companies using integrated business planning

What is Integrated Business Planning?

The origins of integrated business planning, how integrated business planning differs from traditional business planning methods.

• How Integrated Business Planning Aligns FP&A with Overall Business Strategy
• Strategic Role of FP&A

Enhanced Decision Making

• Benefits of IBP for FP&A Teams

1. Better Budget Processes

2. improved forecast accuracy, 3. agility and responsiveness, 4. cross-functional collaboration, 5. resource optimization.

• Key Elements of Effective Integrated Business Planning for FP&A Teams

Accurate Demand Forecasts

Scenario planning and sensitivity analysis, performance management, technology and data integration, cross-functional communication.

• How IBP Connects FP&A and Extended Planning & Analysis (xP&A)

IBP as a Bridge

Collaboration across functions.

• Future of FP&A with IBP and xP&A
• Embracing Integrated Business Planning in FP&A

Additional Resources

Integrated business planning (ibp) in fp&a.

Integrated Business Planning (IBP) enhances financial planning, forecasting, decision-making, and strategic alignment between finance and other business functions

Integrated Business Planning (IBP) is a strategic approach that aligns various functions within a company — such as finance, operations, supply chain, and sales — into a unified planning process. It’s designed to ensure that all business units work together towards common goals, improving decision making, resource allocation, and overall business performance.

Within Financial Planning and Analysis (FP&A) , IBP is a potential game-changer. IBP allows FP&A professionals to forecast more accurately, make data-driven decisions, and ensure alignment between financial strategy and the company’s broader strategic objectives. This alignment helps businesses achieve financial targets and drive sustainable long-term performance.

As businesses increasingly rely on Integrated Business Planning, FP&A professionals who can adopt this approach can make significant contributions and create strategic value for their organizations.

Key Highlights

• Integrated Business Planning (IBP) breaks down silos, unifies various business functions, and ensures alignment between FP&A and overall business strategy.
• IBP supports improved forecasting accuracy and scenario analysis so FP&A teams can better anticipate outcomes, optimize resource allocation, and deliver realistic and strategically aligned financial plans.
• Extended Planning & Analysis (xP&A) and IBP expand the scope of traditional FP&A to integrate cross-functional business insights, positioning FP&A professionals as significant contributors to driving strategic value.

Integrated Business Planning has its roots in Sales and Operations Planning (S&OP), a process that emerged in the 1980s. S&OP was initially developed to align production and sales, ensuring that supply met demand efficiently. The process focused primarily on balancing supply-chain management with market demand.

As businesses grew more complex, the limitations of S&OP became apparent. Organizations needed a more comprehensive approach that included financial and business strategies in addition to sales and operations planning. IBP emerged as an extension of S&OP, combining financial planning, strategic planning, sales, and operations planning into a unified process.

IBP stands apart from traditional business planning by breaking down silos, maintaining a dynamic and responsive approach, and ensuring that planning efforts are strategically aligned with the company’s long-term goals. This makes IBP a far more effective approach to modern business planning, particularly for organizations seeking to remain competitive in today’s fast-paced market.

How Integrated Business Planning Aligns FP&A with Overall Business Strategy

Strategic role of fp&a.

FP&A has evolved from a purely financial function to a critical player in shaping and supporting business strategy. FP&A teams are expected to go well beyond budgets and forecasts to driving strategic decisions that impact the company’s long-term success.

IBP as a Strategic Tool

Integrated Business Planning (IBP) empowers FP&A to connect financial goals with the company’s broader business objectives. By integrating financial planning with operational and strategic plans, IBP ensures that FP&A’s budgets and forecasts are aligned with the company’s overall strategy. This alignment helps the organization allocate resources more effectively, prioritize investments, and achieve strategic goals.

With IBP, FP&A teams can use cross-functional data and insights to provide more accurate and actionable recommendations. This data-driven approach enhances decision making across the entire organization, enabling leaders to make informed strategic choices based on comprehensive, integrated financial and operational information.

Benefits of IBP for FP&A Teams

IBP ties operational plans to financial outcomes, enabling FP&A teams to develop budgets that are aligned with the company’s strategic goals. This budgeting process ensures that financial plans are realistic and achievable, based on integrated data from various business functions. Creating budgets that are aligned with strategic objectives, managing financial resources, and setting financial targets that drive business performance.

IBP enhances the accuracy of financial forecasts by integrating data from various business functions. This comprehensive view allows FP&A teams to create more precise and reliable forecasts that reflect the current state of the business. By using up-to-date information, FP&A can anticipate financial outcomes more effectively, reducing the likelihood of surprises and improving overall financial planning.

The dynamic nature of IBP enables FP&A teams to quickly adapt to changes in the business environment. Whether it’s a sudden market shift, a new competitor entering the space, or an unexpected supply chain disruption, IBP allows FP&A to adjust financial plans in real time. This agility helps the organization stay resilient and responsive, making informed decisions that keep the company on track to meet its goals despite changing circumstances.

IBP fosters collaboration between FP&A and other departments, with key benefits in breaking down silos and ensuring that all parts of the organization are aligned. By working closely with teams across the company, FP&A can develop more cohesive and actionable financial plans. An understanding of financial implications by all departments leads to more effective execution of business strategies with teams working towards the same objectives.

Resource planning ensures the company has the necessary financial and operational resources to execute its strategy. For FP&A, this collaborative planning also involves aligning financial resources with capacity requirements to optimize resource allocation and manage cash flow effectively. Ensuring that financial plans account for resource constraints and capacity needs, thereby supporting efficient and cost-effective operations.

Key Elements of Effective Integrated Business Planning for FP&A Teams

Certain elements are especially critical to effectively implement and leverage IBP in FP&A. Key components include demand planning and forecasting, supply-chain planning, scenario planning, performance management, technology and data integration, and cross-functional communication. These are crucial for FP&A teams to effectively implement and leverage Integrated Business Planning within their organizations.

Integrating accurate demand forecasts into financial planning can directly affect revenue projections, budget planning, and resource allocation. IBP allows FP&A professionals to create more reliable financial forecasts that reflect real customer demand and market conditions, ensuring that financial plans are based on actual business conditions. This integration helps in aligning supply chain, production, inventory management, and sales efforts with financial goals, reducing the risk of over- or underestimating future demand and financial projections.

Example: You work in FP&A at a company planning to expand into a new market.

• As an FP&A professional, you collaborate with sales, marketing, and operations on demand planning to gain insights into customer demand in this market.
• By integrating these insights into your financial forecasts, you can develop an expansion plan that accurately reflects future demand.
• This holistic approach reduces risks and increases the likelihood of greater customer satisfaction and achieving the company’s financial objectives for market expansion.

Scenario planning within IBP enables FP&A professionals to prepare for various business conditions by evaluating potential outcomes based on different “what-if” analyses. By modeling various scenarios and sensitivities — such as changes in market trends, pricing fluctuations, or supply chain disruptions — FP&A can assess the financial impact of each scenario and develop contingency plans. This proactive approach ensures that the company is better prepared to handle uncertainties and make informed strategic decisions.

Example: You work in FP&A for a company that is evaluating whether to launch a new product line.

• Using IBP, you can perform scenario analysis and sensitivity analysis by integrating data from various departments, such as sales, marketing, and operations planning.
• You might create multiple scenarios — such as different market adoption rates or varying production costs — and assess how each scenario impacts the company’s financials, from revenue forecasts to cash flow and profitability.
• Additionally, sensitivity analysis can be used to identify which variables (e.g., cost of materials, pricing strategy) have the most significant impact on the outcomes.
• This comprehensive analysis allows leadership to fully understand the potential risks and rewards under different conditions and make decisions accordingly.

IBP plays a vital role in tracking and reporting financial performance against strategic goals. This component enables continuous monitoring of key performance indicators (KPIs) , variance analysis, and reporting, helping to keep the organization on track to achieve its financial objectives.

By continuously monitoring key performance indicators (KPIs) that are aligned with the company’s strategic objectives, FP&A teams can provide management team with timely insights into how well the business is performing. This ongoing performance management allows for quick adjustments to strategies and plans, ensuring that the organization stays on course to achieve its long-term goals.

Effective IBP relies heavily on the use of technology, advanced analytics, and integrated data systems. Advanced software tools that can aggregate and analyze data from across the organization are essential for FP&A teams to develop accurate demand forecasts, conduct scenario analyses, and monitor performance. Advanced analytics, combined with integrated data, ensures that all departments are working with the same information, reducing discrepancies and enhancing the accuracy of financial planning.

Encouraging collaboration and communication across departments is key to the successful implementation of IBP. When finance, operations, sales, and other departments regularly share information and insights, FP&A teams can ensure that financial plans are cohesive and aligned with the company’s overall strategy. This cross-functional communication improves planning accuracy and helps build a unified approach to achieving business objectives.

How IBP Connects FP&A and Extended Planning & Analysis (xP&A)

Extended Planning & Analysis (xP&A) expands traditional FP&A beyond finance, incorporating other business functions like operations, HR, sales, and marketing. xP&A creates a holistic approach to planning, aligning all parts of the organization with strategic objectives.

As companies increasingly value integrated planning, xP&A is becoming essential in modern finance. IBP is essential for connecting FP&A with xP&A, fostering integration, and advancing a more strategic approach to the business planning process.

IBP unifies financial, sales, and supply-chain operations and planning, enabling a seamless transition to xP&A. This integration ensures that all planning activities support the company’s overall goals, resulting in a cohesive approach to business planning.

By breaking down silos, IBP enables FP&A to work closely with other teams, leading to more integrated planning and decision making. This collaboration ensures that financial insights are incorporated into operational decisions and vice versa, enhancing overall operational efficiency and effectiveness.

Future of FP&A with IBP and xP&A

Embrace IBP and xP&A practices as your career in finance evolves. Position yourself to lead in a more connected, strategically aligned FP&A environment by developing skills in:

• Communication and cross-functional collaboration.
• Advanced analytics
• Strategic planning processes

Embracing Integrated Business Planning in FP&A

Integrated Business Planning (IBP) aligns financial planning with broader business processes and strategies, breaking down silos and enabling more dynamic and accurate decision making. By integrating demand forecasting, scenario planning, and performance management, IBP enhances FP&A’s effectiveness and serves as a bridge to xP&A, expanding FP&A’s influence across the organization.

As finance evolves, FP&A’s role will become increasingly strategic. Embracing IBP and xP&A is essential for staying ahead. Integrating financial insights with operational data, leveraging advanced analytics, and fostering cross-functional collaboration will position FP&A teams as key drivers of business success. Early career finance professionals who adopt these practices will be well-prepared to lead in this new era of integrated planning.

Thank you for reading CFI’s guide to Integrated Business Planning for FP&A. To keep learning and advancing your career, check out the following resources:

• Extended Planning and Analysis (xP&A)
• FP&A Modeling Best Practices
• FP&A Manager: Skills and Responsibilities
• See all FP&A resources
• See CFI’s FP&A Specialization
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More From Forbes

How to transition to integrated business planning for enhanced performance.

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Guru Rath is the managing principal at Grath and Associates and is a supply chain and digital transformation expert.

The business environment is constantly evolving, and companies must adapt to remain competitive while balancing customer expectations with shareholder goals. One way companies can do this is by transitioning from sales and operations planning (S&OP) to integrated business planning (IBP). S&OP is a planning process that aims to align sales, marketing and operations with the overall business strategy. On the other hand, IBP takes this a step further by incorporating financial planning, product development and risk management into the process.

Basic demand, supply and inventory management processes are achievable through traditional S&OP, but there is not much progress beyond a certain threshold limit. Hence the problem is: How do we manage the volatility of the business environment while dealing with business process management?

Benefits Of IBP

Here are some of the benefits of switching to IBP.

• Higher agility: Integrated business planning enables companies to respond quickly to the business environment and market volatility by providing a detailed and comprehensive view of their operations. This can help companies streamline operations and grab customer opportunities.

• Seamless collaboration: IBP requires and enables cross-functional collaboration between various business departments. This inhibits teams from working in silos and brings collaborative team effort, which can enable accurate decision making and operations execution.

• Financial planning: I've found IBP is the key integration process between operational and financial planning. IBP can help companies align their operational and financial goals, resulting in optimized material and financial allocations

• Better risk management: Due to an integrated and holistic end-to-end view between finance and operations, companies can catch the risks upfront and plan for mitigation.

Challenges Of Transitioning From S&OP To IBP

While the benefits of transitioning from S&OP to IBP are significant, there are also some challenges that companies may face. Here are a few.

• Change management: Transitioning from S&OP to IBP requires significant changes in processes, systems and organizational culture. Companies must manage this change effectively to ensure a successful transition.

• Data integration: IBP requires data from multiple sources, including sales, operations, finance and supply chain. Companies must ensure that this data is accurate, reliable and integrated to avoid errors and inconsistencies.

