In 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;
- 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.
- 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.
- 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.
- 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.
IBP – keeping it relevant
IBP, Integrated Business Planning, NewsOn 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;
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.
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.
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.
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.
Supply Chain In The New Normal
Covid 19, News, Supply Chain NewsWatch 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.
Supply Chain Innovation – Post Covid 19
Covid 19, News, Supply Chain NewsSupply Chain Innovation – post Covid 19
Attributed to Darwin; in the quote for the “survival of the fittest” – It is not the strongest or the most intelligent who will survive but those who can best manage change. The disruption caused by Covid-19 has given business a massive headache and Supply Chain Innovation – post Covid-19 will be at front of many leadership teams.
I expect to see businesses taking a new look at their supply chains; seeking ways to make then more reliable, more resilient and increasing sustainability. All of this on top of a need to improve green credentials, ethical behaviours and continue with the drive towards a zero-carbon footprint.
Post Covid-19, supply chain innovation will likely include not just what new products or services to launch but how to deliver them. I anticipate there will be a new trade off-balance between costs and reliability. Network planning will feature high on the agenda as well as collaboration and data connectivity.
Supporting supply chain innovation as a result of the Covid-19 will be a new emphasis on up to date planning tools and techniques such as Demand Driven MRP; DDMRP and a drive to update and renew IT systems and architecture. Management planning processes such as IBP will be challenged to increase visibility, focus on scenario planning and risk mitigation.
All businesses that seek to survive and thrive in the coming months / years will need to innovate, follow government guidelines and design new ways to connect supply through to demand. Be it increasing online presence, developing new marketing processes, renewing product portfolio or simply collaborating in a different way with their network.
Whichever route a business takes it will need the support of key people to work with the senior leaders to renew and deliver new processes; getting that support for Supply Chain Innovation – post Covid-19 could be as easy as picking up the phone to talk through your challenges.
Leading Change – through the rear-view mirror
News, Supply Chain NewsLeading Change – through the rear-view mirror
When it comes to most things in life the things we do are mostly repeats of our past and make judgements based on our history, pre-conceived ideas or even our own prejudices. For business leaders we need to take our people on a journey but recognising we need people to move to something new; I call this leading change – through the rear-view mirror.
From past experiences I have concluded that businesses don’t manage change they have to lead change to be successful. Individuals can manage their responses to change but leaders have to lead. The leaders need to understand that all of us have our own rear-view mirror and we need leading through the change.
Various tools and techniques exist to help the change; however, one I found extremely useful is to ‘create memories of the past’. In this technique a leader will take a team of people to a date in the future and create a sensory environment whereby they can visualise it, think it even taste or smell the place. This place has to be inviting and somewhere the team want to be. Then ask them to look into the rear-view mirror and lead the change backwards to today and document what they did and the results of their actions.
Another great change tool is making a change impact assessment – who needs to change and how the change will be recognised. Key to remember is you are trying to change behaviours not change personality – you can’t do that anyway. Also, people will often ‘validate what they have created’ so getting your team involved in designing the journey of change.
In summary; Leading Change – through the rear-view mirror; validating the steps forward by measuring against the past is a good place to start a change process and gives leaders an opportunity to take people with them which delivers sustainable change.