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A fresh take on business planning

We continue in our work with clients to introduce what is increasingly referred to as integrated business planning (IBP). While the concepts, principles and practices are evolving continuously, people have clearly moved away from using the more traditional labels such as sales and operations planning (S&OP) and integrated business management to get a fresh take and to get away from the baggage that comes with the older terms.

We expect IBP to give us a better way to work together, both within a local, perhaps country-based, business, as well as between a local and regional or global management teams.

We are striving to have a “single set of numbers” in the business, from bottom to top and across all functions, so that everyone is aligned in planning for the future and in meeting customer expectations day to day.

The five steps of the monthly IBP process give everyone the means to update and share their views of the future in terms of what they:

- will offer to the market;

- honestly believe the market will buy from them if it can be made available at the right time and place;

- see as being possible to do, working with their suppliers;

- see as being the most profitable approach to achieve growth plans; and

- agree, as an integrated business, across all functions, brands, and countries, to their IBP commitment to achieve over the next two years and beyond.

This approach will give everyone, including senior management, greater confidence that the plan is realistic and achievable.

What we often find with clients is that, as businesses, they have been very good at managing the short term but only through huge dedication of their people, including working long hours, much longer than they need to. IBP gives them a more efficient way to anticipate better, to plan better and to prevent many of the problems they end up dealing with now.

We thought that readers might be interested to hear some fresh and pragmatic comments directly from one of our clients’ senior managers, who is just embarking on IBP.

He sees a number of upsides from IBP. Most importantly, it should streamline reporting. His people spend too much time reporting to the regional office and much of this is simply the result of inefficiency. There are too many one-off requests for information, often several people asking for similar information at the same time.

Consequently, he is tying up significant resources. On any given day, he may have a dozen people responding to a dozen requests. These people are already stretched and should be investing their time in building the business rather than on ad hoc reporting.

IBP will put some structure into communication with the regional office by defining the information that is required, organising it into templates, and updating it monthly. It should centralise the information and provide better accessibility. This way, he hopes they can eliminate duplication in reporting.

IBP is also expected to improve the budget process, which currently consumes an enormous amount of resources. By the time they finish one stage, they begin another. They are budgeting and forecasting all year long. IBP should streamline this process while providing better visibility into what is going to happen 12 to 24 months ahead of time.

Another pet peeve of this manager is the amount of time spent reviewing short-term results and plans with regional management. He hopes that IBP can streamline this process, too. His team invests a lot of time preparing for this, but when there is no follow through, there is no value.

This should be an opportunity for the region to provide more value for country operations. For example, when supply is running short in one country, the region can reallocate and help resolve this. The region should add more value by proactively managing the future, rather than spending time reviewing the past.

At the end of the day, by changing the way the organisation works, IBP should deliver benefits by aligning the numbers and improve consistency, and by improving compliance. It should help the organisation manage stock better and reduce the risk of stockouts. It should help to deal with issues on time — before they become crises, and to manage costs better overall.

The manager feels that his team members have bought into the concept of IBP now that they see how it will streamline their work and organise the communication with the regional office.

At the beginning, he said, it looked like just another spreadsheet exercise. But everyone knows they will need to invest time getting the data to start with. After that, they will have a more strategic focus and less inefficient ad hoc work.

But IPB can come to naught without a strong team to lead the different areas of the process. This organisation has assigned key people to take ownership for each of the five steps as well as the overall process.

As another manager from a different country business explains: “By far the most important benefit in implementation is the mindset and attitudes of the people and the changes that need to be made in that regard. Other elements such as software tools, data and the specifics of the process may be essential but they are of far less significance. Given this, we can conclude that successfully implementing IBP is essentially a matter of change management. The amount of change is significant. It’s not a matter of doing something better; it’s about doing things differently — to be better.”

The Link is coordinated by Barry Elliott and Chris Catto-Smith of the Institute of Management Consultants Thailand. It is intended to be an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: