The Role of Integrated Business Planning in Growth Companies

SCMS taking integrated business strategy notes

Integrated business planning (IBP) is a process that can deliver efficiency and cost savings to all aspects of a supply chain and optimize total enterprise value. In GSCI we utilize the term DSI (Demand Supply Integration). For the purpose of this article we will use the industry standard IBP terminology. While implementing an IBP process may involve structural changes in how business and operations planning is done within an organization, the resulting improvements in supply chain operations and business are worth the effort.

Wider adoption of the integrated business planning process has led to increased demand for well-trained supply chain professionals familiar with this particular type of strategic planning. Organizations need supply chain leaders who can help guide the IBP process, particularly to minimize the impact of similar supply chain challenges we’ve seen over the past year. For many, leadership in the field begins with an advanced degree that provides the business planning skills required to run the data-driven IBP process.

What is integrated business planning?

Integrated business planning is the process that unifies supply chain planning with other functions’ strategies and the larger holistic business strategy toward profitability. Unlike most business planning, where a mid-senior team (director level and above) develops a division-level strategy then presents to upper management for sign-off, integrated business planning is led by senior management (ie. general manager). The IBP process maps the more granular elements of supply chain management to the overarching objectives of the enterprise. IBP removes demand planning, production planning and operations planning from their silos and inserts them into a unified business planning process. In other words, IBP aims to develop a single, integrated plan that includes end-to-end supply chain planning. The IBP process ensures that every decision in supply chain management is also in service of the financial planning, commercial and product development goals of a company.

Depending on the size of the company, this can be challenging. IBP implementation demands the full participation of top management, which often has different visions and budget considerations than others in the organization. The general manager, financial officer, sales officer and supply chain officer must actively lead and participate, at the minimum.  Nevertheless, all leadership stakeholders actively participate in and shepherd the business planning process. Forward-thinking organizations understand that integrated business planning is just one reason organizations are recognizing the value of promoting supply chain management professionals into executive positions.

Integrated business planning naturally lends itself to an agile approach. The management team in charge of the IBP process typically meets every month to reevaluate and update its strategic plan. The plan covers the following quarters and often as much as two years into the future. The plan is continuously revised and updated, so the enterprise stays current with consumer trends and supply chain changes.

Tools for integrated business planning

The IBP process has many tools to drive success at companies that opt to implement it into their overall strategy. Big Data is a critical ingredient in a successful IBP implementation. It facilitates machine learning, allowing senior management to use predictive analytics for better demand planning. It’s also important to have fluency in data analytics, a core qualification for supply chain managers who want to move into leadership in IBP implementation. This naturally leads to improved production/supply planning and commercial planning.

Many companies provide software solutions to enable the IBP system; SAP IBP and Oracle are two examples of cloud-based software solutions that many companies use for integrated business planning. Tools like these allow the supply chain manager to get a better handle on market volatility and fluctuations in product or materials demand. By having a knowledgeable subject matter expert in IBP software on the team,  supply chain professionals can lead IBP teams to make data-driven decisions.

Other technological tools that support the IBP process can include demand planning software and enterprise resource planning (ERP) platforms. As part of an IBP implementation team, you could be called on to pull together a suite of integrated software solutions to support IBP implementation. Familiarity with and mastery of these tools is a vital qualification for an integrated business planning position.

How is IBP different from S&OP?

Sales and operations planning (S&OP) is a business planning process similar to integrated business planning. IBP can be considered a refinement or outgrowth of the S&OP process.

Similar to integrated business planning, sales and operations planning include the following characteristics:

  • Defines a supply, financial and sales plan
  • Typically operates on a monthly cycle
  • Involves executive-level management

However, there are some fundamental differences between IBP and S&OP, including:

  • IBP focuses on a single integrated plan to drive the best total business value. S&OP typically streamlines supply and order fulfillment independent from the product margin.
  • Integrated business planning goes beyond involving senior management at the decision stage: executives lead the process from start to finish whereas S&OP is led by one or two stakeholders (traditionally the CSCO).
  • The IBP process aims to orient all departments toward meeting the goals of the organization. S&OP focuses on the goals of the demand planning stakeholders in an organization.
  • IBP integrates the finance function seamlessly into the business planning process while S&OP is focused on demand planning.

Whether  the organization uses the term S&OP, IBP or DSI, the key driver of total value is a single integrated business plan. Everyone in the organization is focused on driving one plan.