• Technology infrastructure: IBP requires a robust technology infrastructure to support data integration, analytics and reporting. It's important for companies to invest in the right technology to support IBP effectively.

Best Practices For Transitioning To IBP

To ensure a successful transition from S&OP to IBP, I suggest companies follow these best practices/

1. Define the scope.

Start by defining the scope of the transition, including the key business units and functions that will be included in the IBP process.

When thinking about the scope, consider the planning horizons (operations, tactical and strategic), the KPIs (customer satisfaction, on-time delivery, inventory turns, revenue growth, working capital), process governance structure, data and technology requirements. All of these should be in alignment with the organization's strategic objective.

2. Engage stakeholders.

IBP requires cross-functional collaboration, so it is important to engage stakeholders from across the organization in the transition process. The first step is to identify your stakeholders. Then, some of the best ways I've found to engage stakeholders are to discuss the benefits of deeper process involvement, address any questions or concerns that arise, provide training as needed and, last but not least, identify a measure to monitor the progress.

3. Align processes and systems.

Align your processes and systems to support IBP effectively. This includes integrating data sources, defining workflows and ensuring that technology infrastructure is in place. Avoid relying on unavailable or only partially available data.

4. Provide training and support.

Ensure that employees understand the new processes and systems and are able to use them effectively. To make this training effective, make sure you have the support of the management leadership. Consider customized training as per the organization's needs (generic content can be provided as an overview). Measure effectiveness, and ensure clear communication between the trainer and participants.

5. Monitor and evaluate.

Finally, monitor and evaluate the IBP process to ensure that it is delivering the expected benefits. This includes tracking key performance indicators (KPIs) and making adjustments as needed. Some of the KPIs that leaders should pay attention to include forecast accuracy, inventory turns, customer service levels, working capital, etc. The key would be to set a baseline before implementing IBP and measure against the baseline for benchmarking.

Transitioning from S&OP to IBP is a strategic move that can help companies to improve their business performance. IBP provides a comprehensive view of the business, enabling companies to make more informed decisions and respond more quickly to changes in the business environment. While there are challenges to the transition, companies can follow best practices to ensure a successful transition and reap the benefits.

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At its finest, IBP is fully aligned with growth and innovation metrics, having turned S&OP into a strategic business partner. Visualize aligning your company’s operational decisions with forward-looking financial performance across various timeframes, representing complex trade-offs, constraints, and real-time business realities across the value chain; this is what a successful IBP looks like!

For more than a decade, our customers have struggled with the term IBP and how it relates to sales and operations planning (S&OP), sales and operations execution (SOE) sales inventory operations planning (SIOP), sales and operations management (S&OM), and other processes.

Despite knowing its importance, businesses have been slow to adopt integrated business planning. Many have yet to establish a fluid S&OP process.

Why Companies Struggle to Adopt IBP

So…why are companies still struggling to adopt IBP? A few reasons include:

• Conflicting goals among business units and barriers due to the evolutions of processes and technologies
• Existing technology design
• Traditional methods of doing business

A recent study shows that 79% of companies continue to use spreadsheet planning, yet only 39% say that spreadsheets support a collaborative planning process .

Here’s the problem: Inflexible tools like spreadsheets don’t allow for a cross-functional representation of the business. Also, spreadsheets don’t provide forward-looking insights  — a requirement for IBP. Instead, spreadsheets produce infeasible plans, inhibit collaborative planning, and suck loads of time that could be better spent elsewhere.

In one case study, a snack food giant wasn’t meeting demand on its most profitable product due to constrained capacities. When it tried utilizing its 20+ spreadsheets, they continued to fall short of reaching targets and became well aware that they were missing out on major profit opportunities.

Spreadsheets may work for isolated scenarios but not integrating functions to solve one common goal (meeting demand) while aligning with strategic objectives (e.g., recognizing additional profit opportunities). This is the essence of integrated business planning

Top 7 Barriers to Integrated Business Planning

In addition to spreadsheets, here are a few other barriers that we have found:

• Technology and process structures don’t allow integration.  Traditional software solution designs differ in structure, hindering integration. Supply chain software was built from the ground up with a data model that was singularly focused toward certain areas like demand, supply, logistics, etc. Financial planning and analysis tools which model the General Ledger/Chart of Accounts from a transactional and roll-up perspective take the opposite approach. As such, supply chain planning and financial planning technologies were never destined to meet.
• Complex skill set required.  Optimization solutions present barriers within barriers: modeling a complex supply chain often requires difficult coding and provides no visualization.
• Different cultures within the organization.  Business units within the enterprise usually have a culture of its own; the undertaking of understanding another unit’s goals while striving to reach its own seemed impossible.
• Linear scenario management tools.  Like optimization, scenario management tools can’t replicate real-world complexities, nor acknowledge that what-ifs are not linear.
• Use of spreadsheets as a primary planning tool.  Maintaining the status quo use of spreadsheets presents an inflexible resource unable to integrate and align business goals.
• Inflexible solutions prevent data quality, access, and management.  Solutions are designed to operate a specific way, and often unlike the business, meaning that the access to data or its quality and management are reliant upon the system.
• No C-Suite awareness.  Understanding the meaning and feasibility of IBP often lies outside the C-Suite periphery. As a relatively new process that has been difficult to put into practice, IBP is an educational endeavor within the organization; IBP fails to get the attention of the C-Suite that benefits from it most. The CEO/CFO can be unaware of the benefits of IBP. In this post, we describe situations where employees keep profit-improving opportunities a secret , because an individual silo may be somewhat negatively impacted.

Clearly, navigating the challenges to implementing IBP starts with understanding the advantages that IBP provides.

How Does IBP Work?

IBP represents the end-to-end business goals with a process that takes into consideration each business silo and its various functions. For example, is the operational plan represented in a cash flow statement? If not, what good is an operating plan that includes a product mix with margin contributions that put cash flow risk?  It’s why the outcome of IBP is a true business plan, rather than a demand plan, supply plan, production plan, or a financial budget.

Through IBP, enterprises gain a single holistic plan that unifies the business, seamlessly connecting corporate performance management, financial planning processes, and operational planning systems. This comprehensive business plan increases business alignment through the sharing of performance strategies and helps quantify business risk so enterprises can rapidly adapt to meet challenges.

Why We Need IBP Now More than Ever

Even in a good economy, financial pressure to perform is paramount to maintaining a competitive edge and interesting enough, no different than the factors driving IBP following the 2009 recession. These include:

• Demand volatility has increased considerably for most companies.
• Supply complexity has increased with options such as subcontracting manufacturing and logistics operations — both of which are more common. Supply chains are broader in scope, including goods that are distributed across worldwide supply chains.
• Input cost volatility is a constant, increasing challenge for profitability. No matter the commodity (e.g., aluminum, gas, or petrochemicals), all experience sudden market changes.
• Non-linear connection between costs and volume fluctuates with a mix of fixed and variable costs; some costs vary by volume and others by time, making it more difficult to understand the financial implications of business decisions.

Yet, IBP is essentially an outgrowth of S&OP that fully aligns customer, product, demand, product, and strategic portfolios across a value chain to drive the strategy of a company, its financial performance, and its operational and tactical plans. This realization began as early as decades ago but hasn’t gained much traction in implementation until recently.

With process changes like global sourcing and distribution, the complexities of the supply chain make it necessary to synchronize operational plans with financial and strategic business goals and understand impacts to the enterprise as a whole.

The Need for What-If Analysis for Successful Integrated Business Planning

IBP is only possible with cross-enterprise, what-if scenario planning across various planning horizons. With true integrated business planning, new questions to new answers can be address — driving unmatched value to every aspect of the value chain.

In one use case involving a product mix portfolio, IBP can answer what-ifs such as:

• What if we need to move from one raw material to another, over the next several years?
• What if we want to expand into new opportunities. Where should we be investing?
• What if we make changes in design, materials, and production. How will it affect short- and long-term planning?
• What if new capital expenditures are required today and in the future?
• What if we made acquisitions instead of more capital expenditure projects?

The what-ifs allow companies to find optimal scenarios in addition to optimizing the existing way of doing business.

In other words, what-if scenario analysis is what allows companies to integrate their supply chain plans with finance, manufacturing, procurement, sales, marketing, etc.

The Unmatched Benefits of IBP

IBP has some astounding impacts on those companies who successfully adopt it. Some of the benefits our customers have seen are:

• Profit improvements equal to 2-5% of annual revenue within the first year alone
• Reduced working capital expenses by 15% or more
• Optimization of logistics, capacity, procurement, supply and demand all with the use of a single planning solution
• Improved cross-functional collaboration, planning agility, risk mitigation, and forecast accuracy
• Reduced planning timeframes from weeks or months to just a few days or hours.
• Increased stakeholder value for the company, at large
• Broader trust in plans

6 Factors to Find the Best IBP Solution

Cloud-based technologies, machine learning, and artificial intelligence (AI) sources have eliminated some technology barriers; however, traditional methods continue to play a significant role in preventing companies from using IBP.

When evaluating Integrated Business Planning solutions, these should include:

• Can execution characteristics, capabilities, and constraints be modeled correctly in order to gain an achievable strategic plan?
• Can the IBP solution co-create financial plans in sync with operational plans? Note: a financial plan refers to audit quality financial statements (e.g., Income statement, Balance Sheet, Cash Flow) which provide a full financial picture?
• Does this solution allow users to clearly understand variances – from a budget to a plan, or a baseline to a scenario, at operational and financial levels?)
• Can the solution evaluate alternative “what-if” scenarios in the formation of budgets, strategies, and operational plans? Can the scenarios consider financials as constraints? Can the scenarios optimize to multiple objective functions at the discretion of the user?
• Can we drill down and understand the root causes of those gaps?
• Does the solution have a concept of marginal contribution? This provides the specifics needed to understand the targeted actions taken. If more of this product is sold, will it have this impact? Is it worth it? If less of that product is sold, will it have this impact? Are the risks worth taking?

Intelligent Modeling as a Requirement for Successful IBP

Successful Integrated Business Planning includes unique technology capabilities. Below are the most important ones:

• An underlying holistic model that represents the business as it behaves in reality, including business, financial, and supply chain constraints. Additionally, it is essential to know how variable and fixed costs are incurred, the structure of reporting hierarchies, and process flows with mass/energy balance.
• Allowing users to simulate and optimize scenarios with multiple objective functions
• Supporting analyses from different angles (e.g., solving for optimal product mix rather than holding product mix constant, and solving for a supply plan) allow users to communicate effectively and understand the impact on key performance indicators.
• Providing rich information, including detailed cost analyses, marginal profitability, financial statements, key bottlenecks/constraints, etc.

River Logic as a Recognized Leader in S&OP/IBP

Currently, River Logic is a Leader in Gartner’s Magic Quadrant for S&OP and a Gartner-ranked global leader in both prescriptive analytics/optimization and Corporate Financial Planning. To date, we are the only vendor that is noted in all three of these areas.

River Logic has been a long-time thought leader in the IBP space and has been delivering Integrated Business Planning and S&OP solutions to global clients since 2005.

Our solution fundamentally looks at IBP through the lens of the CEO/CFO: charts of financial accounts and net income and a focus on the value chain. In other words, it truly has an integrated business plan as part of its data model regarding finance, supply, demand and any value chain function that needs to be modeled. River Logic is a comprehensive business modeling tool and much more than just supply-chain modeling tool.

1 Magic Quadrant for Sales and Operations Planning Systems of Differentiation , Gartner Research, May 2017.

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What is IBP? (Integrated Business Planning)

Video: What is IBP?

Why is IBP important?

IBP Framework

IBP best practices by o9 solutions

Summary: ibp software by o9 solutions.

Integrated Business Planning is a best-practice process that aligns Commercial, Financial and Supply Chain activities. In doing so, they are performed as coordinated business decisions with the intent to deliver increased revenue, improved service levels, reduced supply chain costs, greater productivity, better cash flow and higher profits. In short: your integrated business planning process (IBP process) will never be the same.

Integrated business planning (IBP) is important because functional and technical silos across organizations result in flawed decision-making. Within every enterprise there are many thousands of decisions being made and business processes to be aligned, resulting in a final business strategy.

Among those decisions are: commercial decisions related to new products, marketing and sales decisions, supply chain decisions (across the full supply chain and supply chain management, related to positioning of material and capacity and then fulfilling customer demand). Last but not least, financial decisions (related to setting budgets and targets, allocating resources and the forecast that you hold to external stakeholders).

Making the right decisions is not easy and many decisions counteract each other, which may lead to poor business outcomes. Let’s look at some of the fundamental challenges that enterprises face.

1. Isolated decisions are being made

Planning decisions need to be made in a synchronized fashion, but for practical purposes organizations sometimes have to create functional planning departments.  For example, the demand planning and supply and operations planning processes are used to manage the supply chain. Then, you have commercial & sales and operations planning processes driving commercial decisions and finally, financial planning processes to set the budgets and targets.

