Integrated Business Planning (IBP) has become an important cog in many company strategies today. When you look at many of the top companies in the world, their processes are interlinked and easily communicating with each other to make impressive overall practices.
However, what are the exact benefits of using IBP?
There are solid and trackable KPIs that are easy to track where IBP can make a huge difference, but on top of these there are more abstract improvements that often factor in to the success of the solid KPIs.
IBP has a clear benefit in terms of working capital as it allows for wastage to be minimized across departments and processes whilst also creating a situation where spend can be targeted to areas where it can have the most effect. This will mean more working capital across the entire business and therefore investment in the areas that can have the most impact.
Through the holistic view that IBP creates, the forecast accuracy that can be achieved is much greater than when not using it. This means that your forecasting can spot potential benefits or obstacles much quicker than they otherwise could.
With a system that interlinks more areas of the business the benefits to the customer is clear, essentially they will have more knowledge of where their items are or how different departments are dealing with specific issues. Where talking to a customer service representative could result in simply saying ‘it’s with the finance department’, with IBP there is a far more in depth look at what is actually being done within the process at any one time.
Overall this makes the entire company more productive across all areas, from how supply chains are operating, to how finance are dealing with a payment and everything between. It means that more can be produced in a shorter amount of team and at a reduced cost.
These solidly trackable KPIs are only achievable after the more abstract, and arguably harder, elements are achieved to make this process a success.
The first is collaboration and communication.
In order for an IBP process to be a success there needs to be a smooth and seamless collaboration between teams and departments. This is something that cannot be done simply through tracking the number of emails or phonecalls between the two, but needs to be monitored and managed to make sure that everything that is communicated is effectively done so and that there are not snagging points where friction can be created.
Moving along from this initial element of communication, there needs to be an element of trust throughout every team involved. This is something that cannot be done quickly and is again something that cannot be tracked or calculated. It is something that managers need to foster and teams need to create by doing good work that breeds trust in others who depend on their input for a process to work effectively.
Both of these are a necessity to get to the bigger KPI gains that you see through a successful IBP process, they essentially lay the groundwork for an effective implementation.
Through fostering the more abstract benefits of IBP the business will generally create a better groundwork for business improvement, be that within an IBP framework or elsewhere.