Integrated business planning
 | This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages)
|
Integrated business planning (IBP) is a comprehensive approach that aligns strategic, operational, and financial planning—into a single, unified process.[1]
Objective
[edit]The goal of integrated business planning is to modify how organizations create and execute business strategies by integrating various types of functions across the organization. This involves several key components:
1. Functional Integration: Integrated business planning (IBP) aims to integrate different departments within an organization and align them functionally. IBP seeks to create a unified planning process that connects research and development (R&D), manufacturing, supply chain management, marketing, and sales in order to create a common business plan centered on a central planning process incorporating inputs from all these functions.[2]
2. Harmonization of Planning Cycles: IBP also synchronizes planning activities across multiple timelines. In addition, IBP aligns monthly, quarterly, and annual planning cycle. IBP uses a framework that is designed to eliminate discrepancies arising from separate starting points and data sets to create a unified schedule that minimizes wait times between different departments and functions.[3]
3. Integrating across multiple Planning Horizons: Short and Medium-Term planning: IBP facilitates collaboration between sales and marketing teams to capture demand and create a consensus plan.
4. Medium and Long-Term Financial Planning: IBP aligns demand forecasts with pricing data and inputs from marketing teams to develop financial plans and also uses the inputs from this planning to predict financial outcomes.
5. Long-Term Strategic Planning: IBP integrates New Product Introduction phases by leveraging insights from Product Development portfolios.
6. Capacity Expansion Planning: IBP includes capacity expansion planning by aligning long-term plans with new product development, cost improvement projects, and management of existing product portfolios, with the long-term strategic plan serving as a crucial input. These demand elements are matched against mapped capacity data in the system to conduct gap analysis.
The role of IBP is to balance these different objectives in a way that achieves the best overall result. One way of accomplishing this is with prescriptive analytics.[4] These tools are often used to mathematically optimize parts of a plan, a classic example of which is inventory investment. The most high-level IBP processes try to mathematically optimize all aspects of a plan.
History
[edit]The history of integrated business planning can be traced to the development of sales and operations planning (S&OP) in the 1980s by Olliver Wight. S&OP attempts to balance demand and manufacturing resources to create a more streamlined and profitable set of systems. However, as S&OP continued to mature, limitations started to appear. IPB developed out of the weaknesses in S&OP, combining financial planning, strategic planning, sales, and operations planning into a unified process.[5]
Over time, IBP has evolved, combining Enterprise Performance Management (EPM) and S&OP to enhance planning capabilities for financial and operational professionals.[6] IBP platforms leverage predictive analytics[7] and machine-learning technology to optimize plans across multiple domains.[8]
Criticism
[edit]Some argue that IBP is not any different from S&OP. Patrick Bower has described IBP as a marketing hoax,[9] a name developed to create confusion and sell consulting and system services. Others have asserted that IBP is not a marketing hoax,[10] but an important part of Enterprise Performance Management (EPM) system.
Another criticism is that IBP is not academically defined[11] and has a perceived bias towards supply chain perspective. The lack of academic standard allows for varying interpretations of what IBP entails, which can confuse practitioners. In a 2015 S&OP survey,[12] 32% of participants answered that there is no difference between S&OP and IBP, 20% "did not know", and 71% of participants answered that there is a need for more industry standards around S&OP.
It has been called out that IBP lacks formal governance and is in need of an industry group to create a unified definition. In the absence of widely accepted academic or industry standards, there has been an attempt to create an open-source definition for IBP:
A holistic planning philosophy, where all organizational functions participate in providing executives periodically with valid, reliable information, in order to decide how to align the enterprise around executing the plans to achieve budget, strategic intent and the envisioned future.
— Supply Chain Trend, 2015[13]
Academic literature
[edit]According to The Journal of Business Forecasting, when two programs—Sales and Operations Planning (S&OP) and Collaborative Planning, Forecasting and Replenishment (CPFR)—are integrated, they provide the information necessary for decision making. Key success factors and performance outcomes are also discussed.[14]
The journal Information & Management argues that strategic planning for information systems involves combining information systems planning (ISP) with business planning (BP). While this has become more popular recently, there hasn't been much research specifically focusing on this integration. This study looks at four ways these plans can be integrated. The study looked at how this integration relates to organizational success by surveying both business planners and IS executives. The results show that the more integrated the plans are, the better the IS contributes to organizational success, and the fewer problems there are with ISP as per this paper.[15]
Pal Singh Toor[who?] & Dhir[who?] highlight the benefits of integrated business planning, forecasting, and process management. The paper focuses on the need for advanced business intelligence and the crucial role of integrated business planning, forecasting, and process management. Various case studies are used to highlight benefits.[16]
See also
[edit]- Business process modeling
- Business reference model
- Business intelligence
- Business Relationship Management
References
[edit]- ^ "What is Integrated Business Planning (IBP)? | IBM". www.ibm.com. 2024-08-21. Retrieved 2025-04-08.
- ^ K Annavi, Sam. "What Makes Integrated Business Planning". springer. springer. Retrieved 21 March 2025.
- ^ K Annavi, Sam. "What Makes Integrated Business Planning". springer. springer. Retrieved 21 March 2025.
- ^ K Annavi, Sam. "The Future of Analytics in Integrated Business Planning". supplychaintrend. supplychaintrend. Retrieved 21 March 2025.
- ^ Bailey, Kelley. "Integrated Business Planning (IBP) in FP&A". Corporate Finance Institute. Retrieved April 23, 2025.
- ^ "IBP Industry Week cite web". 4 September 2014.
- ^ "Integrated Business Planning (IBP) - Camelot - Management Consultants". www.camelot-mc.com. Archived from the original on 2017-09-03. Retrieved 2017-07-17.
- ^ "SAP Integrated Business Planning (IBP)".
- ^ "Integrated Business Planning: Is It a Hoax or Here to Stay?" (PDF). Retrieved 2024-05-14.
- ^ "Integrated Business Planning Is Not Just a Marketing Hoax". industryweek.com. 4 September 2014. Retrieved 2022-06-25.
Manufacturers can achieve step change improvements to how they plan and manage their business by developing strategies that combine EPM and S&OP.
- ^ "The rise and fall of S&OP". 27 February 2015.
- ^ "The S&OP Pulse Check 2015" (PDF). Retrieved 2024-05-14.
- ^ "A new definition for Integrated Business Planning". Supply Chain Trend. 2015-11-25. Retrieved 2022-06-25.
- ^ Smith, Larry; Andraski, Joseph C; Fawcett, Stanley E (Winter 2010). "INTEGRATED BUSINESS PLANNING: A Roadmap to Linking S&OP and CPFR". The Journal of Business Forecasting. 29 (4): 4–7, 9–13. ProQuest 853877288.
- ^ Teo, Thompson S.H.; King, William R. (September 1996). "Assessing the impact of integrating business planning and IS planning". Information & Management. 30 (6): 309–321. doi:10.1016/S0378-7206(96)01076-2.
- ^ Pal Singh Toor, Tajinder; Dhir, Teena (8 November 2011). "Benefits of integrated business planning, forecasting, and process management". Business Strategy Series. 12 (6): 275–288. doi:10.1108/17515631111185914.
