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 optimise 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, we, at bluecrux implemented an IBP or Integrated Business Planning process.
Now I got your attention, let’s see what IBP is all about. First of all, IBP is a process that consists out of 5 consequent steps, executed in the same order every month or week. First 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 advices as outcome. This information is enriched in the Integrated reconciliation where we add other costs, validate the tactical advices & formulate strategic advices. The last but certainly not least important step: Management business review, where we review & validate on the strategic advices at an executive level.
An optimised bottom-line, better business decisions, synchronised common business goals, looking forward (proactive) instead of backward (reactive), structured & aligned business information, optimal supply chain configuration, reduced total costs, … These are just a number of answers on the question “What’s in it for me?”.
There are some challenges of course. 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 optimise your E-2-E supply chain will give you a nice allocation plan & variable margin after the supply review meeting, whereas motivated & involved people will keep your process running forever. There is also the challenge of having one dataset – one version of the truth – in 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 & involved people. This is still valid, but an IBP tool is still a necessary requirement! The market is full of tools: full-functional tools that may need a high investment, specific IBP solutions… 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 optimise 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 & implementation track we used our change methodology MountK to embed the process in the organisation. To support the financial end-to-end optimisation, we customised & installed our in-house IBP tool. Are you also ready to optimise your bottom-line?