These plannings and processes are the core of functional planning processes, but they are largely operating in silos today.

2. Cycles are not properly synchronized

Not only do organizations have departmental silos, a second challenging factor is that the siloed teams perform their planning processes in what are called ‘planning cycles’.  A business planning process can involve daily planning cycles for operational planning, weekly and monthly planning cycles for tactical planning and annual cycles for strategic planning.

If these planning cycles are disconnected then the execution of each can be flawed and will almost certainly end up deviating from the intended strategy. In short: an integrated business planning process is very important to connect the planning teams, their processes and their schedules.

3. Technology stacks don’t communicate

The third major challenge to successful Integrated Business Planning (IBP) is the decision-making technology stacks. Historically, many technologies have been used to aid enterprise decision-making and performance management. There are data stacks, planning stacks and reporting stacks. Plus, there’s technology for importing data and then technology used for insights, learning and algorithm development.

All of these types of technology aid decision-making and may lead to integrated business planning (IBP). Still, they can also make the lives of business users much more complex and the adoption of integrated business planning (IBP) more difficult to achieve.

Integrated Business Planning

Functional silos, disconnected cycles and separated technology stacks mean that commercial, financial and supply chain decisions are not easily synchronized. As a result, enterprises will typically suffer from service level issues, inventory issues, excess costs in the supply chain and lower returns on investment from marketing and sales spend.

What this translates to is a significant amount of value leakage. Integrated Business Planning is the strategy and methodology of bringing all these planning processes together and connecting them to respond effectively to market risks and opportunities. IBP can help with your business performance – for example supply chain optimization – and help to develop an effective business planning process, enabling the right decisions to be made to reach your company’s business goals.

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Integrated business planning framework

Integrated business planning (IBP) is a journey with many steps requiring a roadmap of prioritized actions that drive quick wins and sustainable benefits. But, before you can plan that roadmap and the business planning process, you need to understand the basic elements of an IBP framework (which we detail below) alongside the benefits each element brings to the table.

Establishment of accountability

The first element to consider is defining the correct roles and responsibilities as well as setting effective governance to ensure the establishment of accountability.  Clear roles, decision rights, policies, and incentives create an atmosphere that enables everyone to work together as an organized unit to achieve the company’s mission.

Alignment with Leadership

The next element is to detail the objectives with a high-level action plan and seek leadership alignment.  Having a clearly defined aim sets the path for integrated business planning (IBP) and defines what IBP will deliver.  Strategic plans, strategic goals, a business strategy as a whole and scenario planning will help with defining a clear mission.

Alignment among the leadership team is vital if integrated business planning is to achieve its goals.  A clear mission provides the pathway people can follow and ensures that the actions and goals are correct, rather than simply the integrated planning process itself.

Achieve Organizational alignment

When processes are cross-functional and designed to align the organization in one desired outcome, you can focus on meeting the goal instead of maintaining the process. This is why both scenario planning and business strategy are important.

You can write down different processes and define operations planning next to financial planning. Still, if the overall strategy is not clear enough, it’s impossible to reach an organized cross-functional process.

Build Talent base

Build a talent base with the skills and core competencies essential to IBP, such as strategic planning, financial planning, and supply chain planning. With skilled and experienced employees on board, you’ll be able to implement IBP across the enterprise more effectively.

Not only that, but new possibilities will equate to new opportunities and the imagined future state will garner enthusiasm and bring new energy to the business.  Successful Integrated business planning will transform process efficiency and motivate the workforce to achieve even greater improvements.

Real-time analytics

With access to real-time analytics, you can run “what-if” scenarios, quickly respond to disruptions and market adjustments, and make insight-driven decisions the core of your business planning. This helps you to be proactive and stay ahead of your market instead of relying on reactive decisions. This way, tasks like financial forecasting and predicting business performance become simpler and easier.  Scenario planning encourages thinking about ranges of possibilities.  Allowing planning teams to have a recognised and structured approach to future states reduces the likelihood of being blindsided by events and being unable to react to risks or leverage opportunities.

Usage of technology

Since IBP is a cross-functional initiative, you need an agile, flexible, cloud-based technology to provide a central platform for IBP collaboration and execution.  Next-generation planning solutions will provide advanced AI/ML capabilities, but equally important for integrated business planning should be the collaborative functionality, dashboards, volume-to-value conversions, metrics and exception handling, automation, performance and security.

The technology you use for implementing integrated business planning throughout your entire business should not only help supply chain management, but also the integrated processes used by the highest management team.

o9 solutions came up with a single integrated plan for all planning processes across the horizon. o9’s Graph Cube Data Model allows for aggregation and disaggregation to the right level of detail for each planning horizon to support end-to-end synchronization.

09 solutions offers  IBP software  that can be used throughout the entire organization and will solve the future demand of business-wide business planning. A few reasons why this software works:

Complete P&L and KPI visibility

The software summarizes scenarios with connected financial KPIs and strategic plans. It understands financial metrics, such as margins, revenues, and working capital and molds this into operational data.

With the help of the Graph Cube Data Model, most companies can use financial performance, financial reasoning and reconciliation within the integrated planning process of your business.

Cross-functional and interactive plan review & publication

o9’s integrated business planning uses Natural Language Processing (NLP) based search & discovery. With this IBP process platform, you can create interactive views instead of static dashboards and turn cross-functional processes, review and alignment into a fluid process.

Live on platform meeting capability

Your management or business leaders can create live presentations step by step with live data for S&OP meetings, removing hundreds of hours of manual work. The business planning process will take up less time, and the complex supply chains and their ways of working will be easier to understand.

Big data enabled

With the help of the IBP software, you can leverage real-time structured and unstructured data from the market, customers, and operations to drive insights into trends and potential disruptions and thus set up a strategic plan for the future.

o9 Solutions’ Integrated Business Planning provides an intelligent, automated planning solution that bridges all the functional silos across the planning cycles in a unified technology stack that can drive up user adoption and enable better decision-making.

o9’s Integrated Business Planning solution uses automation to bring together finance, marketing, sales, and supply chain to address risk and opportunities in an online live platform.

It provides full visibility and complete transparency on the gap vs. the annual strategic plan in revenues, cost, margin and volumes, and therefore enables management to quickly come up with a strategic plan and informed decisions. This results in predictive analytics, profitable growth that balances strategic, financial and operational objectives and many more benefits for your business.

Want to learn more about Integrated Business Planning (IBP)?

View our collection of white papers regarding IBP, tailored to your industry.

About the author

o9 Solutions is a leading AI-powered platform for integrated business planning and decision-making for the enterprise. Whether it is driving demand, aligning demand and supply, or optimizing commercial initiatives, any planning process can be made faster and smarter with o9’s AI-powered digital solutions. o9 brings together technology innovations—such as graph-based enterprise modeling, big data analytics, advanced algorithms for scenario planning, collaborative portals, easy-to-use interfaces and cloud-based delivery—into one platform.

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SAP Integrated Business Planning for Supply Chain

What is SAP Integrated Business Planning for Supply Chain?

Plan for a sustainable, risk-resilient future with the SAP Integrated Business Planning for Supply Chain (SAP IBP) solution. Speed responsiveness and stay ahead of change with supply chain analytics, what-if simulations, alerts, and more.

Powered by SAP HANA, this cloud-based solution combines sales and operations planning (S&OP), forecasting and demand, response and supply, demand-driven replenishment, and inventory planning.

Automated, tightly coordinated supply chain planning processes

Advanced machine learning algorithms and planning capabilities

Native integration with SAP Supply Chain Control Tower and other solutions

2023 annual customer report for SAP IBP

What were the highlights for SAP IBP over the past year? Dive in to find out.

Read the report

Key benefits

Predict demand through ai-powered algorithms.

Improve short- to long-term forecast accuracy through AI-powered algorithms, statistical modeling, demand sensing, and automated outlier correction in your sales history data.

Empower planners with multilevel supply planning

Create an effective supply plan for your entire network by modeling across locations and multilevel bills of material. Boost agility with response management.

Foster collaboration in one unified S&OP process

Integrate financial and operational planning in one S&OP process. Run simulations of demand and supply changes to prepare for supply chain disruptions.

Key features

Forecasting and demand management.

Demand planning

Advanced demand sensing

Robust statistical models

Time-series analysis

Response and supply planning

Multilevel planning

Supply planning

Rough-cut planning

Response management

Sales and operations planning (S&OP)

Real-time planning

Simulation and comparison of scenarios

Collaboration

Performance monitoring

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Read what IDC has to say about how forward-thinking companies are using AI to make sense of their data and conquer supply chain complexity.

Frequently asked questions

What is sap ibp.

The SAP Integrated Business Planning for Supply Chain (SAP IBP) solution is a cloud-based supply chain planning solution that scales to accommodate business growth and integrates with other SAP and third-party systems. It integrates key aspects of the planning process including demand, supply, inventory, and sales and operations planning (S&OP). Designed to help you streamline planning and improve performance, SAP IBP supports data-driven decision-making and simplified collaboration to increase operational efficiency. This is accomplished with help from advanced analytics, artificial intelligence, and powerful optimization algorithms that enable real-time visibility, better forecasting, and faster decision-making across the entire supply chain.

Which modules are part of SAP IBP?

• Demand management: SAP IBP integrates historical data, market trends, and advanced predictive analytics so that you can generate more accurate demand forecasts.
• Response and supply planning: SAP IBP takes capacity constraints, lead times, and inventory levels into account so that you can optimize production and distribution plans and more efficiently meet customer demands.
• Inventory management: SAP IBP helps you maintain optimal inventory levels by balancing the trade-offs between carrying costs, stockouts, and service levels.
• Sales and operations planning: SAP IBP provides a unified platform for collaborative planning, allowing different departments to align on strategic goals and operational plans.
• Demand-driven replenishment: SAP IBP supports DDMRP for strategically positioning inventory buffers in the supply chain to absorb variability and uncertainty.
• Supply chain control tower: SAP IBP supports the real-time supply chain visibility and enhanced analytics you need to quickly respond to changing market conditions and customer requirements.

Who uses SAP IBP?

More than 1,000 companies worldwide use SAP IBP to streamline supply chain and planning processes. Ranging from large multinational corporations to medium-sized enterprises, these companies span a wide range of industries, including manufacturing, retail, consumer goods, pharmaceuticals, automotive, aerospace, and many others. Some of the key users of SAP IBP include:

Supply chain managers: They use SAP IBP to optimize supply chain processes, improve visibility, and monitor and control inventory levels.

Demand planners: They use SAP IBP to forecast customer demand accurately, align supply with demand, and improve overall customer satisfaction.

Sales and operations planners: They use SAP IBP to align sales, marketing, and operations teams to execute integrated business plans and achieve financial targets.

Inventory managers: They use SAP IBP to optimize inventory levels, minimize carrying costs, and improve working capital efficiency.

Executives and decision-makers: They use SAP IBP to gain insights into the overall health of the business, make data-driven decisions, and drive strategic initiatives.

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Integrated Business Planning: A Complete Guide

Do your sales teams push for continuous promotions? Meanwhile, does your supply chain struggle with stock levels as finance grapples with margins? This familiar scenario often arises from operational silos within an organization. It leads to missed opportunities, operational inefficiencies, and uninformed decision-making.

How do you achieve seamless coordination across all departments? The answer lies in Integrated Business Planning. IBP is not merely a strategy; it transforms processes. It aligns your teams, enhances collaboration, and ensures every department works towards the same goals.

Are you ready to streamline your operations and improve decision-making across your organization? Dive into our comprehensive guide to discover how IBP turns your business challenges into opportunities for growth. Keep reading!

What is Integrated Business Planning?

IBP is a strategic approach that transcends traditional planning methods. It integrates diverse business processes to enhance overall corporate performance. IBP aligns departments such as sales, operations, finance, and marketing. This ensures every unit works towards unified goals. Such harmony is crucial for retailers facing rapid market changes and evolving consumer demands.

IBP operates on a rolling horizon, typically spanning 24 to 36 months. This enables retail leaders to make proactive decisions based on long-term forecasts and analyses. This forward-thinking approach aligns strategic and operational plans. It ensures that tactical decisions support the business’s overarching goals.

Consider a national retail chain planning to expand its product line. IBP coordinates new product development with sales forecasts . It aligns with supply chain capabilities and financial budgets. This strategic alignment prepares all departments to support the launch effectively.

Why is Integrated Business Planning Essential?

Before diving into Integrated Business Planning, we acknowledge its core, Sales and Operations Planning. S&OP traditionally focuses on balancing demand and supply within a shorter-term horizon. It establishes the operational groundwork necessary for effective integration. In retail, adapting quickly to market trends is crucial. S&OP ensures your operational capabilities align with immediate market demands. IBP builds on this foundation. It incorporates strategic elements like financial forecasting and long-term market analysis. This broadens the scope from merely operational to strategic.

