Integrated business planning facilitates a systemic cadence that enables leadership to make the appropriate business decisions to achieve their long-term ambitions. This is accomplished by aligning plans, understanding assumptions, evaluating opportunities and vulnerabilities, and perpetually reviewing the different scenarios for optimization.
Too often during an IBP implementation, the process is focused on establishing the various reviews centered on the mechanics of the process rather than the intent. The process itself will not yield the desired results for the business, it is dependent on the right capability of the people to be thoughtful about what is important for discussions. Consider the following scenario.
You are an IBP leader in a business that has deployed IBP almost a year ago that begun with education and workshops with the promise of aligned plans, decision making, longer-term focus, the much sought-after benefits of demand plan accuracy, delivery improvements, inventory reductions, and increase of sales. You have just completed an observation of two supply reviews for two different businesses and have noticed striking differences. Here are the observations from the two supply reviews;
- Business A: The facilitator kicks off the meeting with a full room and a number of people on the phone which has a combined total of approximately 20 people in attendance. The facilitator starts the presentation with a review of actions from the previous meeting and asks for an update. The facilitator then moves through the agenda where individuals discuss their particular sections. The first section is the demand update. This is the supply chain’s interpretation of the demand plan and its changes for each month. Next someone from operations discusses the slides that show backorders with a projection on when they believe the backorders will reduce. Next someone from the product review has requested a few decisions from the supply chain. It is determined that more information is needed before a decision can be made. Inventory reduction is discussed with projections on how they will achieve the inventory reductions by reviewing stock that has not moved in several years, then a review of the scorecard with all the performance measures. Finance then provides an update and informs every one of the upcoming annual operating plan processes. After 3 hours, 120 slides later the supply review concludes.
- Business B: The facilitator also kicks off the meeting and there are approximately 10 people in attendance. The facilitator starts the meeting with an agenda on the critical issues that require decisions and recommendations for bridging gaps to performance issues. Starts with specific supply chain issues with respect to the demand plan forecast with options on how to resolve. Brings up potential issues with opportunities from the demand team and how this would impact overall capacity. The facilitator identified a few critical issues that were observed from the product review and highlighted the issues that the supply chain needed to resolve for smooth product launch and presented options with recommendations for discussion. Performance metrics with a red score were identified with actions to bring back into alignment. Full scorecard in the appendix. Finance reviewed the financials for the supply chain, and the facilitator identified areas for cost reduction opportunities. Recommendations for achieving an annual operating plan for a flex AOP that included the impact of short-term cost reduction actions and long-term capital expense implication. Decisions made, and after 3 hours 30 slides later the meeting closed.
Neither of these two scenarios is perfect as each is in their first year of implementation and they each have many challenges to overcome, however, one clearly appears to be working much better.
The difference between the two reviews is the capability or experience of the facilitator. In business A, the facilitator is a high potential employee but with relative inexperience. As a result, facilitator A is focused on making sure all the right information for the review is in the slide deck. This individual is making sure that everyone submits information on time and the slide deck can be compiled and ready for the review.
Each owner of the information presents his or her sections and discussions occur. In contract business B has a facilitator with 40 years of experience in the business, this individual can review all the content that is submitted and then synthesize the information to identify issues and is able to formulate options and recommendations. This facilitator is more concerned about what is most important for the business, not on the mechanics of the process. As a result, the agenda is developed based on the critical decisions that are required to be made.
The capability of the facilitator can have a significant impact on the outcome of the review and for a successful IBP process, these should be your most experienced people.
