While organisations need more visibility, modelling and planning than ever before, what are the five key areas of change crucial to the success of forward-thinking businesses?
It was a feature of the recent COVID-19 pandemic lockdown that retail and healthcare supply chains struggled to keep up with demand. While shortages of toilet paper and PPE grabbed the headlines, most businesses have suffered from some sort of unscheduled break in the supply chain. This crisis, while unprecedented and unforeseen, has been unforgiving but it has also provided us with some valuable business lessons.
The first is that supply chains can be extremely fragile. The second is that no one can really predict for certain what will happen in the next 12 to 18 months. Unexpected events can always happen. The third is that businesses need to be able to plan for and simulate change and be able to maintain continuity despite uncertainty and crises. This makes economic sense.
While the pandemic has accelerated the need for change, for increased supply chain visibility and disaster planning, this is not a new concept. Integrated business planning (IBP) is a process and methodology of business planning made possible by the proliferation of departmental and supply chain data, so it’s important to understand what is driving the need for IBP – industry changes or disruption, cost pressures, ailing customer demand or to facilitate better collaboration of internal and external teams?
Understanding the strategic reasons for taking on IBP is important but how ready is the business and what effort is required to implement IBP thinking into the organisation? Below we have outlined five key factors for building and delivering successful integrated planning that can transform business and supply chain profitability.
How mature is the business?
IBP will work differently within organisations depending on business maturity. In some cases, it may not work at all, at least not yet, as a business may not be suitably set up to integrate planning across disparate departments. That doesn’t mean the business cannot evolve and work towards the sort of good practice required for successful IBP. The requirements can be achieved in phases. This means no one has to rip and replace anything. It’s about improving the internal structure to enable a greater flow of data and understanding across departments.
The first thing to do is align the business strategy with existing processes, if it is not already. This should help the organisation identify any gaps or misalignments across people, behaviours, process governance, data availability, format and accuracy, speed of decision making and reporting controls. This will help build a picture of where the organisation needs to make changes to move forward.
The implementation plan must consist of both a strategic deployment and operational excellence track with clear drivers for what the organisation is trying to achieve through IBP. This process of embracing IBP thinking should start early and will eventually inform how the organisation structures and grows in the future.
Stakeholder ownership – who’s in charge?
Ideally, any organisation needs someone to take ownership – an IBP leader. This person would then be responsible for bringing together the relevant stakeholders from across the business, including key supply chain partners. A dedicated IBP manager drives adherence and ensures governance. This role also coordinates and manages the whole process, including timelines, tasks, actions and activities of the individuals and teams.
Also, the right combination of stakeholders is essential for successful IBP. By bringing together the views of the different stakeholders, a business can begin to identify and manage areas of potential conflict and ensure every department is moving in the same direction. Outside of the sales and operations view of demand and supply, stakeholder representation must also include supply chain finance and procurement supply chain management. This drives finance integration and supply chain collaboration, which goes a long way to achieving successful planning outcomes.
There’s no substitute for expertise
Skills are always a challenge for any business tasked with change projects. What we have found is that specialist IBP input is needed throughout the journey, across both strategic deployment and operational tracks. While the composition of the team will, of course, change throughout the journey, a core thread of expertise and adoption specialists must be retained to deliver and maintain the necessary processes and to avoid user dissatisfaction and burnout.
Educating employees about the value of IBP and the role they are playing in making the organisation more agile and profitable is key to motivation and the on-going success of IBP. It is also key to adopt the ‘best of breed’ consulting approach, ensuring interoperability and reliability of key technologies and processes. This specialist help is needed to avoid common pitfalls and to ensure project risk is minimised. Ultimately, without the right, sufficiently skilled people, IBP projects will struggle.
Don’t be led by IBP technology
Technology, rather than being a driver of the IBP process, is an enabler. It should not dictate processes but enable them. It’s a common problem to shape an IBP project around the software alone, especially when taking into account legacy systems and data silos. That said, any technology solution must be able to provide the following:
• Single data model
• Fast scenario modelling
• Financial integration
• Flexible reporting
• Forecast collaboration capability
• Near real-time transactional integration
• Intuitive user interface – it has to be easy to use
Ensure the technology is IBP enabled and avoid software that needs excessive re-configuration and customisation. While no one system provides the full IBP scope, there are specialist IBP applications that can provide the core capability. How organisations choose software will also come down to the stakeholders involved. It is likely businesses will need a broad landscape of apps that can support the overall IBP process as long as the core IBP system can scenario model.
Good project management for on-going success
For a business to get maximum value from an IBP project, it will need to adopt and maintain a number of project management principles. The aim is to embed IBP within the fabric of the entire organisation and use it as the source for business targets and KPIs. To do this, the project needs to adhere to the following:
• Embed quality principles for projects
• Have a back-up plan for key resource and changes in working circumstances
• Look out for potential in-flight projects and practices that can disrupt your plan
• Prioritise solutions for business impact
• Manage different solution priorities across different business units
• Use agile methodologies to drive early adoption
• Include the right people from the business who can develop in the supply chain
• Leadership must realise they have a major role in supporting the project and the process
Good governance is critical
Ultimately a successful IBP project will be judged on the company’s ability to make intelligent, data-driven forecasts that improve supply chain agility and increase profitability. Having a vision is all very well but having the ability to realise a vision and basing it on accurate forecasting and planning data is why IBP should be seen as the engine driving the future of supply chains and business strategy. *Fred Akuffo is the managing director at Olivehorse
What is Integrated business planning?
Integrated business planning or IBP is a process that links strategic planning with sales, financial and operational planning. By incorporating financial and operational data from across an organisation and from supply chain stakeholders, it is possible to get a holistic, transparent view of the business, enabling more informed planning, modelling and decision making. IBP uses technology applications to help manage the processes.