IBP offers a cohesive approach to decision-making. It ensures that all business facets, from inventory to finance, are in harmony. Here’s why embracing IBP is crucial for your retail operations:

• Enhanced Visibility Across Departments: IBP integrates data and goals across various departments. This provides a clear overview of business operations. Such transparency lets you see how decisions in one area impact others. It leads to more informed decision-making. For instance, a decision to launch a new product line will involve input from the supply chain, sales, marketing, and finance. This ensures that all aspects are aligned and supported.
• Improved Forecast Accuracy: With IBP, you use advanced analytics and collaborative insights to refine forecasting. Insights come from various departments. This accuracy is vital in retail. It predicts market trends, consumer behavior, and potential disruptions. Accurate predictions directly influence stocking and marketing strategies. Better forecasting lets you adjust inventory levels more precisely. This avoids both overstock and understock situations, which erode profits.
• Strategic Resource Allocation: IBP links strategic goals with operational planning, ensuring efficient resource allocation. This strategic alignment drives investments in personnel, technology, and inventory. Investments are based on a deep understanding of business goals, market demands, and financial constraints.
• Faster Response to Market Changes: Market conditions shift rapidly due to factors like consumer trends, economic changes, and technological advancements. IBP allows swift responses to these changes. You adjust plans in real time, ensuring agility and resilience. For example, if a sudden fashion trend emerges, IBP lets you quickly increase production or distribution in targeted areas. This quick action enables you to capitalize on the trend.
• Increased Operational Efficiency: IBP breaks down silos within the organization, fostering collaboration and coordination. This approach boosts efficiency by getting departments to work together. They optimize workflows and reduce redundancies. Whether streamlining the supply chain or synchronizing marketing and sales, IBP ensures smoother, more cost-effective operations.
• Risk Mitigation: IBP incorporates proactive risk management, anticipating disruptions, and formulating strategic responses. This preparedness is crucial in retail, where supply chain issues significantly affect availability and sales. With IBP, you identify risks and weave risk management into your planning. This ensures your business stays strong against unexpected challenges.
• Sustained Competitive Advantage: IBP’s comprehensive nature provides a competitive edge. You stay ahead of the market and even shape future trends. This forward-thinking lets you innovate continuously. It also enables you to meet customer expectations effectively. Thus, you distinguish your business from competitors.

Integrated Business Planning Process

IBP is a strategic process that aligns demand, supply, new product development, and financial strategy into a cohesive plan. Here’s how you implement IBP effectively in your retail business, ensuring each step contributes to your overarching strategic goals:

• Strategic Review: Start by assessing your long-term business goals and market strategies. This foundation ensures that all IBP efforts align with where you want your retail business to be in the next three to five years. You examine trends, consumer behaviors, and potential disruptions that might affect your market.
• Demand Planning: This step involves forecasting customer demand for your products. You analyze historical sales data, market trends, promotional activities, and seasonality. This forecast forms the basis for all other planning activities. It ensures that you match your inventory and resources to anticipated demand.
• Supply Planning: Once you have a clear forecast of customer demand, you plan your inventory and procurement . This step involves scheduling deliveries from suppliers. You manage inventory levels and ensure logistics handle incoming and outgoing products efficiently.
• Product Portfolio Management: Manage your product portfolio by analyzing existing product performance. Plan the introduction of new products to keep your offerings competitive. Ensure your products stay relevant in the market. Base your decisions on lifecycle management, customer preferences, and profitability analysis.
• Financial Integration: Align your financial plans with operational strategies. This step involves budgeting, profitability analysis, and setting financial targets. Ensure these targets match your operational capabilities and constraints. Optimize all financial resources to support business growth and sustainability.
• Collaborative Reconciliation: In this crucial step, you reconcile all plans across different functions. These include demand, supply, product, and financial plans. Collaboration involves regular meetings with all stakeholders. This ensures every department understands and supports the integrated plan. Resolving conflicts between different areas is vital. Ensure the strategy is achievable and aligned across the organization.
• Execution and Monitoring: Implement the integrated plan across your retail operations. This step demands effective communication and the planned deployment of resources. Continuously monitor performance against the plan. Use key performance indicators and real-time data to ensure execution stays on track and meets expected outcomes.
• Continuous Improvement: The final step in the IBP process involves regular reviews of the outcomes. You analyze what succeeded, what failed, and the reasons. Continuous feedback loops adapt the planning process. This adaptation enhances accuracy and efficiency over time. Ongoing evaluation and adjustment maintain agility and responsiveness to market changes. These actions drive continuous improvement in business performance.

💡Fact McKinsey reports that companies with mature IBP processes reduce delivery penalties and missed sales by 40-50 percent.

S&OP primarily balances supply and demand. IBP extends beyond this. It integrates financial planning and product development into its framework. This makes it a broader, more strategic approach. It encompasses long-term goals and focuses on profitability.

Challenges of Integrated Business Planning

• Complex Data Integration: IBP synthesizes large volumes of data from sales, operations, finance, and marketing. Integrating and harmonizing this data presents significant challenges. If you rely on disparate systems that do not communicate seamlessly, the task becomes more complex. Ensuring data accuracy and consistency requires robust IT support. You also need sophisticated software solutions.
• Cross-Functional Collaboration: IBP requires ongoing collaboration across your company’s departments. Siloed operations and misaligned departmental objectives hinder effective IBP execution. Encouraging a culture of teamwork and aligned goals is crucial. Achieving this culture is challenging. It involves changing organizational behaviors and mindsets.
• Change Management: Shifting to integrated planning demands significant changes in your business processes and systems. These changes affect every organizational level, from top executives to operational staff. You must manage these changes effectively. Securing buy-in from all stakeholders often proves challenging. Overcoming resistance to change is crucial. Everyone must understand the benefits and their roles in IBP clearly.
• Skill Gaps: IBP demands advanced analytical capabilities, strategic thinking, and operational expertise. Combining these skills poses a significant challenge. You must find and develop talent with these cross-functional skills. Training and hiring new talent are necessary but require time and resources.
• Consistent Execution and Monitoring: Once implemented, applying IBP principles consistently across all business units is challenging. You must continuously monitor its performance. Ensuring the IBP process is dynamic and adaptable to market changes is crucial. This requires ongoing attention and refinement.
• Technology Adoption: Implementing the right technology to support IBP is crucial. Selecting, customizing, and deploying enterprise planning software to fit your specific needs is daunting. Additionally, technology alone is not a solution. You must align it with your business processes and train your team to use it effectively.
• Balancing Strategic and Operational Focus: Maintaining a balance between strategic objectives and operational realities is key. You ensure that long-term strategic goals do not overshadow immediate operational needs. This balancing act requires sophisticated forecasting. It also demands effective scenario-planning capabilities.

Embracing Integrated Business Planning positions you to manage your resources smartly. It keeps your business agile and aligned with market demands and growth objectives. It promotes sustained business success and differentiates your company in a competitive market.

Take the Next Step

Embrace Integrated Business Planning today with the right means and unlock the full potential of your business.

Elevate your forecasting strategies with integrated business planning that seamlessly integrates with your operations for synchronized decision-making, enhanced collaboration, and optimized resource allocation. Ensure success across every facet of your organization.

Frequently Asked Questions

What are the key differences between s&op and integrated business planning.

S&OP primarily focuses on balancing supply and demand and aligning production and inventory levels with sales forecasts. In contrast, IBP integrates these operational planning activities with strategic and financial planning, providing a more holistic view and a longer-term focus.

Is Integrated Business Planning adaptable to various industries or business models?

Yes, Integrated Business Planning is highly adaptable and can be tailored to meet the specific needs of different industries and business models. By adjusting the focus on key metrics, processes, and strategic priorities, IBP can effectively support unique operational and strategic requirements across sectors.

What metrics do companies use to evaluate the effectiveness of their Integrated Business Planning initiatives?

Companies assess the effectiveness of their Integrated Business Planning initiatives through various metrics: improved forecast accuracy, increased revenue, enhanced customer satisfaction, and reduced inventory costs.

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Integrated planning: The key to agile enterprise performance management

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Table of contents

What is integrated planning, change as a given: the truth about plans, planning across the organization, the ultimate integrated planning solution.

• Need for real-time insights
• Integrated planning
• Agile and ready organizations
• Integrated planning drives better results

Integration is key to streamlined planning, budgeting, and forecasting. In order to adapt to today's quickly changing business conditions, you need an enterprise performance management solution that creates a single source of truth and delivers speed and agility to your planning process.

Did you know that 33 percent of critical information is delivered late?

The delay of critical information can cause a ripple effect that drives poor decision making and poor results. Today’s business simply cannot afford this type of cost in our customer-centric environment, where data is one of our most valuable assets. To stay ahead of the competition, businesses rely on a solution that can deliver acceleration, agility, and collaboration in every part of the organization.

Integrated planning ensures all parts of the organization are connected and planning is streamlined.

A must in the culture of “now.”

In virtually all industries, work has become more interactive and collaborative. More sharing is required, and more data is available than ever before. Success means integrating information across strategic and operational perspectives, as well as different functional and external sources.

Integrated planning mirrors the modern way we do business — it elevates the critical value of collaboration and cuts through data silos, driving more access to information and faster insights. Leaders use highly collaborative approaches to plan, budget, and forecast. Business planning requires accurate and complete data and buy-in across the entire organization, both from the top down and the bottom up. It sounds simple, but organizational silos are some of the biggest obstacles to accomplishing good work because they hinder critical decisions that strategically steer the business. And at the modern enterprise, silos are everywhere.

Integrated planning starts with a sophisticated planning platform that everyone in the organization can use, creating one source of truth. Data from diverse data sources such as ERPs, CRMs, and HRMs is unified, so users can access the information they need when they need it. Integrated planning helps ensure that plans, budgets, and forecasts are created with a holistic approach. Trends are easier to spot and quickly act on with more accurate and reliable plans. According to analysts at the Aberdeen Group , those organizations that champion data accessibility and collaboration between stakeholders promote organizational accountability and decrease time-to-decisions while increasing revenue. 1

The fact of the matter is that without effective communication, coordination, and collaboration between stakeholders, there is no way to improve organizational performance. 1

Bringing together people, data, and technology leaves organizations well-poised for optimal performance. Most importantly, integrated planning enables employees to be agile in responding to changing circumstances and able make the best decisions possible — all at the speed of modern business.

According to an Aberdeen study, 1 leaders who adopt enterprise performance management tools show a keen understanding of the importance of collaboration. They recognize that to make data driven decisions, they need to make all information accessible by integrating data and breaking down silos. Figure 1 shows steps taken by leaders to democratize data and drive more accurate forecasts.

Leaders put a high value on data integration and accessibility. They see the value of providing real-time data to decision makers and taking the guesswork out of forecasting. These strategies create comprehensive, actionable visibility into overall company performance and drive better results.

Gartner Predicts by 2020, at least 25 percent of large organizations will increase planning accuracy by integrating key operational planning processes with financial planning and analysis. 2

Do you have an integrated view of your data?

I do not feel confident in where to find comprehensive data, even for just my department

I have a good handle on my own departmental data (but only mine)

I have access to my data and that of other departments that impact my planning

IBM Planning Analytics helps Deutsche Bahn unite its global enterprise

Deutsche Bahn AG is a German railway company, and one of the largest IBM Planning Analytics customers with over 6,000 users worldwide. Deutsche Bahn uses IBM Planning Analytics to unite their wide-ranging operations across the globe, ensuring that the most accurate data is being used to create critical plans and forecasts that drive their business forward.

The truth about plans is that they always change. The goal of a dynamic, integrated planning approach is not to create a perfect, fixed plan. It’s to use all the resources available to create the most accurate, flexible and transparent plan possible, using a solution that does more than just plan — it analyzes data, reveals trends, and allows for real-time iteration.

Better, quicker access to data means faster and more informed decisions, laying the foundation for an organization to be agile and ready to pivot when changing business conditions demand.

If you’re reading this and thinking, “great, the finance team integrates all our plans, so we are off the hook,” think again. While we’d like to think that finance is the well-informed master of plans, miraculously weaving them together in perfect harmony and balance, that’s not always the case. In fact, it rarely is. Many, many finance teams rely on the manual collection of data into spreadsheets, which are often disconnected. Remember that much of an organization’s critical planning starts outside of finance and never gets communicated back up the chain or across the organization. There are simply too many top-down and bottom-up communication problems. Spreadsheets only complicate smooth communications. When a finance person is collecting and analyzing budget spreadsheets from across the organization, there is high risk for error in the process of combining and editing, causing confusion at the highest levels. Contradictory data can inhibit a clear picture of what is actually going on and identifying business drivers or detractors. Spreadsheets have proven over and over to be a highly imperfect yet highly common business practice.

With real-time access to data, companies take the guesswork out of planning, decreasing time involved in forecasting and increasing forecast accuracy. 3

Bye bye, silos. Hello, cross-functional planning.

