INTEGRATED BUSINESS PLANNING (IBP)

 T A S K - 1 

What is “Integrated Business Planning” (IBP)?

It is a strategy, which helps to efficiently optimize each level and area of a company, by connecting the planning functions of each department, with the main objective of providing the best strategy to impact the financial results of the organization.

It helps in areas such as:

·         Sales

·         Operations

·         To help each department to make informed decisions.

 

What is “Sales and Operations Planning” (S&OP)?

It is a process, the objective of S&OP is to provide better customer service, help the organization to have lower inventory, as well as help in delivery by having shorter lead times and stable production rates.

It provides:

·         A better control of the management of the company in general

·         A mechanism for creating functional teams

 

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

ü  One of the main objectives of S&OP/IBP is to have a single operating plan: or which managers are responsible.

ü  They allocate resources, equipment, inventory, materials, time and money to satisfy in the most efficient and cost-effective manner.

ü  IBP and S&OP provides sustainable and transparent results because they work in the better way where everything is planning to solve each area: financial, human resources, etc.

ü  Guarantee early attention to any problems that occur, without it the plans would not be achieved.

ü  They develop a multidisciplinary team because people are the driving force of all processes into the organization,

 

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

	IBP	S&OP
Objective	This strategy is based on reaching the most optimal financial parameters.	This process is oriented to reduce the volume of demand, in addition to providing greater stability to the supply.
Focus	It has much more reach, as it seeks to collaborate beyond the company, together with the entire internal and external mechanism.	It is mostly done inside the company.
Owner	It is performed and planned at the top management level including departments such as sales, marketing and finance.	It is conducted by the supply chain because its objective is stock oriented.
Features	It focuses on the entire financial impact, using analysis, planning, and risks and, of course, opportunities. All this given due to a series of evaluations. Making product reviews and project transformations and improvements. Supported by the commercialization department.	It is focused on supply chain modeling and scenario planning. This reduces its power in only certain areas, compared to the IBP.
Connectivity	It is connected to the S&OF, responses from within the business planning levels are fast, and on a real-time timeline.	Because there is less connection, decisions and responses are short, and less meaningful.

 

How does the IBP process work? Describe in detail.

IBP process is a five page planning cycle:

1.    Demand Review

2.    Portfolio Management Review

3.    Management Business Review

4.    Integrated Reconciliation

5.    Supply Review

This process helps to achieve all the financial objectives and operational plans of the organization due to a series of actions that are performed through planning, and of course, through the entire workforce of each department, since each person has clear tasks; with the help of systems and artificial intelligence components, each individual contributes with the information in charge so that it can flow and facilitate the exchange of important parameters, without the need to be linked in a stressful way.

As I mentioned, this process begins when, thanks to technological systems, we are able to review the demand data or any other available and required data, since each person in the team has shared it. It is there where the data are synthesized and with them the best decisions are made for the company in an efficient and organized way, because the information is timely and accurately integrated for the supply review, to adjust the decisions to it.

What are the challenges of IBP?

Due to the heavy use of technology and cloud computing components, there are some challenges that must be faced:

ü  Software Updates

ü  Loss of Control of Software and Services

ü  Security

ü  Master Data Replication and the Batch Schedule

ü  Integration

ü  Lack of Customization 

There are others but they are focused on planning and the whole inventory process in terms of demand and its relevant information.

ü  Demand is expressed in different units of measure and at different levels of aggregation

ü  There is no systematic process for evaluation and validation.

ü  Inventory control.

ü  Problems linking volume to financial targets

ü  With innovation/new product introduction

 

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

§  Because it makes use of technologies, these may not work properly, so that data, histories, information may be lost, and information may be encoded incorrectly.

 

§  Another problem could be that since the information is interconnected and affects the entire financial process, planning, etc... With an erroneous interpretation, the business cycle could be affected.

 

§  If a company or an individual does not have internet, he/she would not be able to share the information that other departments need. 

 

§  You must be sure that this process is implemented and adapted to the capabilities of the company, as it is a plan where there must be a lot of integration and teamwork, to provide the best data to contribute to the decisions.

 

What are the advantages and disadvantages of IBP?

ADVANTAGES

DISADVATAGES

§  Provide a clear picture of overall forecast quality as well as the situation for every level that you are interested in.   §  This process provides all the tools to add additional value in a great way.   This plan helps to achieve multiple goals: §  Translating plan into net revenue forecast §  Gross Margin Projection §  Better working capital   §  IBP      helps make strategic decisions to meet organizational goals.

§  Mandatory use of internet.   §  You must work in a fully integrated and mature team, to drive the process, you must establish ground rules and clear boundaries to work together.   §  85% of digital transformation initiatives fail, resulting in the loss of millions of dollars.   §  Before starting with a technology solution, first consider an integrated theory and methodology.   §  Leadership is obligated to manage the change process in case of opposition.

What is the importance of IBP nowadays?

It is an effective strategy in the world of business and companies since it implements technological tools and processes that facilitate the exchange of information in a simpler and more efficient way, in real time, reducing useless and time-consuming processes, with the correct information collection in a single source, it is possible to minimize the risk of errors and time. Facilitating decision making supported by accurate data that will help to promote and achieve the goals of the company, mainly in the financial area, but can also include other areas such as improving products and services in the market. It makes companies more modern, vanguard, globalized and, of course, organized.

 

References

Blog, O. (2016, November 24). Challenges of SAP Integrated Business Planning in the Cloud. Retrieved from https://blog.olivehorse.com/challenges-of-sap-integrated-business-planning-in-the-cloud

Korver, E. (2020, November 16). PROS AND CONS OF INTEGRATED BUSINESS PLANNING (IBP). Retrieved from https://roundmap.com/integrated-business-planning/

ONIVE. (n.d.). Problems IBP . Retrieved from https://onive.nl/en/5-problems-ibp-will-solve/