Does IBP Make Supply Chain Empty Nesters?
I understand that it has been discussed ad nauseum, but I have to say that Michael Uskert’s presentation (Deconstructing Integrated Business Planning) the other week at the Gartner Supply Chain Executive Conference did a good job with making some clear distinctions between S&OP and IBP and breaking down the process. For me, it all boiled down to a very evident analogy. IBP results when the supply chain has been a successful parent.
The supply chain gives life to new supply chain processes, grow it into S&OP, and help it mature. In this stage, they are the owners of the process (the parents of the child). They make most of the decisions and bring other people into fold as and when needed/desired. They are largely in control of the process and the outcome. And the network and circle of influence of S&OP for the most part is the supply chain (the parents) with specific involvement from neighboring functions (close family and friends).
But at some point, it’s time to fly the nest. The process that the supply chain gave life to becomes bigger than them. S&OP evolves into a business process (IBP), not just a supply chain process. The supply chain (the parents) remains a critical piece of the equation as an integral contributor and supporter, but it is no longer in the driver seat. The process (the child) has grown and now has the foundation to mature beyond the home. The original child, now an adult, makes decisions and takes actions that not only have a greater magnitude but they also impact and are influenced by a larger network of people. IBP spans multiple functions (including supply chain, marketing, sales and finance) across all time horizons, and is ever closely aligned with business strategy. Its goals are broader and more strategic in nature.
A mature sales and operations planning is a foundational prerequisite for achieving IBP. Eventually an adult will leave the nest, but they had to first be the child. And as with parenthood, IBP is not a project, it’s a journey. And given the state of S&OP right now, it would appear there is a lot of parenting for the supply chain left to do.