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What are the challenges involved in Integrated Business Planning?

IBP presents a lot of opportunities but at the same time there are several things you need to take into account when moving to IBP from traditional S&OP. As monetary forecast is the main driver for IBP, you need to make sure that the conversion to units is done using as accurate data as possible. Traditionally the conversion from monetary values into units is done using an average price conversion. Thus the average prices used in the conversion need to be updated regularly to secure the most accurate data. There can also be considerable differences between regions or sales areas for similar products. As an example therefore, one way of securing accurate plans is to develop and maintain regional price conversion rates for the same products.

The other challenge might come from the way the unit level demand plans are then routed to correct factories for supply planning purposes. So besides securing the average prices, the correct routing rules also need to be managed between factories. This should also be an active, monthly process.

How should IBP be embedded in a Matrix and Multi-Country Environment?

The starting point with IBP is the way the forecasts are collected. Are the forecasts on a country level or in regional buckets only? Naturally, the main consideration is that regardless of the structure you need to be able to match the monetary and volume plans in some way so that these are actually integrated.

How can the various levels of S&OP be integrated in countries with various maturity levels?

In most companies the main driver for forecasting and planning is usually the financial information. IBP therefore is the correct process as it matches these two elements, finance and volume, together. So it does not mean that all the countries need to be at the same level of maturity if the financial forecast data can be obtained from them. However, I believe that it is crucial for all stakeholders to understand the fundamental principles of why the S&OP or IBP processes are in use. It is important to understand what the added value in running these processes is and how all the relevant persons or functions are expected to contribute to the process.

What is the importance of process, systems, structures and capabilities in driving strong cross-functional collaboration for S&OP and evolving towards IBP?

S&OP is more of a decision-making process rather than a tool or a system-driven exercise. Thus I believe you should never start to implement these purely from a tool perspective, but rather build a strong and functioning process with clear inputs/outputs and responsibilities first, before starting to think and draft down what the tool for IBP could be. Processes and people come first and systems come second. The structures and capabilities will then grow along the way once you start managing the process.

How can you ensure the quality and regulatory functions are aligned in the decision-making process?

As mentioned above, the S&OP process is really about making decisions based on the inputs from both the demand and supply side. I firmly believe that in order to get the necessary ‘respect’ from the SCM functions you first need to ensure that the demand signals (i.e. forecasts) are as accurate as possible. So the starting point should be to

create a set of KPI’s or metrics that aim in improving the quality of the demand information. The most crucial one in this case would be the forecasting accuracy metric that should be in place at the same time when the process is starting. It might take some time until the biggest fluctuations and volatilities in the demand signals are smoothened, but eventually it will pay off if you are really able to present the development of the forecasting accuracy over time.

What would you like to achieve by attending the 13th Annual Advancing S&OP to Integrated Business Planning conference?

I would like to hear about case studies from various companies that have implemented or are about to implement the IBP practices in their operations. I have noticed that even if companies are not directly in the similar lines or business us ours, the overall challenges within the SCM and S&OP/IBP are pretty much the same. Therefore it is always interesting to hear and learn about the ways these companies have solved these challenges. Another part of the conference is naturally to network with the participants and also to hear from solution providers how they can help you out in the aforementioned topics.

Ahead of the 13th Annual Advancing S&OP to Integrated Business Planning conference, read here an interview with Toni Sirviö, Director, Head of Planning, Konecranes about the challenges involved in Integrated Business Planning. In addition, Mr. Sirviö offers his view on how can IBP and S&OP be looked into an multi-country level. He then goes on to indicate the importance of S&OP as a decision-making process rather than a tool or system-driven exercise.

Practical Insights From:

Neil James, Vice President, Core Commercial Cycle Global Manufacturing and Supply, GSK,
Marcelo Paroni, Global Head of S&OP, Diageo,
Richard Lemerle, Supply Chain Director, Mars
Jakob Lignell, Director, Global S&OP, Arla Foods,
Monica Prati, CFO, Wrigley,
Toni Sirviö,Director, Head of Planning, Konecranes,
Martin McKinnon Edwards, Senior Manager, Global S&OP Lead, Novozymes

About the conference:

This marcus evans event will provide the best platform for benchmarking and moving forward your S&OP efforts, with interactive discussions and practical case studies from top companies in Europe. The 13th Annual Advancing S&OP to Integrated Business Planning Conference will take place from the 8th until the 10th of February 2017 in Amsterdam, Netherlands.

Previous Attendees Include

Johnson & Johnson
Nestle
Proctor & Gamble
Shell
Sanofi
Nike
DHL
British American Tobacco
Honeywell
Unilever
Electrolux
Kia Motors Europe GmbH
Diageo
Allergan Pharmaceuticals
BASF
Carlsberg
Henkel AG & Co KGaA
Philip Morris International

About the speaker:

Toni Sirvio has been working at Konecranes since 2005 with various responsibilities within the Supply Chain Management including Project Management, Order Management, Pricing and IT/ERP Tool development. Since 2010 he has had the group wide responsibility for the development of the global demand and supply planning processes. Currently as the Head of Planning, Mr. Sirvio leads both the operational demand and supply planning processes as well as the further development of them with his team. Prior to joining Konecranes, Mr. Sirvio worked in the Telecommunications industry at Tellabs Inc. where he was responsible for the demand-supply planning operations at the Customer Logistics organization.

S&OP and IBP: Main Challenges and Advice

An interview with Konecranes

Toni Sirviö

Director, Head of Planning

Konecranes, Finland