Integrated Business Planning:

Planning in most companies is done at different levels department-wise without or with little consultation with the result there is a gap or disconnect in the planning process.

Finance department sets the revenue and profit goals with minimum consultation from the Manufacturing whether the company has the resources, materials, capacity or demand to attain these goals, resulting in lop-sided planning process.

On the operation level Manufacturing develops plans on `demand and supply` without knowing if the company will meet the budgets on which the company’s revenue and profits goals are set. 

Similarly, the Marketing department agrees to quotas that meet finance’s revenue goals without a complete understanding of what the Manufacturing can deliver.

Integrated Business Planning (IBP)   bridges these gaps in corporate business planning system.  IBP integrates the financial planning with operations planning provided by Sales & Operations Planning System.

This results in revenue goals and budgets getting validated and the operating plan is reconciled with financial goals.

In other words, IBP refers to technologies, applications, and processes of connecting the planning functions across the company to improve organizational alignment and financial performance.  It means the strategic planning and operational planning are linked with financial planning.

The single model of IBP in an organization leverages the information assets, corporate executives, business unit heads, and planning managers to use IBP to evaluate plans and activities based on the exact economic impacts of each and every consideration.

Planners can quickly see the big picture in totality and its impact of the changes when such detailed changes are made to the operations plan.

Through IBP, operation plans are updated daily or weekly for the precise forecast based on current market conditions. IBP helps reliability of the revenue forecast.

IBP integrates the planning in such a way that it helps in –

• Product profitability
• Customer profitability
• Capital expenditure
• Manufacturing operations
• Supply chain
• Human resources and information technology
• Business policy
• Market demand
• Competitive strategy.

IBP, thus, integrates and aligns the various units of a company in improving the planning process for better performance.

Questions:

 1.   What is meant by IBP?  What is its role in a company`s planning process?

 2.   What are the various areas in which IBP helps integration of planning of a company?