Integrated Business Planning

Definition

Integrated Business Planning is the set of processes, practices and technologies used to unite a company on a Consensus Business Plan.

A Consensus Business Plan is an executive driven, companywide plan aligning volume and commercials at a high level of detail and extending long term.

Integrated Business Planning includes Sales and Operations Planning and extends it, unifying the volume and financial forecasts across the business.  A company conducting true IBP will have a single consensus forecast across all functions, which is often referred to as a “one number forecast”.  The Consensus Business Plan is the key input for ongoing strategic decision making.  It enables senior management to make informed decisions tactically and operationally, driving profitability and revenue and improving customer relationships.

Goal

The goal of IBP is to have a single set of numbers driving the business (the Consensus Business Plan), and to have complete buy-in from all business functions.

A company successfully conducting IBP will use the Consensus Business Plan for strategic descision making, supply planning, budgeting and commercial planning.

Benefits

Companies implementing IBP successfully always drive tangible bottom line gains within the first year.  The primary benefit comes from visibility and the capability to make proactive strategic decisions.  Key benefits also include:

  • Improved stock turns and inventory reductions;
  • Improved spend optimization and efficiency;
  • Revenue growth;
  • Improved customer relationships.

More detailed benefits analysis can be found here.

Ownership

Successful IBP within and organisation is driven from the top down.  Senior management understand it both strategically and operationally and drive the process and accountability throughout the business on an ongoing basis.

Process

Integrated Business Planning within a typical consumer goods company, per business function, is demonstrated below.

Executive

Senior management set the strategic direction for the business, taking the dynamic Consensus Business Plan as the key input.

Category

The Category team conduct analysis and provide insights to the sales and marketing teams.  For example, they create a optimized promotion “menu” for the sales team to select from when budgeting or planning with customers.

Sales & Marketing

A key input for promotional planning and ROI analysis is the baseline forecast, generated by the demand team.  Taking this, combined with category intelligence and scenario planning technology, the sales and marketing teams build and manage complex and optimized programs.

Demand

Taking the promotional plan as incremental from the sales team, the demand team collaboratively manage a total unconstrained customer forecast.

Supply

Supply Planning provide capacity constraints as input to S&OP and use the Consensus Business Plan for inventory control, supply and production planning.

Commercial

Taking the promotional program managed by the sales team, claims and accruals are overseen by the commercial team.

The process overview above blueprints, at a high level, IBP successfully implemented within an consumer goods business. Please contact us if you would like more detail.

IBP Implementation

Implementing Integrated Business Planning involves a process and technology improvement program. Forward thinking companies accept the challenge of broad change scope as the benefits far outweigh the investment. Successfully implemented IBP is characterized most notably by the cross functional cultural shift associated with acceptance of the Consensus Business Plan.

Technology

Successful IBP implementations include technology that supports the end to end process.  Systems that support IBP, such as Blueshift’s ONE Solution, have the following features:

  • Enterprise-grade Demand Planning including the capability to hold and interact with a Consensus Business Plan (i.e. including the commercial forecast);
  • Demand capabilities to produce an accurate baseline-plus-incremental type forecast, thereby minimizing positive bias;
  • Promotion Planning, acting as the single entry point and subsequently integrating with Demand Planing, generating accruals and matching claims;
  • Tight financial integration with a company’s ERP system including accruals, claims and pricing conditions;
  • Capability to interface all master data and transaction data from the ERP system including time and customer sensitive pricing and cost pricing;
  • Capability to interface external data from scan and other providers;
  • Real time scenario planning for the purpose of modelling business outcomes;
  • Interface capability to output the Consensus Business Plan to a company’s Enterprise Data Warehouse, Supply Planning system and Field system.

Best practice IBP is where users interact with data they have control over (plans, promotions, mechanics, scenarios)  without having to worry about master data (pricing, cost pricing, history).  Best practice IBP is also characterized by a system that is single input only, where users are responsible for keying their information once and interfaces and reports take care of the rest.

Blueshift Best Practice

Based on extensive industry experience, Blueshift have developed Best Practices for IBP.  Blueshift recommend that:

  1. Established, sound IBP process takes precedence over knee-jerk decision making;
  2. The sales team take responsibility for both managing and keying the promotional program;
  3. A demand team be specifically set up with the sole purpose of maintaining an unconstrained customer forecast;
  4. Adherence be maintained to the monthly IBP process (contact us for more information);
  5. All discretionary promotional spend (accruals and claims) be driven from the IBP system without commercial interference;
  6. Structured spend approval processes be established and adhered to;
  7. The Sales team be held accountable to the Consensus Business Plan accuracy as well as Delivery Performance.

Blueshift has extensive experiencing helping companies successfully implement Integrated Business Planning.  Blueshift have the know-how, expertise and system capable of delivering the benefits of IBP to forward thinking companies.