A centralized, automated solution for performance data and planning allows coordination between different parts of the business and enables more streamlined, accurate plans. Leadership needs to understand what is truly driving the business — what causes increases and decreases in revenue or demand. At every level, access to a full range of data is critical to understanding how change (both internal and external) impacts the business. Though planning often starts with finance, other areas of the business can benefit from a dynamic planning solution as well. Let’s dive into a few use cases.

Supply chain planning

The term “operations” covers an enormous range of business activities. But one that’s almost universal is supply chain management. Supply chain planners are under constant pressure to reduce costs, increase efficiency and improve margins. Unfortunately, too many of them lack visibility into data and are misaligned with other teams. One centralized tool can help connect operational tactics with financial plans to allocate resources more effectively in response to market opportunities or competitive threats. This helps planners avoid mismatched data across multiple spreadsheets and enables them to pivot in the case of supply chain disruptions.

“ Our managers all have quick, easy access to the latest operational data via detailed reports that help them make better-informed decisions to improve the efficiency of the entire supply chain. ”

- Homarjun Agrahari, Director, Advanced Analytics, FleetPride

Learn more about supply chain planning

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Workforce planning

A company is only as good its people. That’s why it’s so important to hire and retain the right talent. Alignment between HR, finance and operations is crucial to ensure that the right people are in the right roles at the right time in order to meet organizational demands. This is rarely a simple task and too often it involves manual spreadsheet-based processes. Ensuring that departmental staffing targets are in sync with broader organizational objectives requires high levels of planning integration.

“ Our business is based on people. IBM Analytics is helping us manage that critical asset much more efficiently and effectively than ever before. ”

- Nadia Bertoncini, Coordinator of Governance, Projects and HR Analytics for Latin America, Natura Cosméticos

Learn more about workforce planning

Infographic Aberdeen report Learn more

Sales planning

Misalignment between finance, marketing and sales could lead to investment in the wrong initiatives, missed opportunities and inaccurate revenue forecasts that can severely hinder sales growth. And in a fast-moving market, manual processes and siloed systems are detrimental to agility. Decisions that are based on outdated information can lead to misguided sales strategies and thus lost sales and lost revenue. It’s critical to unite data under one roof for one single view to boost sales and effectively manage sales people.

“ The sheer level of detail that IBM Planning Analytics provides is very impressive … We can calculate our sales and gross margins for each SKU in IBM Planning Analytics and generate insightful reports at the click of a button. As a result, senior managers can rapidly access the comprehensive information they need to make effective strategic decisions. ”

- Vince Mertens, Group Accounting and Consolidation Manager, Continental Foods

Learn more about sales planning

Marketing planning

Constantly changing customer preferences and rising customer expectations require marketers to interpret high volumes of data and respond appropriately. But siloed data systems give only a partial picture and hinder smart decision-making. In addition, marketing teams can be fragmented and often disconnected from sales. Siloed planning causes misalignment with overall marketing goals, driving misallocated spend on the wrong elements of the marketing mix. Manual, siloed processes reduce visibility into how marketing activities affect one another, how marketing and sales touches move a lead through the funnel and how marketing helps achieve overall financial and business goals.

“ We first needed a better handle on our sales data. With so many lines of business, channels, and franchisees, collecting and consolidating this information was something that we knew we could do better. ”

- Donald Neumann, Demand Manager, Grupo Boticário

Learn more about marketing planning

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IT planning

With IT, you need a business case for every dollar spent. But balancing the IT needs of an entire organization with digital transformation objectives and constant technology innovation is no simple task, and often requires additional resources. That’s why it’s so important leverage a planning solution that keeps IT focused on the projects that matter, automates planning tasks, gives a clear view into resources available and helps measure ROI. It’s also critical to coordinate with both finance and human resources to ensure the right resources are provided for IT initiatives and projects.

“ A few years ago, my team probably spent around half their time just keeping everything running — now it’s around 10 percent. With the move to IBM Analytics in the IBM Cloud, we have 40 percent more time to focus on working with the business to add value. Instead of asking ‘how do I make it work?’ we ask ourselves ‘how do I make it better?’ It’s a quantum shift in mindset. ”

- Vimal Dev, Vice President – IT, Global Enterprise Applications Leader, Genpact

Learn more about IT planning

Learn more IBV report

Operations, sales, marketing, human resources and other departments and disciplines all have a need for fast, flexible planning and analysis. And all of them can use the same tools to provide insight and manage performance. When people in one part of the organization see how their decisions affect other parts of the organization, all of the activities will be better coordinated and drive better results. In fact, according to Aberdeen, leading organizations are those who align planning across departments at double the rate of laggards in areas like sales, marketing and finance.

Become a leader

With IBM Planning Analytics , you can break down silos and generate an integrated view of your departmental or organizational performance. The solution enables you to create more accurate forecasts, identify potential performance gaps before they occur and make resource allocation decisions quickly and intelligently. Using multidimensional modeling and scenario analysis, IBM Planning Analytics lets you drill down into your data to examine the ripple effects of alternative courses of action and understand how your decision will affect related areas of the organization and ultimately impact the bottom line.

Using what-if scenario analysis to make smarter decisions

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IBM Planning Analytics offers all areas of your business — finance, operations, HR, sales, marketing, operations, IT and more — the ability to solve problems today and respond to new challenges with agility tomorrow.

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Integrated Business Planning for pharma: From concept to adoption—and value

With supply chain disruptions, demand uncertainty, and growing regulatory complexity facing pharmaceutical manufacturers, an integrated approach to business planning has become an imperative.

Responding quickly to external pressures and conditions is dependent on an organization’s ability to make decisions based on accurate, comprehensive insights and adapt cost and capital investments and innovation accordingly. That speed has a direct impact on revenue, profit, and market advantage.

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Your Complete Starter Guide to Understanding Integrated Business Planning

Integrated business planning gives you a 360 degree view of the business by connecting all your business applications. Here's how to get started.

Create flexible and predictable sales forecasts

Integrated Business Planning (IBP) has emerged as the hallmark of businesses undertaking concentrated digital transformation efforts.

While business planning has been a standard part of every organizational strategy, it has been a disjointed process until recently. Different departments ended up formulating their own strategies which impeded the organization's growth potential. Without a cohesive planning process in place, companies were unable to get a 360° look at the business and were unable to plan for the future.

Realizing the bottlenecks created by disjointed business planning, companies are now migrating to IBP as their default strategy.

What is Integrated Business Planning?

Integrated Business Planning (IBP) can be described as a process that offers management a 360° view of organizational functions like sales, marketing, finance, accounting, and others. These insights enable decision makers to prepare a comprehensive strategy to carry the business towards a promising future marked by enhanced growth potential.

Integrated Business Planning (IBP) has been a buzzword in the corporate sector for quite a few years, but its importance has increased exponentially in the last decade. IBP can be considered as a refined mashup of financial planning, operational best practices, and supply chain optimization to not only mitigate the risks but also deliver savings, responsiveness, and speed for the company and improve customer experience .

What is an Integrated Business Strategy?

Integrated Business Strategy (IBS) is a set of processes that companies can employ to bolster their efficiency and competitiveness in the market through expansion in different avenues.

These areas could include logistics, distribution, or competition. Businesses can use the IBS to enhance their sway in the distribution network to forge ahead of the competition and have a strong market presence. When compared, IBP is more focused on creating a cohesive business strategy that is in harmony with organizational objectives, while IBS is more about executing the IBP to achieve the desired goals.

What’s the difference between Sales & Operations Planning (S&OP) vs. Integrated Business Planning (IBP)?

There is a constant debate amongst experts if there is any difference between IBP and S&OP. While some argue that these strategies are complementary, there is a slight difference between these two integral tactics. 

S&OP is described as a cross-functional planning process undertaken to maintain the balance between supply and demand through the communication of changes in market demand to management. Finance, production, and supply chain departments utilize this data to optimize their production planning and purchasing decisions. S&OP empowers the organization with shorter lead times, improved management control, better customer service, and superior supply chain management. 

In comparison, it is evident that IBP is an extension of S&OP. Where S&OP is more inward-looking, IBP attempts to strike a balance between internal and external factors. After an organization has achieved a higher maturity level in S&OP, it must embark on the journey towards incorporating IBP as a standard business process. 

What are the key benefits of integrated business planning?

In the modern business environment, management must ensure alignment across cross-functional groups to maintain a competitive edge. IBP helps an entity overcome challenges posed by disjointed business planning to augment the decision-making processes. Some of the noteworthy benefits of IBP are:

• Accountability : Departmental teams are aware of the impact of their actions on other departments and the entire organization. Managers can fix individual responsibilities of employees to determine employee accountability.
• Transparency : IBP offers a consolidated view of data that enables departments to undertake scenario planning for different possible situations in sync with other departments. Such transparency in operations bodes well for the company's future.
• Alignment: With IBP, departments can understand the overall organizational objectives and then align their operations with syncing with those objectives. 
• Optimization : Management can ensure optimal resource utilization by addressing common bottlenecks that impede the operations of multiple departments. 

What is the purpose of integrated business planning?

IBP is a process designed to enhance the efficiency of the decision-making process for the entire organization. It enables management to lay down a detailed plan for managing the enterprise with a long-term horizon. Some of the key aspects that IBP addresses are allocating crucial resources, supply chain management, personnel requirement, financial analyses, and time management to ensure a balance between profitability and customer satisfaction.

IBP is the next step in the evolution of S&OP which in itself originated in the 1980s from supply and demand balancing processes. IBP ensures alignment of all departmental functions to prepare the entity for possible scenarios through accurate strategy deployment and better cooperation between key stakeholders.

Why do you need integrated business planning?

Whether you are a start-up looking to establish a strong presence in the market or an established enterprise interested in consolidating your market position, IBP must be an integral part of your strategy. Companies need IBP to devise a set of concrete actions to achieve different objectives. 

• Quality of inputs, outputs, and processes : Companies can maintain a uniform demand and supply plan that is in sync with the financial goals by attending meetings attended by cross-functional decision makers.
• Organizational capabilities : IBP promotes cross-functional collaboration across multiple layers of the organization to encourage functional excellence and problem-solving.
• Accountability and Performance : IBP helps design incentives to encourage transparency and accountability of performance. Shared metrics made available promote collaboration between key stakeholders. 
• Data systems : IBP promotes integrating data systems across departments to deliver a single point data source for all requirements. Automated data flows and system detection promote real-time decision-making. 
• Process design : IBP helps bridge the gaps left by short-term and long-term planning by enabling flexible strategies for addressing issues arising between these two time horizons. It also promotes strategy via management-level operational planning and target setting. 

How do you implement integrated business planning for your company?

Many companies struggle with implementing IBP as crucial responsibilities and metrics are not aligned across functions. This might pose difficulties with steering the operations collaboratively. Thus, it is important to clearly understand implementing IBP for your company. 

Integrations

To save crucial time and resources for different departments, it is important to select an IBP platform that seamlessly integrates with your existing tech stack. This will help eliminate data transfer errors and reduce data consolidation time, as well as maintain critical data security standards. Therefore, the first and foremost requirement for implementing IBP is to ensure seamless integration of the IBP software with your tech infrastructure, including ERP software, CRM software, Billing Systems, Data Warehouses, and more. 

Consolidating data sources into a single source of information 

Duplicate and inconsistent data sources pose challenges for an organization at multiple levels, leading to a waste of precious resources and impacting the bottom line. It is, therefore, important to have a single source of information that can act as a reference point for multiple departments. After integrating the IBP software with your tech stack, your next focus should be ensuring accurate data collection and aggregation in real time. This approach would provide a single source of truth for all the departments, eliminating errors due to omission or duplication.

Building forecasting models

Forecasting in IBP is used for demand sensing in the short, medium, and long term. To create a forecast model with your IBP software, you must define the algorithms and key figures related to outputs and inputs. A forecast model features three steps, i.e., pre-processing, forecasting, and post-processing. But a forecast model only works as a container of functionality, and it is you who must define its aggregation level and timing of running.

Financial forecasting methods

There are different financial forecasting methods that you can opt for per specific requirements according to different situations.

• Straight Line Forecasting : - This method is used to get a simple view of continued growth at a consistent speed to derive predictions for guiding financial and budget goals.
• Moving Average Forecasting : - This method calculates average performance for different metrics in a specified time frame. Companies use this method for the identification of underlying patterns for varied financial metrics.
• Simple Linear Regression Forecasting : - This method helps create a trend line based on the relationship between an independent and dependent financial variable. 
• Multiple Linear Regression Forecasting : This method uses two or more financial variables to make a projection. This forecasting model helps understand the relationship between different financial parameters and possible outcomes.

Scenario planning

Use your IBP platform to eliminate being caught off guard while executing your strategies. You can run multiple “what-if” scenarios within minutes to analyze the aspects affecting your business. You can create new scenarios using existing scenarios and compare different scenarios per your requirements. Representations like line charts, bar diagrams, tables, and other visualizations can be used for easy understanding of data for informed scenario planning. This allows you to improve the accuracy of predictions based on a single source of truth.

