objective of integrated business planning

A better way to drive your business

Managing the availability of supply to meet volatile demand has never been easy. Even before the unprecedented challenges created by the COVID-19 pandemic and the war in Ukraine, synchronizing supply and demand was a perennial struggle for most businesses. In a survey of 54 senior executives, only about one in four believed that the processes of their companies balanced cross-functional trade-offs effectively or facilitated decision making to help the P&L of the full business.

That’s not because of a lack of effort. Most companies have made strides to strengthen their planning capabilities in recent years. Many have replaced their processes for sales and operations planning (S&OP) with the more sophisticated approach of integrated business planning (IBP), which shows great promise, a conclusion based on an in-depth view of the processes used by many leading companies around the world (see sidebar “Understanding IBP”). Assessments of more than 170 companies, collected over five years, provide insights into the value created by IBP implementations that work well—and the reasons many IBP implementations don’t.

Understanding IBP

Integrated business planning is a powerful process that could become central to how a company runs its business. It is one generation beyond sales and operations planning. Three essential differentiators add up to a unique business-steering capability:

• Full business scope. Beyond balancing sales and operations planning, integrated business planning (IBP) synchronizes all of a company’s mid- and long-term plans, including the management of revenues, product pipelines and portfolios, strategic projects and capital investments, inventory policies and deployment, procurement strategies, and joint capacity plans with external partners. It does this in all relevant parts of the organization, from the site level through regions and business units and often up to a corporate-level plan for the full business.
• Risk management, alongside strategy and performance reviews. Best-practice IBP uses scenario planning to drive decisions. In every stage of the process, there are varying degrees of confidence about how the future will play out—how much revenue is reasonably certain as a result of consistent consumption patterns, how much additional demand might emerge if certain events happen, and how much unusual or extreme occurrences might affect that additional demand. These layers are assessed against business targets, and options for mitigating actions and potential gap closures are evaluated and chosen.
• Real-time financials. To ensure consistency between volume-based planning and financial projections (that is, value-based planning), IBP promotes strong links between operational and financial planning. This helps to eliminate surprises that may otherwise become apparent only in quarterly or year-end reviews.

An effective IBP process consists of five essential building blocks: a business-backed design; high-quality process management, including inputs and outputs; accountability and performance management; the effective use of data, analytics, and technology; and specialized organizational roles and capabilities (Exhibit 1). Our research finds that mature IBP processes can significantly improve coordination and reduce the number of surprises. Compared with companies that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower—and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

When IBP processes are set up correctly, they help companies to make and execute plans and to monitor, simulate, and adapt their strategic assumptions and choices to succeed in their markets. However, leaders must treat IBP not just as a planning-process upgrade but also as a company-wide business initiative (see sidebar “IBP in action” for a best-in-class example).

IBP in action

One global manufacturer set up its integrated business planning (IBP) system as the sole way it ran its entire business, creating a standardized, integrated process for strategic, tactical, and operational planning. Although the company had previously had a sales and operations planning (S&OP) process, it had been owned and led solely by the supply chain function. Beyond S&OP, the sales function forecast demand in aggregate dollar value at the category level and over short time horizons. Finance did its own projections of the quarterly P&L, and data from day-by-day execution fed back into S&OP only at the start of a new monthly cycle.

The CEO endorsed a new way of running regional P&Ls and rolling up plans to the global level. The company designed its IBP process so that all regional general managers owned the regional IBP by sponsoring the integrated decision cycles (following a global design) and by ensuring functional ownership of the decision meetings. At the global level, the COO served as tiebreaker whenever decisions—such as procurement strategies for global commodities, investments in new facilities for global product launches, or the reconfiguration of a product’s supply chain—cut across regional interests.

To enable IBP to deliver its impact, the company conducted a structured process assessment to evaluate the maturity of all inputs into IBP. It then set out to redesign, in detail, its processes for planning demand and supply, inventory strategies, parametrization, and target setting, so that IBP would work with best-practice inputs. To encourage collaboration, leaders also started to redefine the performance management system so that it included clear accountability for not only the metrics that each function controlled but also shared metrics. Finally, digital dashboards were developed to track and monitor the realization of benefits for individual functions, regional leaders, and the global IBP team.

