5 Benefits of Integrated Business Planning
September 23, 2021 | by: David Phillips
Integrated Business Planning has become a hot topic in planning circles over the years. But what is it? Integrated Business Planning (IBP) is a type of holistic planning that connects strategy, operations and finance. It combines people, process and technology in order to improve business agility and performance.
IBP recognizes that decisions and actions in one area of the business often directly impact other areas. It seeks to create more collaborative, distributed processes in which stakeholders manage planning in their areas of the business, in alignment with company strategy. It goes beyond the typical budgeting process, which focuses on money. Rather, it incorporates operational and strategic drivers, coupled with finance, that drive business execution and success.
Dashboard that indicates inventory status based on demand forecast
Organizations that implement IBP are able to plan in a more strategic, data-driven and nimble manner. The top five benefits of IBP include the following:
- Agile, Continuous Planning – IBP enables organizations to move from a static to agile, continuous planning process. This is critical for organizations that plan and forecast on a frequent basis – including weekly and even daily. Using manufacturing as an example, business conditions can change rapidly – from sales orders for particular products and workforce constraints for production runs, to prices for raw materials and shipping costs. All of these factors impact margin. With Model Metrix’s IBP solutions, planners access an efficient multi-dimensional modeling platform for continuous planning, execution and analysis in order to maximize profitability. They are able to analyze data to identify and exploit opportunities while having the foresight to get in front of issues before they are critical.
- Dynamic “What if” Scenarios – With Model Metrix IBP solutions, “what if” scenarios can display the effects of potential actions along the production value chain – including gross margin, production capacity, workforce availability and expense, inventory levels and shipping costs. With scenarios, planners can proactively identify and manage constraints. A scenario can show impact of a change of one driver or how multiple drivers can be adjusted in concert to arrive at a desired outcome.
- Automation and Efficiencies – Integrated models eliminate the need for copy/paste and manual consolidations. They also eliminate the need for ad hoc modeling typically done in a spreadsheet. Data from accepted versions of a plan can be pushed to the database for the official consolidated plan. Actuals data from the G/L system can be automatically pulled into the model for variance analysis. These features save time, money and effort and allow stakeholders to focus on strategic objectives. Efficiencies extend to “what if” scenarios as well. Logic can be constructed so that, for example, if another shift is added, the required staff, training levels, and expenses automatically populate the model. Furthermore, projecting an increase in demand can automatically add requirements for materials purchase, more workforce capacity and expense and everything else connected to demand.
- Comprehensive, Real-time Data – Agile planning requires comprehensive real-time data. This means the time lag caused by copy and paste from spreadsheets is not an option. Integration with a database and source systems along with automated updating ensures models are populated with real-time data. Good decisions aren’t made with last year’s actuals…they are made with the latest data.
- Collaborative Planning and Decision-making – One of the real benefits of IBP is that it decentralizes the planning function. Managers and other stakeholders on the frontlines of business are able to take responsibility for their numbers. This eliminates glaring errors, lag times, and makes planning more accurate. With application-like, easy-to-use models that are accessed via web browser, we are able to eliminate the version control and consolidation issues associated with spreadsheets. Planners are able to view the same data and make decisions collaboratively.
At Model Metrix, we have expertise designing and deploying Integrated Business Planning systems. We have a methodical approach that captures goals and challenges and establishes a cost-effective roadmap for integrated planning. Contact us today for an overview and personalized demo.