Why the integrated business planning process is vital to keep enterprises competitive

Integrated business planning doesn’t just consider the long-term business vision—it also plans for the specific details of supply chain operations and commercial functions. The IBP process works well because it unites departments with diverse roles for the purpose of meeting the same goals.

One area of supply chain management that benefits from an integrated business plan is demand planning. Forecasting demand requires the IBP team to make predictions, which is always a challenge. As the industry continues to push for more and more data, predictive analytics uses internal and external data and machine learning to provide accurate demand forecasts. With a precise demand plan, an organization can calibrate its production schedule and inventory planning to implement a “just-in-time” inventory strategy without running out of stock. This level of detail in demand planning translates to more accurate financial forecasts and less waste throughout the supply chain.

The benefits of this improved demand planning are quantifiable. A strong example is the results achieved by Oliver Wight, one of the most respected integrated business planning consulting firms in the world. A survey of 40 of the firm’s IBP clients found that their demand planning improved by as much as 46%, while sales revenue increased by up to 15%. The clients in the survey were able to run lean operations, cutting inventory and safety stock, while they boosted on-time delivery by as much as 50%. These improvements led to customer retention rates as high as 91% and gross margins between 30% and 43%. Impressive results like these are convincing more and more organizations to adopt an IBP process.

An integrated business plan helps a company achieve its strategic goals, accomplish its mission, and meet its growth targets. The IBP process is one reason why supply chain jobs have taken on greater importance during COVID-19 and will continue to be vital even after the pandemic is over. If you have the credentials and capabilities to join an IBP implementation team, you’re destined to be in high demand.

Key factors for a successful integrated business planning career

Integrated business planning is a demanding process. Since the goal of IBP is to improve the profitability and operational efficiency of the enterprise, it requires expert data analysis with a high degree of accuracy. Here are some of the capabilities that will help you become an integrated business planning professional:

  • Fluency in IBP software
  • Delivering valuable insights using data analysis and predictive analytics
  • Experience with demand planning and the software needed to ingest and analyze your owned data and refine your demand plan
  • Operations planning experience, a core competency for integrated business planning
  • The ability to work closely with a team towards a shared goal
  • Relentless focus on data gathering and data cleaning for accurate and actionable metrics

If you don’t yet have these skills, you can still pursue a career in integrated business planning. There are several ways to build your capabilities, most notably by completing higher-level coursework or pursuing a master’s degree in supply chain management.

If you’re interested in a career in supply chain management, integrated business planning skills make a powerful addition to your resume. In addition, the rewards of being part of an IBP implementation team are plentiful. Here are just a few:

  • You will be an integral part of the business success team, doing work that has a measurable effect on the profitability and performance of your company
  • IBP leadership is an excellent way to advance into senior management
  • You’ll have a skill set that’s in demand right now and shows no signs of slowing down. That can open doors in your current position and increase your future earning potential

Training and degrees for integrated business planning

The future of supply chain management seems to favor those that have the skills to work with big data, RPA, and machine learning. Supply chain management professionals who have expertise in data analytics have a stellar career path ahead of them. This is especially true for those with a deep understanding of the IBP process, making you an asset to organizations eager to harness the competitive advantages that integrated business planning offers.

You can learn the skills you need for IBP implementation by taking courses in supply chain management. Specific training in IBPr software platforms that support the IBP process may also help you join an integrated business planning team.

Another route to develop an IBP skill set is through a Master of Science in Supply Chain Management  - Online or executive MBA program like the Executive MBA - Global Supply Chain at the University of Tennessee, Knoxville’s Haslam College of Business.

Haslam is home to the renowned Global Supply Chain Institute. GSCI is known for innovative research projects, such as the EPIC Global Supply Chain Risk Assessment, and the MS SCM – Online curriculum, which is taught by some of the top professors in the supply chain management field. A recent GSCI white paper on Advanced DSI Best Practices (co-authored by Dr. Mark Moon, Mike Burnette, and Mike Policastro) provides the latest benchmark processes for successful business integration.

These courses will develop your data modeling and analysis skills, supply chain planning and analysis, and strategic supply and cost management. A capstone project in integrated supply chain management is the perfect preparation for a position that places you on an integrated business planning team.

Best of all, the MS SCM – Online gives you the flexibility to gain the skills you need in strategic planning, the IBP process and integrated planning while maintaining your existing remote work routine. As an online student, you’ll be part of a cohort of talented professionals from across the U.S. and around the globe. The MS SCM - Online coursework will prepare you to move into a management role as a supply chain professional and to become part of the integrated business planning process at some of the most competitive jobs in America’s most notable companies.