Scheduled imports

With the option of scheduling data imports built-in, IBP platforms are taking the hassle out of data collection and consolidation. With the scheduling option, you can define the import requirements and get all the data presented to you in a consolidated manner. With access to real-time data, you can ensure higher data integrity and accuracy, as well as data access autonomy. You circumvent investing heavily in setting up IT infrastructure, as cloud-based IBP software solutions can operate seamlessly on your existing infrastructure.

Analytics and data visualizations

Why stick to cells, rows, and columns for data analysis when you can access stunning data visualization solutions with your IBP software? Visual analytics helps draw meaningful insights from data by offering multiple ways to look at the same dataset. IBP platforms allow you to clean and enrich your data in seconds, allowing you to spend more time on data analysis and exploration rather than on manual data collection and consolidation.

Building beautiful presentations 

The true value of data analysis lies in the decisions it enables leaders to take. Storytelling, by incorporating the data and visualizations in a beautiful presentation, is essential to reaping the benefits of an integrated planning and analytics platform. You can use your IBP platform to import and export your data from sources including Google Sheets and create impressive presentations that drive positive impact.

Measuring ROI and impact on the business

Always ensure the measurement of return on investment (ROI) with key metrics depending on the use case. For example, your Finance team might have spent several days on data preparation before achieving actual insights from financial reporting. An integrated business platform has the potential to reduce this data prep time by 80% — metrics like this can be a great way to measure your team’s efficiency post implementing an IBP.

Integrated business planning by the department

The best part of an integrated business planning platform is its ability to support a wide array of business use cases - Sales, HR, Marketing, Finance, RevOps, CX, and more:

Finance and FP&A teams 

IBP platforms empower finance teams to build, maintain, and visualize data in real-time to deliver informed forecasts. Finance teams can save considerable time and resources as they can clean and enrich data in seconds and run models in hours instead of days with up to 20x fewer formulas than Excel. 

Revenue and Sales teams 

IBP platforms enable revenue and sales teams to unlock revenue growth potential through flexible financial modeling options. Therefore, teams can spend more time on strategy by reducing planning cycles for non-productive tasks. 

Executives 

Management teams and key executives are empowered to deliver well-rounded business results as the IBP platforms offer a single data source for all stakeholders. With a 360° view of the business, informed decision-making becomes the new standard practice.

Choosing the best business planning software 

To avail the complete benefits of IBP, selecting the best business planning software is essential. When compared based on power, flexibility, and design, Pigment emerges as the clear leader and is trusted by industry leaders across domains.

Pigment is one of the most feature-rich and user-friendly business planning softwares that offers you a one-stop solution for all your planning requirements. 

Pigment allows your teams to be more efficient as they gain single-point access to enriched data and can spend more time on data analysis to draw meaningful insights.

You can quickly create impressive models with real-time previews to bring all the decision makers at speed quickly. You create a seamlessly shared understanding of numbers across multiple departments, breaking down the silos affecting operational efficiency.

Pigment removes the element of surprise from all your decisions as you can forecast and run multiple scenarios to identify suitable opportunities and risks for your business.

Book a demo today and experience the unparalleled power of Pigment for yourself.

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Complete guide to integrated business planning (ibp).

Integrated Business Planning, or IBP for short, is a strategic management process that connects various organizational departments to align business operations with financial goals. How? By integrating business functions – such as Sales, Marketing, Finance, Supply Chain and Operations – to create a holistic view of the company's performance and future direction. This blog post offers a comprehensive guide to discuss what precisely IBP entails and how Finance can drive business results and collaboration within the organization via a robust and comprehensive IBP process.

What Is Integrated Business Planning?

While the business world and Finance have always had shared language and acronyms, some new (and reimagined) acronyms may now be flooding your feed. One such topic you may be hearing a lot about lately is Integrated Business Planning (IBP). Yet the concept of IBP isn't new. In fact, it's related to Sales & Operations Planning (S&OP) , a concept that's been around awhile.

Still, IBP may seem overwhelming in the context of all the different acronyms related to financial and operational planning floating around lately. For example, IBP, S&OP, eXtended Planning and Analysis (xP&A) and others are just a few acronyms muddying the waters. But this comprehensive guide to all things IBP aims to help demystify the process.

So what, exactly, is IBP?

IBP ultimately aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. In turn, a trusted, common view of the numbers provides a robust baseline for agile decision-making. That common view also keeps all teams collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line? IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

How Integrated Business Planning Works

The IBP process is a framework to address the C-suite needs and help implement the business strategy and manage uncertainty to improve decision-making. So what's the secret sauce of IBP to make all of that happen? A collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance. That's how the C-suite gets value from IBP. Consequently, Finance plays a central role in the IBP process.

IBP typically focuses on horizons of 24-60 months, as opposed to the short term. That focus equates to Integrated Tactical Planning or Sales and Operations Planning and Execution. Since the process must be fully integrated, it removes the departmental silos. Plus, the IBP process must adapt to the organizational construct of every business (IBP isn't a one-size-fits-all type of process).

A typical IBP process involves several stages:

• Data Collection and Analysis : Gathering relevant data (e.g., sales forecasts, production capacities, inventory levels and financial projections) from different departments.
• Demand Planning: Predicting future demand based on historical data, market trends, customer feedback and sales forecasts.
• Supply Planning: Determining the resources and capabilities (e.g., materials, production capacity and distribution channels) needed to meet the forecasted demand.
• Financial Planning : Developing financial plans and budgets aligned with the demand and supply forecasts, considering factors such as revenue targets, cost structures and investment requirements.
• Scenario Planning: Creating alternative scenarios to assess how different strategies, market conditions or external factors impact business outcomes.
• Management Business Review : Collaborating across departments to make informed decisions on resource allocation, investments, pricing strategies and operational adjustments.
• Execution and Monitoring : Implementing the plans, tracking performance against targets, and continuously monitoring key metrics to identify deviations and take corrective actions.

The most efficient way to foster this collaboration is through a unified solution and data model that caters to the needs of the various agents involved on each review. In fact, Figure 1 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

Figure 1: A Unified Data Model for IBP

Core Elements and Stages of the Integrated Business Planning Process

The IBP process includes the following core elements:

• Governance Structure : Establishing a cross-functional team with representatives from key departments to oversee the IBP process, define roles and responsibilities, and ensure alignment with organizational goals.
• Data Integration : Integrating data from different systems and sources to create a single source of truth for decision-making, using technologies such as enterprise resource planning (ERP) systems, Corporate Performance Management (CPM) tools, business intelligence (BI) tools and data analytics platforms.
• Collaborative Planning : Encouraging collaboration and communication between departments to share insights, align objectives and develop consensus-based plans that support overall business objectives.
• Continuous Improvement : Implementing feedback loops, performance reviews and process refinements to enhance the effectiveness and agility of the IBP process over time.

Key Performance Indicators (KPIs) for Integrated Business Planning

Some key KPIs to measure the effectiveness of an IBP process include:

• Forecast Accuracy : Comparing actual sales or demand with forecasted figures to assess the accuracy and reliability of forecasting models.
• Inventory Turnover : Calculating how often inventory is sold and replaced within a specific period indicates efficiency in inventory management.
• Customer Service Levels : Monitoring metrics like on-time delivery, order fulfillment rates, and customer satisfaction scores to measure service performance.
• Financial Metrics : Evaluating financial KPIs such as revenue growth, gross margin, operating profit, and return on investment (ROI) to gauge overall business performance.
• Supply Chain Performance : Assessing metrics like lead times, supplier performance, inventory levels, and supply chain costs to optimize supply chain operations.

Technological Enablers for Integrated Business Planning

Several technological enablers support a robust IBP process:

• ERP Systems : Integrated ERP systems consolidate data from different departments, automate processes, and provide real-time visibility into business operations.
• BI and Analytics Tools : Business intelligence tools and analytics platforms enable data visualization, trend analysis, scenario modeling, and predictive analytics for informed decision-making.
• Collaboration Platforms : Cloud-based collaboration tools facilitate communication, document sharing, and workflow management among cross-functional teams involved in IBP.
• Advanced Planning Software : Specialized IBP software solutions offer capabilities for demand planning, supply chain optimization, financial modeling, scenario planning, and performance monitoring.
• AI and Machine Learning : AI-driven algorithms and machine learning techniques can enhance forecasting accuracy, identify patterns, optimize resource allocation, and automate repetitive tasks in IBP processes.

By leveraging these technological enablers, finance professionals can streamline the IBP process, improve decision-making, and drive business growth.

In conclusion, Integrated Business Planning (IBP) is a strategic approach that aligns business functions, integrates data-driven insights and fosters collaboration to achieve operational excellence, financial stability, and competitive advantage. By implementing a robust IBP process supported by technology and focused on continuous improvement, finance professionals can effectively drive sustainable growth, mitigate risks, and adapt to evolving market dynamics.

Want to learn how you can maximize the benefits of your IBP process and get leadership on board with the plan? Check out our eBook Unifying Integrated Business Planning Across Finance and Supply Chain . You'll learn how to unify IBP across Finance and Supply Chain teams and read about use cases as proof points. Plus, you'll gain an understanding of the unique capabilities OneStream's Intelligent Finance Platform brings to unify Finance and Supply Chain planning activities.

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What Is SAP IBP (Integrated Business Planning)? (+ Examples)

This is about SAP IBP (Integrated Business Planning).

You’ll learn:

• What IBP is
• How SAP IBP is structured
• The features of SAP IBP

So, if you want to know what SAP IBP is and what it can do for you, you are at the right place.

Let’s jump right in!

What Is SAP IBP (Integrated Business Planning)?

Did you ever wonder how big companies manage their most important processes?

For example, how does a multinational company with more than 50,000 employees, 5,000 retail stores, and thousands of warehouses manage its payroll, inventory, supply and demand, and production?

Years ago, these companies conceded a certain level of inefficiencies and disjointed planning, but today’s companies are powered by digital transformation. 

Today businesses can find insights into data on their financial, operational, and sales plans thanks to smart software solutions and modern planning processes. This allows them to make more informed decisions and come up with better overall strategies.

To do this, companies can use Integrated Business Planning—a digital platform that helps them organize all of these processes.

SAP IBP is one of the most popular such platforms. Let’s take a look at SAP’s Integrated Business Planning solution:

• Its history
• And much more

What Is Integrated Business Planning?

Integrated business planning is an advanced approach to business organization that merges operational and financial data across the whole business. It allows organizations to maximize results by connecting sales, financial, operational, and other sectors. It also gives businesses greater visibility of their whole process, from the entire supply chain to sales operations.

You can use Integrated Business Planning to manage different parts of a company such as:

• Finance and operations
• Supply and demand
• Cash flow, cost, and revenue
• Business strategy
• Inventory optimization

An IBP process is used to balance all these (and more) objectives so that the company achieves the best results going forward. 

To ensure this happens, IBP uses prescriptive analytics, which is the application of mathematical sciences and statistics to suggest business decisions based on data.

This goes one step further than predictive analytics which uses mathematical data to predict what’s going to happen.

Simply put, using prescriptive analytics, IBP tries to answer the question of what is likely to happen, tells you why it’s going to happen, and suggests actions you can take to benefit from these predictions.

While IBP is an organizational approach, it can also be referred to as software. In this case, we’re talking about a digital platform that uses advanced analytics to help you manage all these processes like:

• Supply planning
• Supply chain management
• Operations planning

Before IBP: Sales & Operations Planning (S&OP)

As a process, Integrated Business Planning is an heir to Sales and Operations Planning (S&OP) . 

In fact, IBP has been criticized for not being all that different from S&OP—it’s even been called a marketing hoax . 

IBP, however, is a broader term than Sales & Operations planning. It combines S&OP with EPM (Enterprise Performance Management) to give companies both a financial and an operational overview of the business. 

IBP allows organizations to create what-if scenarios that boost the responsiveness of the supply chain and improve the way that manufacturers govern and plan the business.

Source: Semantic Scholar

Here are some ways in which IBP differs from S&OP:

• Financial performance management: IBP helps you express business goals in financial terms. So you can set financial targets and see how well your company is doing relative to those targets. It helps you measure the impact of different scenarios through a financial lens.
• Supply chain planning: With IBP, you can not only plan your supply chain, but also measure its performance. This means you can use IBP to find those decisions that increase your profitability and create production plans based on valuable information.
• Long-term planning: S&OP usually supports medium-term planning (for around two years). IBP aligns with long-term strategies while also supporting shorter-term operational plans. Also, since you can use it to measure financial performance, you can also use it to determine long-term budget needs.

What’s Wrong With Traditional Planning? 

Before we get into SAP IBP and its features, let’s answer one important question: 

What’s wrong with traditional business planning? 

