IBP: How to stop inefficient use of expensive resources?
Are you coordinating your strategic plans in a departmental view? Do you believe there is more potential in horizontal alignment? Do you want to optimize your forward-looking EBITDA on a regular basis? Or, are you already convinced of S&OP planning, but believe there is even more potential? Then keep on reading! Together with one of […]
Are you coordinating your strategic plans in a departmental view? Do you believe there is more potential in horizontal alignment? Do you want to optimize your forward-looking EBITDA on a regular basis? Or, are you already convinced of S&OP planning, but believe there is even more potential? Then keep on reading! Together with one of our customers, Bluecrux implemented an integrated business planning (IBP) process.
What is IBP all about? First of all, it’s a process that consists of five steps, executed in the same order every month or week. There is product review, followed by demand review. These two result in a forecast that goes into a supply review, where we have an allocation plan, variable margin and formulate tactical advice as outcome. This information is enriched in the integrated reconciliation, where we add other costs, validate the tactical advices and formulate strategic advices. The last but certainly not least important step is management business review, where we review and validate on the strategic advice at an executive level.
An optimized bottom-line, better business decisions, synchronized common business goals, looking forward (proactive) instead of backward (reactive), structured and aligned business information, optimal supply chain configuration, reduced total costs, etc. These are just a number of answers to the question, “What’s in it for me?”
There are, of course, some challenges. The most underestimated challenge is change management. Most companies consider IBP as a tool-driven process, where in reality it is a people-driven process. A good tool to optimize your end-to-end supply chain will give you a nice allocation plan and variable margin after the supply review meeting, whereas motivated and involved people will keep your process running forever. There is also the challenge of having one dataset—one version of the truth—in the company, which provides every department with the same information. An important challenge one should not forget is the financial side of IBP vs. S&OP. Finance acting as a business partner in IBP is a critical success factor.
I stated above that a good tool is less important than motivated and involved people. This is still valid, but an IBP tool is still a necessary requirement. The market is full of tools: fully functional tools that may need a high investment, specific IBP solutions, etc. In many cases, a customer-fit, easy-to-use solution can already bring a lot of value. Bluecrux developed an IBP solution looking to financially optimize the end-to-end network from customer to raw material.
Bluecrux has designed and implemented IBP together with several of our customers. During this design and implementation track, we used our change methodology MountK to embed the process in the organization. To support the financial end-to-end optimization, we customised and installed our in-house IBP tool. Are you also ready to optimize your bottom-line?