The hidden risks of poor planning: How IBP protects against value leakage
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Boost your business resilience by using integrated business planning (IBP) to prevent costly mistakes and enhance efficiencies.
What sunk the Titanic? The obvious answer is the iceberg. But that collision is only part of it. The full story must factor in the ways little leaks and bad decisions can add up to a terrible outcome. Titanic was the most technologically advanced ship of its day, but it had a fatal flaw in its design and construction that doomed it. Built of the best steel of the time, it relied on poor-quality rivets to put it together.
It was the failure of those rivets, not the initial gash, that sunk the great ship. Examination of the wreckage revealed the cumulative effect of a series of little holes (some as small as a golf ball) spread out over nearly half the ship are what mortally wounded it. Now you may ask, “What does this have to do with supply chain planning?”
Supply chain planners and practitioners generally understand the problem of value leakage and some of its leading causes — such as excess inventory, poor pricing, missed demand, product defects — and how they erode the P&L. Yet, the real impact of value leakage, as the story of the Titanic reveals, is not any one thing but the cumulative effect of little leaks across your planning process and execution.
In past blogs on the topic of IBP, we’ve looked at how IBP improves upon traditional S&OP processes and how to crisis-proof your business and supply chain. Today we explore how implementing an expanded view of IBP into your strategic decision-making at product portfolio and finance levels can help your organization avoid the pitfalls of poor planning and human error.
Value leakage: The cumulative effect of small failures
Value leakage refers to the loss of potential revenue or profit due to inefficiencies in planning and decision-making processes. Organizations often identify a few visible problems but may overlook others. They even may see value leakage coming from more than one place. But value leakage is cumulative across many parts of the planning process that don’t talk well to each other.
If you treat each aspect of planning as a separate activity, the result of these overlooked issues can be devastating. Traditional tools often keep sales, marketing, finance, and supply chain functions separate, both hindering collaboration for timely decision-making and creating blind spots that cost money and hide risk. A lack of integrated planning leads to small yet compounding value leaks across and throughout the operational cycle, ultimately impacting your bottom line.
How can IBP help your business stay buoyant?
With the right tools, you can consolidate data from across your operations into a single source of truth. This supports real-time data integration, collaboration, and agile decision-making, helping to reduce time wasted on compiling and comparing disparate datasets. This in turn helps you eliminate value leakage.
Let’s look at the key benefits of IBP and how they help you prevent value leakage:
Multi-scenario planning: Proactively develop actionable responses by surfacing opportunities and risks, ensuring resources are optimally allocated when crises — such as market shifts, supply chain disruptions, or financial downturns — strike.
Business resilience: Pivot quickly, recalibrating strategies and reducing the impact of value leakage, as you identify and address gaps in performance or planning.
Data curation: Prevent costly oversights by connecting all departments and providing a single version of the truth across data sources and types, reducing the risk of value leakage caused by misaligned data or fragmented systems.
Flexibility and scalability: Adapt your planning process to respond effectively to unexpected disruptions, using a tool that bends to the way you want to plan, avoiding the rigidities that often lead to errors, inefficiencies, or missed opportunities that result in value leakage.
Collaboration and iteration: Iterate on plans, test different assumptions, and adjust in real time, ultimately improving strategic responses and minimizing the chances of value leakage due to siloed decision-making or lack of coordination.
Speed and autonomy: Make fast, data-driven decisions with business-owned planning, reducing the risk of delays, and ensure crisis can be averted quickly, preventing value leakage that could arise from slow reactions or missed opportunities.
Low-code footprint: Achieve your goals for IBP without being saddled with the technical debt that often dooms new technologies to fail before they even get started, using a business-owned tool that works with but doesn’t add to the IT infrastructure you already have.
How IBP keeps modern businesses shipshape
Stability helps avoid losses at Coca-Cola
Following an acquisition, Coca-Cola Beverages Northeast leapt from $300 million in revenue to $1.2 billion. For a business whose success depends on having the right product mix available at the right place and time, coordinated planning across multiple teams suddenly became essential.
“We need to make sure that the demand plan, the production plan, and the sales forecast are all aligned. If we don’t plan properly, we end up with out-of-stock situations and, ultimately, lost sales,” said Justin Conroy, VP of finance and accounting at Coca-Cola.
“Before Anaplan, supply chain, sales, and finance never could align on certain measurements, metrics, and ultimately for us, unit case sales. Now since Anaplan, all three areas can have one uniform truth,” said Conroy. “Honestly, my favorite thing about Anaplan is going to sound very simple, but it’s the stability. From a transformation basis, we’ve moved from strictly transactional to more business partnership, and Anaplan's really been at the crux and crossroads of that."
Watch our on-demand webinar with Coca-Cola talking IBP.
Navigating unsteady seasonal conditions at Bayer
Bayer Consumer Health faced significant challenges during seasonal demand peaks, often spending excessive time compiling data instead of delivering products.
“Scenario planning is huge in our industry because we have to understand the financial impact of changes,” said Lori Martucci, digital lead at Bayer. “For example, if we were to change a sales figure or run out of product, how would that affect the bottom line?”
Because they wanted to bring in data from multiple systems automatically for scenario planning, Martucci and her team chose Anaplan. Moving the process to an S&OP application on Anaplan has made the process faster, richly detailed, and more business friendly. It’s also enabled precise analysis that supports better, more effective decisions.
As a result, Bayer saved around 1,000 hours of manual data integration, consolidation, accruals, and other tasks annually.
Read our customer story with Bayer to learn more.
The contingency you didn't plan for — it can happen
The Titanic tragedy is perhaps the modern world’s most popular story of hubris and lack of planning for every scenario. For modern business operations, having the best planners and data sources can fail when not coordinated from the ground up with the right IBP tool. Siloed planning efforts cause value leakage in the blind spots they perpetuate, which occur mainly in the seams between your functional areas, data, decision-makers, your suppliers, and customers.
Organizations that fail to integrate their planning processes with the right tools see value leakage every day, but the worst type is that which is hidden by your current tools and process disconnects.
By adopting a connected approach to IBP, and using the right solution, you can prepare for the unexpected, minimize operational risks, and create a more resilient business model. Long-term, you can build a solid foundation that not only avoids the mistakes of history but also paves the way for sustainable growth and success.
Want to learn more about how IBP can help you achieve your business and supply chain goals?
Check out our collection of white papers below for more IBP expert guidance and industry-specific insights: