Integrated Business Planning: In logistics management, for a long time, S&OP was an indispensable tool for the success of operations.
However, the IBP (Integrated Business Planning) arrived to take this prominent place — consolidating itself as the ideal tool for successful logistics management.
The efficiency of S&OP has already been more than proven—no wonder he is so adopted worldwide. According to the Hackett Group, around 70% of supply chain managers claim to adopt good S&OP practices in their companies.
And really, it makes perfect sense. You, in your company, are faced daily with a routine of Sales and Operations Planning processes. However, many managers and companies have realized that more is needed.
As an operational tool, it is argued that S & OP offers little help in financial and strategic business matters. And in today’s reality, it is necessary to have a robust solution based on semantics and data intelligence to provide valuable insights.
Something that a tool like IBP (Integrated Business Planning) offers. And for this reason, it is considered the evolution of S&OP.
In this article, we will understand more about the subject, reviewing the concepts and the parallels between both tools and knowing a perfect solution for the industry to anticipate the market’s needs. Check out!
Remembering: What Is S&OP?
S&OP is not a single tool. Instead, there are several variations in its definition. It is a set of processes that aims to adequately align the sales and production sectors with planning demands. It is, as the term says, operational and sales planning.
S&OP exists for a simple reason: successful production planning needs to consider demand, production capacity and supply, and this process is conducted from a meeting with those involved in the company’s supply chain.
Together, they analyze the results for the previous month (or chosen period) and combine this information with the sales department’s demand forecasts.
Thus, systematically, S&OP is a method that primarily aims to align the production level according to the expected sales volume.
What Is IBP – Integrated Business Planning?
And what about IBP—or integrated business planning—how does it fit into S&OP’s “next step” position? As with S&OP, there are many definitions of IBP.
The best is that it is an extension of the S & OP principles, which aims to include the entire organization in perfect business management.
IBP is a broader concept than S&OP and operates at a higher level in the organization — not limited to sales and production.
That is, the business planning process extends S&OP principles throughout the supply chain, product and customer portfolio, customer demand, and strategic planning.
Thus, it allows accurate continuous management of processes. Its objective is to align all business functions with the organization’s short, medium and long-term goals.
Here comes one of the significant differentials of the solution. The IBP’s objectives and goals are measured financially and naturally align with the organization’s long-term budgets and goals.
Thus, dynamically, IBP assists companies in the correct and profitable allocation of critical resources in the most vital sectors, projects and functions for business success and maximum customer satisfaction.
The Importance Of The IBP
The IBP is a process focused on aligning the company’s actions. The processes for implementing this strategy follow a standardized line but must be adapted to the individual characteristics of each business.
Throughout the process, and if necessary, the teams involved must evaluate the results and ensure constant analysis and change of strategies.
Why Does Using IBP Replace And Evolve S&OP Processes?
While S&OP focuses more on the operational aspect of the supply chain, IBP embraces all the variables that may affect the company’s deliveries and finances.
The IBP can be used to provide data and structure processes that strategically and assertively direct the organization.
Your starting point differs from the sales forecast in several units but the organization’s financial forecasts.
While they may represent two different measures of the same thing, where sales drive an organization’s success, the unit of measurement and means of execution is separate.
The IBP naturally aligns with the organization’s financial numbers and forecasts, which is impossible with the S&OP.