Integrated business planning (IBP) is the task of linking strategic, operational, and financial objectives and plans to enhance overall business performance. When it works well, it is a strategic and collaborative decision-making process that evaluates the business and financial implications of different supply chain scenarios, balancing supply and demand in alignment with the annual operating plan and budgets and service-level goals.
Successfully implementing integrated business planning requires participation and input from all facets of the organization – supply chain, sales, marketing, finance, customer service and customers. While IBP is a goal for many companies, few have reached the level of world-class performance and capabilities that enables them to reap all the benefits IBP can offer.
When seeking to implement best-in-class IBP with the help of a proven partner, companies around the world turn to The Hackett Group.
Integrated business planning benefits
Companies that manage integrated business planning effectively can realize a myriad of benefits.
Organizational and process improvements
- Better demand and supply forecasting
- Enhanced service levels and greater customer satisfaction
- Faster and more informed decision-making
- Improved visibility among business groups throughout the organization
- Enhanced ability to scale business and enable growth
- Improved teamwork and collaboration
- Increased ownership and accountability
- Reduced out of stocks
- Improved new product launches
- Improved campaign/promotion effectiveness
- Material cost reduction
- Freight cost reduction
- Labor productivity improvement
- Fixed cost optimization
Working capital improvement
- Finished goods inventory reduction
- Raw materials and work-in-progress reduction
Integrated business planning with The Hackett Group
The Hackett Group is an intellectual property-based strategic consultancy and benchmarking firm serving global companies. With analysis and insight drawn from unparalleled intellectual property and more than 23,000 benchmark studies with the world’s leading businesses, The Hackett Group provides a broad array of services for digital transformation, supplier management, implementation of cloud applications, workflow automation and advanced analytics.
The Hackett Group recommends a rollout of integrated business planning processes in three primary phases: preparation, pilot cycles and continuous improvement.
Phase 1: Preparation
Creating a blueprint for IBP implementation begins with assessing the current state of business planning and how well processes are aligned. During this phase, it’s helpful to define where the company wants to be using an IBP capability maturity model, and identify gaps in process efficiency, organization, analytic skills and capabilities, and data/technology early on so they can be addressed during the future-state design work.
Phase 2: Pilot cycles
Pilot cycles allow organizations to pressure test IBP design and make improvements or adjustments that can improve efficiency and accuracy.
Phase 3: Continuous improvement
Once the pilot phase is finished, companies should ideally shift focus to using metrics and targets to measure performance going forward, conducting root cause analysis if targets are missed and driving profitable operational improvements.
Key IBP implementation best practices
The Hackett Group has identified the following best practices and key lessons learned by companies that practice world-class integrated business planning.
Leadership buy-in is essential
Senior management must fully understand the value of the integrated business planning process and commit to executing decision authority on demand/supply trade-offs.
Get started with IBP with whatever you have. Waiting for better systems, reports or automation will only delay your progress.
Leverage existing meetings
Rather than scrapping existing demand and supply meetings, these events can be reoriented as part of the IBP process.
Synchronization is priority No. 1
As you get started with IBP, synchronization is more important than accuracy, which can be improved with time.
IBP won’t be perfect the first time – it’s an iterative process that will get better over time.
The keys are people and processes
IBP success depends on defining the right people interactions and processes.
Data is key
Data in a structured IBP process can create an environment of continuous improvement.
IBP should not replace other planning processes
Don’t try to make IBP a replacement for day-to-day execution management. The role of IBP is to drive alignment within the organization.
Why trust The Hackett Group?
Founded in 1991, The Hackett Group has become a leading enterprise benchmarking and best practices digital transformation firm for companies around the world. Our services include business transformation, working capital management, enterprise analytics and global business services. We also provide dedicated expertise in business strategy, supply chain, third-party risk management, finance, human capital management, e-procurement, strategic sourcing, information technology and managed services.
The expertise of our consulting team is augmented with unparalleled intellectual property from benchmark studies with the world’s leading businesses. These include 97% of the Dow Jones Industrials, 94% of the Fortune 100, 70% of the DAX 30 and 51% of the FTSE 100. With insight captured through our leading benchmarking platform Quantum Leap® and our Digital Transformation Platform, we accelerate best practices implementations to enable our clients and partners to achieve world-class performance.
What is integrated business planning?
Integrated business planning, or IBP, is a standardized process that brings together and aligns supply, demand and financial plans. It is a collaborative decision-making process that balances functional goals and constraints while defining joint actions to achieve the overall business plan.
What is the value of integrated business planning?
Companies that are top performers in IBP can realize stronger sales growth, greater customer service levels, greater cost reductions and improved working capital performance.