IBP and S&OP are the partnership to drive your anti-fragile supply chain
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Learn how to build your way to S&OP and IBP success through finance, planning, and execution collaboration.
Within supply chain management, finance, planning, and execution can be likened to the collaborative efforts between a bank, an architect, and a construction worker building a house.
The bank sets the budget and oversees the financial aspect of the process, taking into consideration the cost of materials, resources required, and project duration. The architect designs the blueprint and considers the measurements, the terrain, the materials, and the environment to determine a viable plan. It involves continuous modifications and tweaks — both during the planning approval stage and throughout construction. As every architect knows, a good plan adapts to meet the challenges of construction as they arise.
Execution, on the other hand, entails the actual construction of the house, including laying the foundations, building walls, and installing the roof. Real-time monitoring is essential, using the architect's plans as a guide. Execution also requires hands-on effort, adaptability, and the ability to adjust to the changing realities of the site, the client, the finances, external factors, and new requirements.
While finance, planning, and execution are all essential for creating a beautiful, functional house (or supply chain), they serve very different roles, require different skills, and operate in distinct ways. A good plan guides execution, adapting as necessary while ensuring adherence to budgets and timelines.
Event-driven supply chains
When it comes to successful planning and execution within a supply chain today, there are multiple transforming functions that are all trying to adapt to the changing business landscape. But, like the bank, the architect, and the construction worker, while they share a common goal of achieving company success, the skills, approaches, and responsibilities each performs are vastly different, often creating a barrier to homogeneity.
Gartner recently explored the concept of an anti-fragile supply chain, whereby organizations don’t just survive uncertainty with contingency plans and redundant systems; rather they continually adapt to and learn to thrive under uncertainty and see opportunity disorder.
Supply chains have evolved into event-driven ecosystems, where sales and operations planning (S&OP) teams leverage data to identify market trends, social hiccups, or geopolitical shifts that could affect demand and thereby impact supply chains. Gartner suggests that instead of avoiding these disruptions, an anti-fragile supply chain actively seeks out disturbances because within chaos lies opportunity.
Uniting across the divide
The challenge in achieving this anti-fragile supply chain comes in the fact that, for most organizations, S&OP, execution, and other business functions are not coordinated, properly sharing planning data or event-opportunity driven. They operate reactively, working in silos that are slow to recognize problems, and even slower to align all stakeholders on events, their impacts and opportunities, and then make decisions.
What’s required is a common set of processes and data that bring together the siloed groups within an organization and goes beyond just planning, execution, and finance to include marketing, HR, R&D, and production teams.
Enter integrated business planning (IBP).
Like the construction site, there are always additional players — a contractor, an interior designer, a project manager — who are impacted by risk and events and can contribute to a successful outcome. In a supply chain, disruption can impact an organization at any point of entry, from demand to supply to pricing and beyond. Functions across the business must come together if organizations want to turn risk into opportunity and achieve an anti-fragile supply chain.
Getting connected through IBP
Gone are the days of S&OP creating a static forecast and managing that forecast every quarter or six months. Today’s savvy organizations have ditched this traditional model in favor of an S&OP team that proactively monitors and predicts events in real time, and uses an IBP shared with other teams, using shared tools and data, to interpret the impact of events, unite departments to pivot their strategy, and ensure supply chains can operate — and thrive — despite whatever disruptions should occur.
An IBP-based S&OP function, connected with other stakeholders, changes its role from reactive risk mitigation to an anti-fragile model that sees events as opportunities and has the processes, built on modern connected planning technologies, to operate as an anti-fragile supply chain function.
By leveraging data from across the organization, IBP teams can adopt a longer-term perspective to make business predictions and conduct scenario planning that supports company vision. However, IBP teams need to collate planning data from across the business within a single platform. With the same data, the same processes and the same sources, IBP is not hampered by traditional integration between disparate siloed planning functions, which is not only time-consuming but can also be prone to error.
With improved visibility, IBP teams can act as a decision-making unit that has the ear of the key stakeholders in the organization — from sales to finance to production, to collaborate, assess risks, and adjust the strategy accordingly.
With Connected Planning, IBP and S&OP teams can gain a clear line of sight into instabilities, impacts, and scenarios, and planners can model potential opportunities through “what-if” scenarios aligned with desired outcomes.
Using an established Connected Planning approach, Anaplan empowers S&OP and IBP teams to architect the right plan, delivers the power and insight to adapt those plans according to market changes, and provides the tools to collaborate with execution teams to facilitate faster decisions that change their business outcomes.