In the movie Field of Dreams, the character played by Kevin Costner repeatedly heard the words, “if you build it, he will come”, implying that if he built a baseball diamond in his cornfield the famous Shoeless Joe Jackson would return to play ball once again.
If only this worked when implementing IBP, if you build it value will come. Unfortunately building an IBP process doesn’t necessarily mean value from the process will miraculously just appear like Shoeless Joe Jackson and we are left with a mechanized IBP process but dissatisfied with the results.
When designing an IBP process for an organization it’s critical to be clear how the organization makes decisions and clearly identify where accountability will be held. IBP is a cadence for decision making and often organizations end up with a process that has a cadence for information sharing which is often indicative by how many people attend each step review. I have seen a supply review that had greater than 50 people in attendance, or a demand review that had over 30 attendees from all over the globe.
The process is in place; however, it is not likely that any strategic decisions will be made with that many people as issues will undoubtedly be confidential, or too sensitive with a broader group. Some things to consider:
- For the commercial demand, review consider who is accountable for the consequence of the demand plan in terms of growth in revenue or market share. This should be the forum where decisions are made on the commercial aspects of the business. What potential new customers can we win, what gaps exist on meeting objectives, should we enter a new market or exit a market that is no longer profitable.
- The supply review should be considering the strategic decisions that are required to respond to the demand plan. What are the long-term implications of the demand plan? Do we need more capacity, or do we have too much capacity? Can we lower COGS by moving operations to a new location? These are often confidential discussions and often have resource implications which cannot be discussed in a broad forum.
- Decisions in the product portfolio review include new projects/program prioritizations for development which is often confidential and sensitive when canceling programs that may impact individuals. Issue resolutions that may have technical sensitivities that may also impact individuals. This review is required to make difficult decisions on the long-term life cycle management of the product portfolio with respect to the business’ long-term aspirations.
- The integrated reconciliation step must have the right people in the room to discuss recommendations for bridging the gap between the bottom-up process to the business’ top-down aspirations. These are delicate conversations in determining what options are required to meet business objectives and fully understand all implications of each decision.
The challenge is designing a process with these decisions and accountabilities in mind rather than a mechanized process for information, which isn’t easy because that is where most people tend to gravitate.