In other words, why do companies need IBP software at all?

First, without IBP there is only the bare minimum of information about how each department is functioning and the corresponding impact on the bottom line.

Second, in traditional planning, there’s often a disconnect between your strategies and operations. This results in lower competitiveness because the business is slow at reacting to market changes.

Third, IBP promotes collaboration. Without it, departments tend to only focus on their own activities and results, rather than feel like part of a larger company team.

Overall, IBP promotes a holistic approach that helps you see the bigger picture and make smart decisions with all aspects of your company in mind.

Who Is SAP?

Let’s get to the details: SAP SE and its IBP platform.

SAP SE, simply known as SAP, is an international software company based in Germany . They make ERP (Enterprise Resource Planning) software that helps companies manage and gather data from all parts of their business.

The definition of SAP is:

SAP (Systems, Applications, and Products in Data Processing) SE (Societas Europaea) is a European worldwide operating software company that makes software for the management of business processes suitable for organizations of any size and industry.

It’s the largest software company outside of the U.S. by revenue.

What Is SAP IBP?

Let’s take everything we’ve learned and put it all together: SAP IBP is an Integrated Business Platform developed by the company SAP SE. 

Like most other business applications from SAP, the platform runs on SAP HANA.

SAP IBP lets you plan all kinds of business activities. 

Thanks to the in-memory processing functions of SAP HANA, their IBP platform provides companies with end-to-end visibility of: 

• Supply chain data

This helps departments such as sales, finance, and C-level management to create plans and business strategies.

Source: SAP

Let’s put it like this: companies conduct periodic reviews of their supply, demand, sales performance, budgeting, and other processes to identify potential issues that can affect their business targets. 

SAP IBP lets companies do more frequent reviews, compare planned figures to actual ones, and take a more active approach to planning.

Furthermore, SAP HANA’s processing capability allows companies to run what-if scenarios with real-time data in order to get statistical input and make smarter decisions.

The Capabilities of SAP IBP

More specifically, SAP IBP allows you to do the following:

• Predict and meet customer expectations: You can use SAP IBP’s predictive modeling and demand sensing to improve your responsiveness and forecast accuracy. The platform makes it easy to react to demand changes and promise deliveries based on commitments.
• Make better planning decisions: As mentioned, SAP IBP uses advanced analytics and machine learning algorithms. You can use these to do effective top-down and bottom-up forecasts. You can also leverage supply planning and set inventory targets.
• Align planning processes: IBP’s simulations and analytics can help you manage planning processes at operational, strategic, and tactical levels. What-if scenarios enable you to make better decisions and increase business predictability.
• Improve supply chain visibility: IBP gives you actionable insights from your entire supply chain that enable you to make timely adjustments. You can take into account data like risk, weather, and sustainability. The platform also allows you to work with your suppliers and manufacturers for easier planning.

The Structure of SAP IBP: The Five Components

SAP Integrated Business Planning is composed of four key components, plus a fifth that serves as a centralized visual interface. Each component is an independent component so you can just use what you need.

Source: Salt-solutions.de

This is a quick overview of those components:

• Sales and Operations: Provides a sales plan to help you get the best business results according to your corporate strategy. You can align your short-term and long-term strategies to increase sales, improve market share, or achieve any other financial goal.
• Demand: Predicting product demand is one of the most important success factors in business planning. The SAP IBP for Demand allows you to leverage machine learning to get demand forecasts, including temporary fluctuations.
• Inventory: The Inventory component sets forward-looking inventory targets across your supply chains. You get real-time data so you can see where your products are in the supply chain at any time. You can optimize the stock targets for your whole supply chain.
• Response and Supply: This module lets you react to any ad-hoc changes. Using what-if scenarios and simulations, you can predict changes and make adjustments accordingly. Response planning calculates demand variability and helps you meet your fill rate while keeping track of your costs.
• Supply Chain Control Tower. The Tower acts as your dashboard—an analytics platform that gives you real-time data. It provides end-to-end supply chain visibility. The module also allows you to set up alerts when there are potential interruptions in your supply chain.

Now, let’s dig into each of these modules or component:

SAP IBP for Sales and Operations

SAP Integrated Business Planning for S&OP is at the very core of the whole platform. It’s also a starting point for many companies using SAP IBP—in many cases, companies start out with long-term sales planning which they then need to synchronize with the rest of the organization like:

• Procurement

This module provides a holistic view of your supply chain network by simulating financial, supply, and demand models. 

You can see everything in the supply chain, from manufacturing and suppliers to customers and distribution units.

The S&OP component also provides you with all the tools you need to create supply plans across all departments. You can use it to balance your product mix, service levels, inventory, and financial operations.

The module uses the familiar Microsoft Excel interface, so that everyone feels comfortable with the system. Supply chain management is usually handled through spreadsheets, so this is a natural transition for most managers.

SAP IBP for Demand

This module combines demand sensing models that use real-time data with traditional demand planning tools. 

Using machine learning, historical data, trends, and seasonal patterns, the demand planning module excels at long-term demand forecasting.

Like the previous module, this one also uses a Microsoft Excel interface. 

Besides that, you can also access some other apps based on the SAP HANA database like the SAP ERP and SAP APO. These can be useful if you want to access transactional and master data.

The SAP IBP for Demand module also has demand sensors. The sensors monitor your incoming data on a regular basis and notify you when a forecast target isn’t being met. This way you always have the latest info and can adjust your approach accordingly.

SAP IBP for Inventory

SAP IBP for Inventory component lets you to model your whole inventory network, from your supplier to your customers. It gives you inventory management tools and lets you identify key drivers so that you always have the right amount of inventory.

So, how does that work in practice?

For example, let’s say a company is working in a multisourcing environment—they have multiple suppliers and multiple warehouses all over the country. 

The IBP for Inventory component would use all the transportation costs, targeted service levels, and fill rates to determine how much of each product’s inventory it should have in each location.

Like other components in the SAP IBP suite, this one uses real-time data, so you’ll always know where your products are in the supply chain.

You can also use inventory planning simulations that take into account economic shifts, changes in demand, and differing customer expectations. This technique uses real-time what-ifs to help you figure out where your weaknesses are and how to strengthen them. 

SAP IBP for Response and Supply Planning

This component helps you simulate and evaluate planning scenarios so that you can achieve a balance between supply, demand, and capacity. It also considers inventory, procurement, production, and warehousing costs so you can get a financial insight into your supply planning as well.

The keyword here is response, meaning that the Response and Supply Planning component enables you to adapt quickly to your supply chain model. You can use what-if analyses to predict potential uncertainty and plan for it.

This module takes into account the demand variability and helps you allocate supplies to achieve the highest service level and fill rate. 

Since you can use SAP IBP to get measurable financial outcomes, the Response and Supply Planning module can help you perform all of these actions while keeping costs as low as possible.

The component has pre-made templates for what-if analysis to make things easier, but you can make your own in no time. 

SAP Supply Chain Control Tower

The last component is an analytics tool, a dashboard that allows for a real-time, end-to-end overview of your entire supply chain. 

Not only can the component alert you any time there’s a potential supply chain disruption—it can dig deep and tell you where it came from.

Source: Mccoy partners

The Supply Chain Control Tower provides what-if analyses to help you make quick, informed decisions. This data isn’t only available to you: partners in your supply chain can also have access to real-time alerts that might lead to delivery delays or exceptions.

All the tools in this component are highly visual, so you can share the tables and charts with others without them having to be great at numbers or tables.

Ultimately, the Control Tower ensures your company can make timely deliveries with better inventory management and fewer operational risks.

The Benefits of SAP IBP

Here are a few reasons companies might consider using SAP IBP for supply chain management, inventory optimization, production planning, and other processes:

• Better data collection: Companies using old S&OP technology often have to collect data manually from sources like third-party applications and spreadsheets. SAP IBP lets you collect data more quickly and more efficiently, saving you and your team time.
• Managing fluid data: The biggest challenge with Integrated Business Tools, in general, is that inventory levels change constantly—they’re fluid. SAP IBP lets you view those levels as dynamic data, rather than just static data about how many items you’ve got in stock.
• Better data presentation: Many old S&OP tools present data in tables that can be confusing to make sense of. SAP IBP offers dashboards and similar analytics tools that make it easier to interpret data in moments. These tools also make it easier to share data across departments.
• Quick installation: SAP IBP is a cloud solution, which means that you don’t have to order hardware or have data warehouses. SAP IBP implementations typically don’t take more than a few days.

SAP IBP Implementation

Let’s see what SAP IBP implementation methodologies you can use:

The go-to model for SAP implementation has been ASAP (Accelerated SAP). This methodology uses the waterfall model which employs a linear structure where the deliverables in each phase depend on the previous one.

The model has five stages:

1. Project Preparation: at this stage, it’s important to identify goals and get stakeholder support. SAP and the client also work together on establishing a reliable process for making decisions.

2. Business Blueprint: at this point, SAP needs to get relevant information about the company. These blueprints come in the form of questionnaires to determine the company’s future business goals and processes.

3. Realization: the SAP team configures what’s called the baseline configuration, which is the basic setup based on the business blueprint the company delivered. Then, the company’s implementation team fine-tunes the system to make it perfectly suited to their business needs.

4. Final Preparation: preventative maintenance checks are performed to make sure the SAP system performs as it should. Now is the time to do workload testing (daily load, peak volume, and similar types of stress testing), along with integration or functional testing.

5. Go-Live and support: the final stage is less important—going live is just a matter of minutes. However, ensuring that the Go-live stage goes smoothly and without any hiccups will depend on the attention you paid during the previous phases.

A possible problem with this model is that all of the documentation goes on earlier in the process, culminating in the business blueprint document. This means that the company gets to see and use SAP IBP later in the process, which can lead to a mismatch between the company’s expectations and the actual implementation.

To overcome this, some companies use an adaptive planning model like the agile methodology to implement SAP IBP. This is a more iterative process, in which the SAP team engages the company to share its business requirements (called user stories in Agile). They then capture these stories and deliver them iteratively (called sprint cycles ) in SAP applications.

You can use a hybrid approach to IBP implementation, where the five stages are combined with Agile methodology.

Frequently Asked Questions About SAP IBP

Finally, here are some frequently asked questions about SAP IBP:

What Is The Difference Between SAP IBP and SAP APO?

SAP IBP is a much more advanced solution that addresses some of SAP APO’s weaknesses and is meant to replace the solution. Standard support for SAP APO will be maintained until 2025 .

SAP IBP is superior to SAP APO for multiple reasons. For example, in SAP IBP, the data is presented in a more coherent way, with graphs and dashboards. It also has a Microsoft Excel interface that makes it easier for planners to perform familiar actions.

SAP APO also doesn’t have demand sensing and multi-echelon inventory optimization that are included in the SAP IBP for Demand and SAP IBP for Inventory, respectively.

Is SAP IBP Available as an on-Premise solution?

According to the SAP Answers forum , SAP IBP as a whole is restricted to the cloud only. On the other hand, the Sales and Operation Planning module is available as an on-premise solution.

However, the SAP Support seems to suggest how implementation on an on-premise system is possible.

To get the most accurate information, you’ll want to contact SAP directly and ask them about your particular business and its needs.

What Are SAP IBP’s Competitors?

There are several software solutions that offer similar solutions to SAP’s Integrated Business Planning platform.

Here are some of them:

• Oracle S&OP Cloud. This cloud-based solution from Oracle aligns supply, demand, and product plans with the financial targets of a company.
• Kinaxis RapidResponse S&OP. This S&OP platform allows you to create a sales and operations plan that you can collaborate on. You can also align that plan with your financial goals.
• NetSuite. The software from NetSuite lets you set up your inventory storing locations and improve your on-time delivery metrics. 
• Demand Works Smoothie. This solution is browser-based, which makes it easily deployable. Much like SAP IBP, they use a highly graphical and interactive interface.

The ERP market is incredibly competitive. There are dozens of other solutions that do what SAP IBP does: 

• Production planning
• Statistical forecasting
• Scenario planning
• Inventory management

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SAP ERP modules overview graphic inside.

Consumer-goods companies must transform their planning end to end

The consumer-goods industry has been fending off an array of challenges, such as shifts in consumer expectations and purchasing habits, low GDP growth in some large economies, and a global pandemic that created seismic upheaval. In 2020, the most resilient players were the ones that had already begun rethinking their planning practices.

Those successes are cause for optimism, but existing planning capabilities won’t be sufficient for organizations to keep pace over the next decade. The accumulation of challenges will only make things more difficult for managers of global supply chains and the companies that rely on them. In the current context, supply chains will be called to contribute much more to performance—and that will require a complete reimagining of planning operations, capabilities, company performance, and processes.

The answer: an end-to-end transformation of planning. Technologies such as analytics and machine learning will play a major role, but to be effective they must be supported by new processes, talent, and governance. Companies should start their journey by focusing on five discrete priorities that could generate significant value. The benefits will be well worth the effort.

