Supply Chain Blog

FMCG: S&OP morphing into Integrated Business Planning (IBP)?

Posted by Dave Jordan on Wed, Sep 23, 2015

I speak to many FMCG companies who tell me they do not need Sales & Operational Planning in their businesses. As a formal process they may not be operating to S&OP norms but if they are getting their products onto shelves then some form of S&OP must be in place. This may not be optimum or efficient but at the end of the day their products are in front of consumers and ready for purchase or not, depending on how successfully your sales and marketing colleagues have stimulated the market.

This leads me to a frequent problem with S&OP – the name, not the process. Reluctantly sales people do get involved in S&OP process but in my experience they have rarely bought into the idea 100%. Nevertheless, they are there at the meetings and they are sharing data and information etc.

To everyone else in a company the “operational” term usually applies solely to those continually moaning Supply Chain types and sometimes in Finance. Colleagues in all other functions including marketing frequently do not see themselves as part of this process yet it is the lack of rigour and discipline in these sales supporting roles that undermines business performance.

This is why I increasingly prefer the term Integrated Business Planning (IBP) as it covers the whole company plus there is no “and” in the process name. The latter point may seem trivial but S and OP triggers a “them and us” mentality whereas there is no debate about the IBP process. We are in this together (not in the current UK government way) including HR who play the important role of providing the right people and the right training opportunities in order to support the overall business objectives.

The use of IBP does not change the objectives of the process significantly but perhaps the benefits are more clearly defined:

IBP helps to transform planning from a boring must-have into a decisive and continually improving competitive advantage by fostering one integrated planning platform across sales, marketing, supply chain and finance and yes, even HR:

  • A clear and unambiguous understanding of business performance drivers.

  • A dynamic understanding of the financial impact and interdependencies of different planning scenarios.

  • Optimisation and balance of the monthly business plan with longer term strategic planning and identification an allocation of skilled resources.

  • Balancing planning for profitability or volume or growth as per the business need.

  • Unambiguous quantification of financial risk and opportunity of planning scenarios.

  • Continually increasing business flexibility and surety of success.

  • One company working as one team.

Of all these desirable benefits the last is the one you really need to pursue. If you get this working within the framework of an IBP you will be hard to stop in the FMCG marketplace.

Image courtesy of Sheelamohan at freedigitalphotos.net

 

Tagss: FMCG, S&OP, Forecasting & Demand Planning, Sales, Integrated Business Planning