Integrated Business Planning (IBP) is increasingly becoming the management process of choice for organisations around the world, improving planning and decision making effectiveness. The key characteristics of IBP are as follows:
- A process that evaluates and revises time-phased projections for demand, supply, product management, strategic projects and the resulting financial plans on a monthly basis, led by senior management.
- Typically a rolling 24-36 month horizon.
- A decision-making process that realigns the tactical & operational plans for all functions within an accountable organisation entity, in support of the organisation’s goals and targets.
- Drives consensus on a single operating plan, to which executives hold themselves accountable.
- Allocates the critical resources - people, equipment, inventory, materials, time and money - to most effectively satisfy customers in a profitable way.
- Drives scenario planning aimed at optimising the business in the event of multiple outcomes.
- A process that has the capability to transform the performance of the business.
IBP involves a monthly review of functional plans and strategic projects across an organisation to identify material changes and their impact. Where functional plans are now found to be misaligned, these plans are reconciled to ensure that everyone in the organisation is “pulling in the same direction”. Once the total organisation plan has been reconciled it is then compared to the commitments that the organisation has made including annual plan/budget, performance goals and strategy. If gaps to commitments are identified then the process teams focus on identifying gap closing actions. If these need approval at the leadership team level then they are presented as recommendations for decision at the Management Business Review. These decisions are then communicated back out to the organisation in the form of the approved latest IBP plan.
This monthly “check and correct” activity ensures that the leadership team can regularly check on progress and “course correct” as new information becomes visible. This allows them to steer their organisation towards their committed plans, objectives and strategy.
The integration of financial plans with operational plans is a key feature of IBP, ensuring that the financial implications of the bottom-up plans and the overall health of the business are understood. By driving collaboration across all departments, the entire business works from one set of numbers that are underpinned by clear assumptions and activity plans.
Every function has a role to play in the success of your organisation. Leaving any member of the “family” out of the Integrated Planning process inevitably leads to misalignment and results in wasted effort and sub-optimal outcomes.
