IBP – keeping it relevant

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integrated-business-planning-latestIn this Blog post I explore and relate my experiences of why Integrated Business Planning (IBP) frequently fails to deliver the promised outcomes, becomes non-sustainable and disappears from the agenda. To me the secret is; IBP – keeping it relevant

On a number of occasions, I’ve heard; “we tried IBP (or S&OP) and after 12 to 18 months we just gave up” When questioned why I get a whole list of one-line replies such as inventory levels went up, we missed so many orders, our customers / suppliers are so unreliable and our IBP process is no longer relevant.

So why does this great process so often become side-lined, what are the main points of reference companies miss that causes frustration and ultimately a shift backwards in business behaviours?

My experiences on keeping the IBP process relevant and up to date are summarised as follows;

  1. Process has become stale;

Like any business process, IBP has to be fit for purpose, it should be a true reflection of the business itself and it needs to be reviewed ideally by an external person at least twice a year. If the IBP process is no longer relevant to senior leaders, functional leadership or is measuring the wrong things then the whole IBP process will fade away as people get bored having to check the numbers or hide away from the facts.

  1. Supply Plan Reliability

Supply planning is probably the hardest part in the IBP process; manufacturing plants will break down; shipments do get sent with the wrong paperwork or planning calculations are based on the theoretical number and not demonstrated capability.

  1. Separate Financials

If there was one major shift when S&OP transitioned to IBP it was the integration of Finance to the planning process. Those organisations who have embraced this and even have the process owned by the Finance Leadership are the ones who I have seen get the most from it. Without it the single set of numbers or one version of the truth is lost which leads to confusion and poor strategic decision making.

  1. Scenario planning is overlooked

The real power of IBP is the ‘what if’ scenario collaborative planning piece. The process should seek these scenario’s look at the options, risks and mitigations then set out to align and agree on the actions

 

In conclusion, the keys to IBP – making it relevant are; have a process that fits the business not a process that’s a slave to a process formula, regular review of the process and fully integrate the finance team into each step.

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Supply Chain In The New Normal

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supply-chain-consltant-news

Watch the news, read social media or just listen in on an open conversation; we get references of moving into a ‘new normal’. So, what will it mean when we say supply chains in the new normal?  – what is this new normal?

Sadly, I’m seeing a society becoming more fractured; divided on politics, divided on age and subdivided by those in work and those not. For sure there is likely to be a race to get back to some sort of normality albeit uncertain. Human behaviour would suggest we will hanker after the old ways, our history is what guides us into the future. Supply chains will need to react to human behaviour changes in a way not seen before.

So, what does this mean for a new normal in supply chains My thinking is the new normal will probably look and feel much like the old one; the forward-thinking businesses will continue to innovate, operate in the same markets, dealing with most of their suppliers and customers as before. The changes will be how they interact; social distancing will mean reduced face to face meetings, less travel and more online interactions.

Supply chains will seek to become more sustainable and the trade-off between cost and reliability may shift away from a focus on cost toward ensuring end to end connectivity.  Data flows will be critical to success along with the ability to sense and respond quickly to changes

Business who are part of the hospitality or retail sectors will see the largest challenges; here the supply chain and the new normal will be more integrated. For some months these sectors will be in a state of flux not really knowing how the situation will play out. People will need to build a level of confidence that they will be safe, notwithstanding there will be many who cannot afford the luxury of an evening out or a holiday.

Shopping will likely stay for a large part online resulting in redundancies and a different feel to our traditional town centres. A move to a cashless society has leapt forwards and is likely to continue, even though it will lead to confusion and yet again a divide into those who accept it with open arms and those who will not trust the ‘system’

In summary; when we look at a supply chain in new normal, I feel that the supply chain will be mostly based on our old norms / behaviours and measured on the ‘rearview mirror’; it’s going to be a white knuckle ride, so strap in and hold on tight this will be too stressful and some will fail, but that’s a reality we need to accept. For those businesses that accept the challenge, there will be many rewards to be had.

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