Companies that perform Integrated Business Planning (IBP) well are more efficient, more effective, and make more money than those who don't. However, at the cornerstone of successful IBP are the skills and capabilities within the organisation, and an appreciation that IBP is a business process.
The IBP process only works if there is appreciation of the importance of understanding demand and supply, and finding joint solutions to support achievement of the business objectives.
From an education perspective we have not developed the capabilities of supply chain students in terms of the level of change that has happened in the industry. A change to curriculums at university and college level is needed to accommodate what business is facing today to ensure alignment. There are huge gaps in skills and capability, with many specialists in the industry but little broad based business expertise. There is far too much silo thinking within companies and in order to drive internal collaboration within businesses which is a key component of IBP, people need to understand the impact of their decisions and actions.
Every person in the supply chain needs to understand the impact of what they do. This means broadening the skills of people to understand cause and effect; the impact of the decisions they take on other areas of the business. 95% of business issues begin with a lack of clarity of demand, and supply ends up chasing its tail. People working in the supply chain don’t always recognise that supply chain is a business issue, not a functional one. The impacts of not working together are clearly felt by the business in poor service levels, poor inventory control, and the ensuing financial loss.
For example, a sales representative may have hit their KPI’s in terms of the price benefit by selling in a large volume to a particular customer, however has he/she thought about the impact of that decision? Has he/she considered the expiry dates or the fact that that customer may not be able to sell all the stock ordered and will eventually resort to returning half of it?
We have forgotten the basics and are looking for the silver bullets. It’s about driving central collaboration within businesses to ensure they are aligned and doing the right things internally. This means defining the customer strategy in collaboration with the customer, and ensuring that the strategy can be executed within the business. Then the execution team must provide operational support to execute the strategy - in this way both demand and supply will be covered. But everyone needs to be involved to understand the business strategy and what needs to be achieved. Ensuring that the team is empowered, and sufficiently resourced to execute is critical to achieving success.
In Europe there is evidence businesses have got it right - companies have formed strong customer business teams where sales, marketing and supply chain meet together regularly to understand their roles and the impact of their decisions.
The first step is to revisit the internal supply chain by asking the simple questions… who is the supplier and who is customer? Who do you need input from? Who do you need to give information to? Once this has been clarified, you can start generating a useful basis for discussing where the issue lies. You also need to understand what you are you accountable for; what work elements are your responsibility; who you need to engage with and who you need to inform.
While overall accountability is critical, often there is a lack of clarity on responsibility, and who is actually going to do the work. This lack of clarity leads to frustration and failure of what may be the best thought through business plans.
Businesses that are looking into Africa for growth should get their internal business collaboration and resourcing done before they expand. If these are not right, you will add additional complexity. Due to the fact that you are dealing in new markets where there is lack of information, you need to be clear on your strategy, and if you are opportunistically trading or building brands. Continuity of supply into these “New Markets” is critical if you are going to succeed in these markets, and that needs a good planning process.
In conclusion, multi-disciplined teams, with people who understand the
broader impact of their roles with clear accountability and responsibility are
fundamental to successful IBP.
Contributed by: Alastair Gore, Associate Consultant at Aperio
