What is IBP?
Integrated Business Planning (IBP) is a strategic planning methodology that enables end-to-end business planning through a cyclic process that includes a review of demand, new product development, supply and financial plans.
IBP is best practice methodology within the manufacturing supply chain and business management and is all about managing the gap between the ‘Top-Down Business Strategic Target’ and the ‘Most Likely Bottom-Up Outcome’.
IBP enables business leaders to understand whether their plan will be able to fulfil the customer’s requirements or not; if not, then options around fulfilment.
Benefits of IBP for a business
There are many processes and people involved from the conception of a product to delivery of the finished goods to the consumer. Due to the number of processes and people within the chain, clear and effective communication is vital; IBP provides excellent collaboration between all stakeholders to improve business management through the creation of a single operating plan.
The aim of IBP is to implement a centralised planning procedure where all the people and departments involved from different functions within the organisation work together and share information cross-functionally in real-time to achieve the organisation’s objective. This means there is only one set of data (targeted information) a single version of the truth, opposed to multiple sets of data held within each department, with all the key business data securely stored in the cloud in a Master Data Repository (MDR).
How does Integrated Business Planning work?
Procurement of materials through to product delivery includes separate process owners that are accountable for ‘What’s changed’. ‘Change’ can be a vulnerability or an opportunity, for example, a new customer win or external changes in the market that could impact or benefit the organisation. Once identified and communicated, the whole team can review and discuss these changes and come to a decision based on consensus, enabling the mitigation of vulnerabilities and exploitation of opportunities.
IBP ensures visibility of the ‘one plan’, but it also allows business leaders to incorporate intelligent insights and suggestions from all collaborators, with the process boosting the morale of employees as their efforts and inputs are recognized and valued cross-functionally.
Through real-time collaboration, organisations are able to make quick and informed decisions and can modify their plan accordingly. IBP facilitates reconciliation of an unconstrained demand plan against constrained supply to achieve a required financial target with the results of the reconciliation being incorporated in the next plan.
Efficiency and behavioural changes
IBP enables an organisation to use the experiences and foresight of functions across the business to improve the workflow, with an outcome of a rolling plan with a longer time horizon that improves forecast accuracy.
Integrated Business Planning is a way to manage an organisation more efficiently, it’s about introducing behavioural changes and ways of working to improve communication, identify and improve on any identified inefficiencies.