysts should avoid hiding behind jargon and buzzwords.
- IBP should also be clear in terms of roles and responsibilities - What are the individual roles and demands expected of people in the chain?
- IBP should organize to target a singular goal - The aim should be to have one target for several teams across the chains in a cross functional manner.
- Effective planning will also need wide-reaching technology - Sharing data and plans through cloud technology, for example, will help disparate teams and bodies collaborate. Through digital transformation and integrating the flow of data from every business application (such as inventory, sales, and forecasting), businesses will have greater data accuracy and ease of access to crucial statistics in real time.
- Above all, IBP should be insightful - Analytics shouldn't ever exist for the sake of it. The key to business excellence lies in an operational plan and demand projection which actively drives insightful, worthwhile results and data.
Integrated business planning can seem complicated. However, it is a business process that aims to make things much simpler for all departments and chains in an organization. When appropriately used, IBP can help to bring together business forecasting, risk management, inventory optimization, supply chain management, and more under a simple, singular umbrella for better decision making.