Integrated business planning is not just a new name for S&OP

If you're a supply chain leader who knows what integrated business planning (IBP) is, and thinks you're already doing it, but feels like your planning is inadequate or incomplete, it might be time to review your understanding of IBP. Are you following?

There’s a rumor going around that IBP is just sales and operations planning (S&OP) rebranded. But we’re here to debunk that myth.

So, where does the difference lie? 

S&OP focuses on an organization’s readiness to deliver against planned demand, involving key stakeholders from sales, marketing, and supply chain operations. IBP takes this a step further, moving beyond S&OP. It raises the game by bringing finance into the mix at every stage of the planning process, not just at the beginning or the end. This allows your finance team to move from a reactive to a proactive role in responding to business changes.

But there’s a catch: even with all the right stakeholders at the table, if your organization is still relying on outdated tools — like spreadsheets and disconnected systems — your IBP efforts are likely falling flat. Why? Because your planning efforts aren’t truly connected…

The real problem with silos

Many organizations are grappling with disconnected data across teams and business functions. This lack of data alignment causes tensions across departments, with each team making decisions based on their own analysis of that data. Marketing, sales, R&D, and product teams will all look through a different lens, creating biases that hinder decision-making. Too much time is wasted trying to reach a position of agreement — which is unreliable without the tools to present a single source of truth. 

It’s not simply that different functions have different goals, it’s that they have different priorities, processes, and interpretations. Done properly, however, IBP gives you the tools to turn arguments over the interpterion of data into decision-making opportunities.

The importance of involving finance in IBP

One of the most significant shifts that IBP brings is in changing the role of the finance team. In traditional planning, finance might not be fully involved at every stage of the planning cycle, often reacting to variances after they’ve occurred. 

With IBP, finance is involved throughout the entire process, enabling your organization to make real-time adjustments as business conditions change. By creating a transparent partnership between finance and other business functions, you can minimize surprises and all stakeholders feel empowered to contribute to strategic decisions.

But it's not just the stakeholders that are different in IBP. The planning timeframe is also different. 

Short and long-term planning

Traditionally, plans are generated at the start of the planning cycle and any variances are managed at the end. IBP combines short-term, tactical S&OP with longer-term, strategic planning, encompassing product lifecycle management and product portfolio decisions across a three-to-five-year timeframe. It includes a reconciliation process, which ensures functional alignment throughout planning cycles, not just at the beginning and end.

IBP not only reduces the timeframe to build the plan, but it also allows all business stakeholders to track performance against the plan throughout the year and adjust as required. Which means no more nasty surprises or dramatic U-turns.

The undeniable power of IBP

A McKinsey assessment of more than 170 companies, collected over five years, uncovered proof of the process improvements delivered by mature IBP across business organizations. 

The research demonstrated that mature IBP could lead to significant improvements. Organizations with well-functioning IBP saw a one to two-percentage point increase in EBITDA, service levels that were five to 20 percentage points higher, 10 to 15 percent lower freight costs, reduced working capital intensity, and 40 to 50 percent lower delivery penalties.

Removing planning barriers and roadblocks

Global businesses are inherently complex, with numerous opportunities for roadblocks and silos to form. When implemented correctly, IBP has the power to remove these barriers, leading to better business outcomes. 

By reducing the length of planning cycles, increasing the accuracy of your forecasts, and fostering a transparent, collaborative environment, IBP ensures that your business is agile, resilient, and well-prepared to respond to both internal and external changes.

However, the success of your IBP strategy hinges on the tools you use. If your current system is failing, it’s time to consider an advanced Connected Planning solution, which can transform your planning process from one impinged by data silos to one defined by aligned, accurate, and actionable insights.

Embrace the full potential of IBP by ensuring you have the right tools in place and see your business become more agile and better prepared for whatever the future holds.