Supply planning covers the entire supply chain planning process, including distribution, manufacturing, and procurement operations according to demand forecasts while considering capacity constraints and material availability.
This week we take a deeper dive into supply planning with IBP.
Q: What is IBP?
A: IBP stands for Integrated Business Planning. It is a management process that aligns tactical planning across sales, marketing, operations, and finance. IBP enables companies to balance supply and demand (and much more) through integrated planning rather than relying on disjointed, siloed processes.
Q: How does IBP improve supply planning?
A: There are several ways IBP enhances supply planning:
It provides a single version of the truth - With IBP, all departments work off one set of numbers and assumptions rather than separate plans. This eliminates inconsistencies and accelerates decision making.
It enables multiple scenario planning - IBP allows managers to model different demand scenarios and develop supply plans accordingly. This makes supply planning more agile.
It boosts collaboration - Cross-functional teams come together in IBP meetings to align on the numbers, priorities, and trade-offs. This collaboration leads to better supply plans.
It incorporates a consensus forecast - The demand forecast used for supply planning reflects inputs from sales, marketing, and finance rather than just a top-down view. This consensus forecast is more accurate.
It aligns tactics to strategy - IBP links financial goals to demand plans to supply plans in an integrated way. This strategic alignment improves decision making.
Q: What are some key steps to implement IBP?
A: Critical steps for implementing IBP include:
Secure executive sponsorship and dedication of resources
Train planners on conducting demand-driven planning
Define the planning process with cross-functional input
Select enabling software for data integration, modeling, and collaboration
Develop consensus forecasts with statistical models as an input
Conduct regular reconciliation meetings to reach alignment
Provide transparency into planning with dashboards and visuals
Continuously improve processes through lessons learned and feedback
Q: What are some key benefits managers see from IBP?
A: IBP delivers many advantages, including:
Reduced inventory costs due to better demand visibility
Minimised expediting costs and supply shortages
Improved forecast accuracy leading to better customer service
Higher revenue through synchronized tactics and aligned goals
Increased planner productivity through elimination of rework
Enhanced cross-functional collaboration and accountability
IBP is a powerful framework for boosting supply planning. It provides the process and tools to enable integrated, data-driven, and agile planning across sales, marketing, operations, and finance.
Managers that have implemented IBP report significant, sustained cost savings, better customer service, and improved business performance.
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