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How does Integrated Business Planning (IBP) align organisation and strategy?

Integrated Business Planning (IBP) aligns organisation and strategy in the following way:
To start with a bit of background, IBP is stage 4 and 5 of the Gartner model. It is about profits and market shares, instead of costs and volumes, it is about looking from the outside into the company. This means how are competitors doing, what are the trends consumers are experiencing, what new developments from suppliers and what new technologies are we facing. As a company, you must respond or even lead these insights.
And that is all about the goal and the strategy you develop as a company. Once this strategy is developed, in the monthly IBP cycle you continuously compare your (financial) bottom-up view of Product, Demand and Supply on a rolling 24-36 months with your strategy. There will always be a gap between this bottom-up view and the strategy, otherwise, there is no, ambition or the bottom-up numbers are made up to artificially meet the budgets.

When the gap is too big to close with actions in marketing and advertising to increase penetration, new product development, promotions, increasing distribution and making your supply chain agiler, then it is time to make a call if the long-term goal and the strategy are still valid. I have experienced examples in companies where we adjusted the strategy to avoid we were burning money, assets and more important our employees. People will feel over-stressed and leave the company, especially the good ones.

So, when the strategy is scrutinized and modified, you have to adept also your organisation. This can be down-sizing, changing priorities on regions where you are in, changing people to assure you have the right candidate at the right place, and in some cases going from central led organisations to putting the countries in a dominant position with support from the centre instead of dictated by the centre. The latter depends very much on the category you are in.

Why it is important for the IBP leader to be well connected with the Leadership?

The IBP Leader must be well connected to the Leadership because he/she is facilitating and leading the resolution of business issues which are material or strategic. These issues can have an origin in Sales, Marketing, Supply, Procurement, R&D, Finance, HR, or IT. And in all cases, there will be consequences or conflicting objectives between the functions. This means that the resolution will require an integrated approach, and has to be ultimately decided by the Executive Leadership team. The IBP Leader reports preferably to the CEO. Besides designing, implementing and running the IBP process, the IBP leader is also the trusted coach for the Leadership, educating them on IBP, transferring knowledge and helping them to realise their company goals and strategy. The IBP leader masters the business issues and understands the strategy.

How can firms achieve the effective implementation of IBP?

Companies can achieve the effective implementation of IBP when they start with appropriate education at the Leadership team.  The Leadership team must fully understand what IBP means, how it can help them to realise the strategy and what it takes to get a professional level in IBP. A good next step is to identify where the company is at this moment on the checklist criteria of IBP, to set a baseline and to set priorities for design and implementation. Once that is clear, the direct reports of these Executive Leaders have to be educated on the same level and with this knowledge they can start a 3 months design process. The objective of the design process is to have a starter to run the IBP process. Don’t run into the pitfall to deliver a full detailed design what takes too long. Also in IBP, you have to start with crawling, then walking and then running. So, within half a year after the first education of the Leadership team, you can start running your first IBP cycle. Every year you will see substantial achievements from crawling to running a marathon. IBP is not a sprint. Once IBP is running, continuous coaching in the IBP step reviews is needed by the facilitator and/or the IBP Leader in Product, Demand, Supply, Reconciliation and Management Business Review. Management and staff in the IBP process (what is in principle everyone) must be so well educated that they can give IBP education to their (in)direct reports.
Measure continuously where you are in the maturity journey and define improvements to reach a higher level of performance. IBP is like top-sport, passion, discipline and learning from your mistakes, but never give up!

What role can technology play in moving forward the IBP Process?

The role of technology is one of an enabler and accelerator once you have set the basics in IBP. Educating people, having the right people and processes in place comes first. When you start with IBP, it is crucial that your data accuracy and completeness become at a very good level. I have experienced this in several companies and started a parallel project on data to assure one set of numbers and numbers with a high accuracy. Technology like BI and reporting can help in that.
Once you have people, processes and data in place the leverage of good planning software is giving you equipment, like in top-sport, what can really leverage your people and processes. To compete against competition, I will even go a step further when you use technologies like blockchain in your extended supply chain, or apps to interface with your (new and future) consumers. This will create demand and will help to make you a leader in your industry. 

What would you like to achieve by attending the 14th Annual Advancing S&OP to Integrated Business Planning conference?

I like to achieve in the 14th Annual Advancing S&OP to IBP conference is an understanding of the audience that S&OP doesn’t equal IBP. And IBP requires great Executive Leadership because the price you have to pay is too high in terms of not realizing your strategy and people are leaving your company. IBP is not for free.