Pinpointing growth and margin opportunities

A high-performing planning function can provide consumer companies with the ability to capture value across both the top and bottom lines.

Top line: Growth and revenue

In recent years, e-commerce has accounted for 65 percent of growth in the consumer industry. The COVID-19 crisis reshaped the e-commerce landscape by forcing customers to change the way they buy. This trend led to the creation of a number of new “microchannels,” several of which look set to endure beyond the pandemic (Exhibit 1). For instance, the adoption of apps such as DoorDash and Instacart and models such as “buy online, pick up in store” has spiked.

Despite the rapid growth of e-commerce, traditional channels still represent the largest share of sales in the consumer market. Consumer companies have made significant investments in technology, but service levels haven’t improved. They face a number of persistent challenges in this space: increasing customization, greater complexity in the product portfolio, stockouts and missed revenues, and excess inventory. These issues all contribute to a negative customer experience.

Recent events have also placed resilience under the magnifying glass. Over the past 20 years, value chains have become more global, prompting leading companies to develop business-continuity plans. In the second quarter of 2020, we surveyed 60 senior supply-chain executives from across industries and geographies and discovered that a staggering 93 percent of respondents want to increase resilience in their supply chains . The COVID-19 pandemic highlighted the need for more transparent supply chains across industries such as retail, pharmaceuticals, and consumer packaged goods. The few players that had the skills, capabilities, and technology to precisely track SKUs across the supply chain have not only weathered the crisis but have also gained an edge on less-advanced competitors.

Bottom line: Margin and cost

Companies are scrambling to hold down costs and protect margins across several fronts. First, they are facing higher production and logistics costs thanks to the proliferation of SKU portfolios; rising demand for sustainable, organic products and locally sourced fresh goods; and the robust growth of smaller brands, which have expanded three to four times faster than large brands. As a result, costs have risen from lower purchase volumes, manufacturing time has increased from longer changeovers, and less-predictable demand has caused more waste and markdowns.

In addition, the increasingly scattered product portfolio is making end-to-end planning even more critical for organizations seeking to maximize growth and profitability across all planning horizons.

Organizations cannot make optimal decisions without cutting-edge algorithms that can process vast amounts of live data and give planners the insights to react quickly to any change in demand. Finally, most consumer organizations have undertaken ambitious IT transformations that have improved data consistency and accessibility but that have failed to significantly increase planning accuracy or agility. Indeed, many are struggling to generate insights that could deliver superior business value or reduce manual planning efforts.

Establishing a ‘North Star’ for end-to-end planning

Many companies have been making investments in their planning tools and capabilities. Some have made progress in one or even a few areas, but only recently have companies started to tackle planning with the end-to-end perspective needed to significantly elevate performance and address the complex suite of issues. The best-in-class end-to-end planning of the future is built on the following principles:

Cross-functional integration. Companies must manage different planning activities (for example, demand, net requirements, production, and scheduling) in a comprehensive, coordinated way to produce the best decisions for the entire value chain.

Short planning cycles. Traditional monthly planning cycles accelerate to weekly cycles or even continuous-planning processes to enable the agility required in consumer industries.

Advanced-analytics enablement. Advanced analytics helps improve planning quality by, for example, enabling better demand forecasts, production planning, scheduling, and workforce planning.

A high degree of automation. Systems and algorithms support the automation of standard tasks and trigger interventions based on “basic” deviations, allowing planners to focus on exception management and decision making. Tools for automated root-cause identification and the fast, efficient evaluation of alternative actions support planners in their core tasks.

Full supply-chain visibility. Real-time data and performance transparency along the entire supply chain (for example, with inventories and orders) help organizations identify risks and exceptions early on and develop potential countermeasures. In addition, automated scenario-planning capabilities help companies understand the financial implications of potential actions and provide the basis for fact-based, profit-maximizing decisions.

This future state represents a “North Star” for consumer companies. While the end-to-end transformation is aspirational, the required technologies already exist, and companies are making progress across these elements.

Charting a path to value

To unleash maximum value from planning operations, many companies will need to embark on a comprehensive transformation. This effort encompasses several main priorities and embeds the right mix of technology, processes, capabilities, and operating-model changes required to make the journey successful (Exhibit 2).

Focus on business metrics instead of supply-chain key performance indicators: Integrated business planning

Integrated business planning (IBP) builds on real-time financial scenarios that increase the quality of planning decisions as well as the agility of the planning process. Key enablers of efficient IBP are supply-chain and financial planning, system capabilities for real-time scenario creation and evaluation, and machine learning supported by exception identification. IBP is increasingly important for all consumer players, but it is crucial for omnichannel businesses that rely on cross-channel decision making (for example, prioritization decisions in case of bottlenecks). By enabling a coordinated category and product range strategy, companies can make complex trade-offs among pricing, promotions, and availability, a task that is extremely hard to achieve with classic planning systems and capabilities.

An international packaged-food company that was already holding less than 30 days of inventory with service levels above 95 percent embraced this challenge. The company started by cleaning its data to improve availability and transparency and introduced new cross-functional processes to enable data-driven decision making. Through these efforts, it decreased finished-goods inventory by 20 percentage points, improved forecast accuracy by six percentage points, and achieved a threefold increase in response time.

Know what your customer will ask for: Creating a better demand signal

Machine-learning forecasting algorithms use internal and external data sources, as well as their ability to “learn” from historic demand patterns, to continually improve forecast accuracy and minimize manual planning. Leaders harness the capabilities of advanced analytics forecasting tools to strengthen their fact base and close the gap between demand forecasts and commercial targets. Machine-learning algorithms can also simulate the expected impact of sales activities (such as promotions) on demand and help optimize activity management. These tools contribute to an improved customer experience by increasing the availability of the newest offerings. A beverage company built the capabilities to simulate the impact of commercial activities on demand and integrate machine-learning forecasting into its demand-planning processes. The result: an improvement of 13 percentage points in forecast accuracy.

Immediate hands-off order confirmation: No-touch order management

The growth of omnichannel business elevates the importance of automated order-management processes, which give planners the ability to immediately confirm orders—for example, available to promise across planning levels—for optimal stocking based on customer requirements and product availability. Yet side-order management must handle an increased volume of smaller orders. Automation is required to ensure efficient, rapid order processing and allow planners to focus on critical exceptions. As planning becomes more automated and moves toward a touchless operation, it frees up employees to gain new skills so they can focus on more value-adding tasks.

For example, a large consumer-goods distributor developed a stand-alone digital use case to pinpoint inventory position along its supply chain and accurately confirm expected delivery dates and transportation lead times. As a result, client satisfaction rose 30 percentage points.

Break artificial silos between different functions: Automated end-to-end planning

Integrated and highly automated planning processes and systems seamlessly optimize the planning process from demand to production scheduling to deployment. These tools give companies the ability to react in real time to changes in demand or supply exceptions and determine ideal trade-offs among functions. To achieve the greatest impact from advanced demand-sensing solutions, leading consumer-goods players establish automated, end-to-end planning systems to support supply- and inventory-planning agility. That capability allows companies to react to changes in short-term forecasts, manage costs and inventories more effectively, and improve service levels. One leading food company invested in advanced planning capabilities and reduced its inventory by 30 percent while raising customer service levels by three percentage points.

Fix problems before they occur: End-to-end visibility and control

Key elements of a resilient, responsive supply chain include real-time visibility and the early identification and rapid resolution of exceptions (ideally before they have an impact on customers or finances). Service and inventory control towers can help to create transparency, enable fast reactions, and continually address root causes. This visibility is essential to get the right product to the right place at the right time and through the right channel to fulfill customer demand and maximize growth. The COVID-19 pandemic clearly demonstrated the need for transparency across the supply chain, including customers and suppliers. Companies with real-time visibility have been able to react to the disruption much more quickly, make fact-based decisions, and minimize the negative impact on their supply chains—or even gain a competitive advantage.

One home and personal-care company improved customer-service levels by 25 percent through a rapid turnaround of its supply-chain performance. It achieved greater supply-chain visibility by implementing a governance structure (a control tower) that enabled faster response times when identifying exceptions in the supply chain.

Companies with real-time visibility have been able to react to the disruption much more quickly, make fact-based decisions, and minimize the negative impact on their supply chains—or even gain a competitive advantage.

Key success factors in advanced planning transformations

In our experience, a planning transformation is particularly complex. Successful companies must simultaneously manage a large stakeholder base and technological enablement while implementing new ways of working throughout the organization. Executive leadership is a vital component; without the engagement of the top team, any transformation is destined to fail. Business leaders should focus on five actions to accelerate their planning transformation:

• Engage stakeholders beyond the supply chain and the organization. Since the supply chain touches so many different parts of the organization, a successful transformation requires engagement from the CEO and COO. Their presence will lend credence to the transformation and ensure decisions are made in a cross-functional way. A transformation also presents companies with the opportunity to use external data (for example, from retailers, contract manufacturing organizations, copackers, trade partners, and proprietary databases) to generate value for itself and its ecosystem—such as through better visibility on capacity or supply. One company that had a digitally mature procurement function developed an algorithm to predict supply safety, thus improving supply-chain efficiency.
• Develop a plan starting with high-value areas. End-to-end planning transformations run the risk of remaining too conceptual—and therefore difficult to implement. To make efforts more tangible, organizations should select one of the top five use cases and identify its relevance at the granularities of product family, geography, and customer segment (called cells). This exercise enables the development of a portfolio of applications that can be deployed over 12 to 24 months, focusing first on high-impact cells and those with sufficient data. In addition to starting small, organizations should be sure to scale up. One solution is to start with a cell that holds significant business value. Once a sizable flagship has been established and is generating results, the case for scaling can be much easier to make.
• Select the right ecosystem of tech partners. Several tech partners offer advanced integrated solutions, and many start-ups have developed specialized supply-chain offerings—for example, for a specific planning process or industry. While some organizations have specific planning challenges that require customized solutions, executives should start by considering more than one major tech partner. A wider set of candidates can help companies concentrate first on the expected business outcome and then on the technology required to address it.

Reinvent the organization to ensure end-to-end optimization and more agile decision making at interfaces. While advanced planning transformations focus mostly on digital and technology enablement, organizations achieve the greatest planning improvements and efficiency gains through an organization and process redesign. This approach ensures end-to-end decision making in a fit-for-purpose way depending on geography, product segment, channel, and customer type. Indeed, advanced algorithms can solve the most complex issues and identify an optimal solution for the company as a whole. However, this solution can include implications that aren’t beneficial to some individual functions, so organizational setup has to ensure that the resulting actions are executed by all functions to achieve the best outcome.

Organizational changes can take different forms. Radical changes include the creation of a central product organization representing all functions to make optimized trade-offs for a given brand and geography. A less-radical approach is to develop an official network of colleagues in charge of a product or brand while maintaining functional structure. A good way to start is to establish a cross-functional board and ensure it makes decisions based on the recommendations of advanced algorithms. Still, additional elements are required for planning to unlock optimized trade-offs, such as implementing properly aligned incentives for objectives and target functions (for example, by product and channel). In starting such a journey, it is critical to involve key stakeholders in addition to operations, such as sales, marketing, and finance.

• Engage in a massive reskilling program with HR. Planning teams typically still handle a lot of work manually, including consolidating, checking, and reviewing data. As the transformation proceeds, the role of a planning team must evolve to focus more on strategic decision making, trade-offs, and stakeholder engagement. Given the size of the team and the scarcity of those resources in the job market, companies must invest in upskilling as a critical pillar of the planning transformation. In our experience, successful efforts harness techniques such as learning by doing. For example, each individual planner should contribute to the solution design—from business-case creation to delivery—and understand the potential of algorithms to support planning.

How to get started

Companies that want to explore the potential of advanced planning should start by identifying and aligning on a core list of strategic business priorities across their operations and set clear improvement targets for each one. They should then understand how true end-to-end planning across the five priority areas discussed can achieve each of those targets and set a path for the transformation. Finally, they need to devise a clear deployment plan that embeds key success factors across organizational structures, skills, processes, and technologies to make sure that all typical pitfalls are addressed from the start.

Planning activities have traditionally been a supply-chain topic. However, digital and advanced analytics are now unlocking the ability to make complex trade-offs among functions such as sales, production, and the supply chain that will become more critical in the coming years. This dynamic challenges the way companies think about their planning operations and organization. Given the value at stake and the threat posed by digital natives, an advanced planning transformation should be at the top of the agenda for consumer-goods CEOs, and it should focus on five main priorities: integrated business planning, creating a better demand signal, no-touch order management, automated end-to-end planning, and end-to-end visibility and control.

Jérémie Ghandour is an associate partner in McKinsey’s Paris office, Tim Lange is a partner in the Cologne office, Andreas Seyfert is a senior expert in the Berlin office, and Alessandro Turco is an associate partner in the Milan office.

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