INTEGRATED BUSINESS PLANNING (IBP)

What is “Integrated Business Planning” (IBP)? It consists of synchronizing the commercial, financial and supply chain processes of the company in a single administrative process, this process is vital to meet the requirements of modern supply chains and is widely used in the manufacturing, distribution and services sectors. Companies that use this process experience improvements in their sales and organization.

What is “Sales and Operations Planning” (S&OP)? It is a management tool that improves communication within companies, it emerged in the 80s due to the lack of communication between departments that existed in companies.

What are the similarities between IBP and S&OP? Mention and describe them.

Both have the objective of improving the processes and making them as efficient as possible so that everything is done in a faster but well done way. Both also need supporting data to be able to see what is happening and guide the company on the best path to meet its objectives and those of our market. Both guarantee us an improvement to the administration and management problems within the company.

What are the differences between IBP and S&OP?

	S&OP	IBP
Objective	Volume oriented; demand and supply balancing.	Value-based delivery of financial business objectives
Focus	Internally focused	Extended to collaborate beyond the “4 walls”
Owner	Driven by the supply chain.	Sponsored by Exec Management and driven by the commercial or finance organization.
Features	Supply chain modeling and scenario planning.	Financial Impact analysis and planning including Risks and Opportunities evaluation.  Protect planning support for new product introduction. Product reviews and transformational projects. Commercial alignment.
Connectivity	Siloed system derives decisions with no or little “disaggregation/connection”	Boundaryless and connected to operational planning.

Mention and describe them. How does the IBP process work? Describe in detail.

• Demand Planning: The planner reviews forecasts monthly and verifies forecast accuracy against customer service levels and inventory levels.
• Creating the supply plan: The objective at this stage is to build a supply plan balanced with the demand strategy that helps address supply and demand mismatches before they affect customers.
• Take advantage of collaboration with the supply chain: Once the demand and supply plans have been made, it is very convenient to establish collaborative relationships with other supply chain partners and share information, in order to control potential risks or interruptions that may affect to the demand plan.
• Integrate business partners into the business plan: The next step is to include suppliers and customers in the business plan.
• Monitor, measure and modify supply chain activities on an ongoing basis: These decisions of the directors mentioned above seek to maintain the financial performance of the company. To do this, the monthly plan must be monitored daily until the next one is published.

What are the challenges of IBP? 

• Attract the main customers and suppliers
• Model finances in an agreed upon way to handle complexity: discounts, discounts, exchange rates, prices, etc.

Which are the most common difficulties/problems when implementing IBP? Mention them and  provide examples.   It is important to involve the "right" people in the business planning process. These are the people who are going to influence the long-term vision of your business. Many small business owners feel that they can avoid this negative aspect simply by creating the business plan on their own, but that requires experience in multiple fields for it to be successful. Generally, a wide range of opinions and input is needed for the best possible business plan because otherwise the blind spots of inaccuracy can have many unintended consequences.

What are the advantages and disadvantages of IBP? 

Advantages:

• Integrate your key business processes
• Gain control of your supply chain
• Stay ahead of demand - and the competition
• Deploy and align your people behind your business strategy
• Identify performance gaps early
• Business scenario modeling
• Establish the optimum plan for your business
• Rolling business plans with 24-36 month horizon
• Full financial appraisal of rolling business plans
• Sustainable growth
• Improved profitability

Disadvantages:

• A business plan can turn out to be inaccurate.
• It creates an environment of false certainty.
• It restricts the freedom you once had.
• A great business plan requires great implementation practices.
• There is often a lack of accountability.
• Too much time can be spent on analysis.

What is the importance of IBP nowadays?

It is very important to implement it in companies because it helps all departments within this to be connected and have constant communication, this helps to avoid misunderstandings and possible damage to be prevented.