Integrated business planning designs a business structure that facilitates alignment across the organization with transparency to performance issues, that enables the business to focus on the critical decisions in order to achieve business long-term ambitions. Although many leaders in an organization are eager to realize the potential benefits that are derived from a fully operational IBP process, many are not cognizant of the significant change such an implementation will need to endure.
It is common that deployments of IBP began within the supply chain organization by enabling alignment between supply and demand, however, it quickly becomes exhausted by foundational capability issues and as a result, the organization becomes frustrated with the mechanics of a process with little decision making and almost no entrepreneur spirit to achieve ambitious results.
At this point in the deployment, the business has lost its way and then begins to believe that IBP just isn’t working or has forgotten the original intent. Attendance in the review begins to drift as the focus is more on operational short-term issues with little to no long-term discussions and no one owns the market on frustrations.
Businesses that are more successful with navigating the challenges of IBP, focus the process from the business perspective to drive the business’ long-term ambitions.
For this to work the organization must have clear long-term strategic objectives defined, accountability to achieve, and evaluated regularly in the IBP reviews to ensure that the business maintains visibility with any gaps to those objectives.
Listed below are a few common issues I have observed;
- In many organizations accountability over the longer horizon is somewhat elusive. There is clear accountability for the annual operating plan (one year or quarterly). However longer-term growth targets will often change each year. It is difficult to hold a discussion on gap closing to a target 3 years from now if the number will change next year. In order to move your IBP process to focus on the longer horizon, the organization must feel accountable to those long-term goals.
- Often those that are managing the IBP process possess more operational experience and may not necessarily have the right knowledge or the time for the longer more strategic elements of the business. Asking the chair of the supply review how they can strategically lower COGS% of sales over a 3 hear horizon when they are trying to manage backlogs and short-term constraints may not view that as a priority. Ensure that the people in the review are the right people accountable for the gap closing to the longer horizon.
- In many businesses, foundational capabilities plague the organization and it is easy for those issues to infiltrate the IBP step reviews. It is important that you use the process to maintain the focus on where you want the organization to be over a longer horizon and use those ambitions to further support resolving capability issues. Making declarative statements, this is where I want to be in three years, what is getting in my way, then use the leadership team to help drive those improvements that will enable you to have the right level of conversations.