A critical component of the IBP rollout was creating a company-wide awareness of its benefits and the leaders’ expectations for the quality of managers’ contributions and decision-making discipline. To educate and show commitment from the CEO down, this information was rolled out in a campaign of town halls and media communications to all employees. The company also set up a formal capability-building program for the leaders and participants in the IBP decision cycle.

Rolled out in every region, the new training helps people learn how to run an effective IBP cycle, to recognize the signs of good process management, and to internalize decision authority, thresholds, and escalation paths. Within a few months, the new process, led by a confident and motivated leadership team, enabled closer company-wide collaboration during tumultuous market conditions. That offset price inflation for materials (which adversely affected peers) and maintained the company’s EBITDA performance.

Our research shows that these high-maturity IBP examples are in the minority. In practice, few companies use the IBP process to support effective decision making (Exhibit 2). For two-thirds of the organizations in our data set, IBP meetings are periodic business reviews rather than an integral part of the continuous cycle of decisions and adjustments needed to keep organizations aligned with their strategic and tactical goals. Some companies delegate IBP to junior staff. The frequency of meetings averages one a month. That can make these processes especially ineffective—lacking either the senior-level participation for making consequential strategic decisions or the frequency for timely operational reactions.

Finally, most companies struggle to turn their plans into effective actions: critical metrics and responsibilities are not aligned across functions, so it’s hard to steer the business in a collaborative way. Who is responsible for the accuracy of forecasts? What steps will be taken to improve it? How about adherence to the plan? Are functions incentivized to hold excess inventory? Less than 10 percent of all companies have a performance management system that encourages the right behavior across the organization.

By contrast, at the most effective organizations, IBP meetings are all about decisions and their impact on the P&L—an impact enabled by focused metrics and incentives for collaboration. Relevant inputs (data, insights, and decision scenarios) are diligently prepared and syndicated before meetings to help decision makers make the right choices quickly and effectively. These companies support IBP by managing their short-term planning decisions prescriptively, specifying thresholds to distinguish changes immediately integrated into existing plans from day-to-day noise. Within such boundaries, real-time daily decisions are made in accordance with the objectives of the entire business, not siloed frontline functions. This responsive execution is tightly linked with the IBP process, so that the fact base is always up-to-date for the next planning iteration.

A better plan for IBP

In our experience, integrated business planning can help a business succeed in a sustainable way if three conditions are met. First, the process must be designed for the P&L owner, not individual functions in the business. Second, processes are built for purpose, not from generic best-practice templates. Finally, the people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions.

Design for the P&L owner

IBP gives leaders a systematic opportunity to unlock P&L performance by coordinating strategies and tactics across traditional business functions. This doesn’t mean that IBP won’t function as a business review process, but it is more effective when focused on decisions in the interest of the whole business. An IBP process designed to help P&L owners make effective decisions as they run the company creates requirements different from those of a process owned by individual functions, such as supply chain or manufacturing.

One fundamental requirement is senior-level participation from all stakeholder functions and business areas, so that decisions can be made in every meeting. The design of the IBP cycle, including preparatory work preceding decision-making meetings, should help leaders make general decisions or resolve minor issues outside of formal milestone meetings. It should also focus the attention of P&L leaders on the most important and pressing issues. These goals can be achieved with disciplined approaches to evaluating the impact of decisions and with financial thresholds that determine what is brought to the attention of the P&L leader.

The aggregated output of the IBP process would be a full, risk-evaluated business plan covering a midterm planning horizon. This plan then becomes the only accepted and executed plan across the organization. The objective isn’t a single hard number. It is an accepted, unified view of which new products will come online and when, and how they will affect the performance of the overall portfolio. The plan will also take into account the variabilities and uncertainties of the business: demand expectations, how the company will respond to supply constraints, and so on. Layered risks and opportunities and aligned actions across stakeholders indicate how to execute the plan.

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Trade-offs arising from risks and opportunities in realizing revenues, margins, or cost objectives are determined by the P&L owner at the level where those trade-offs arise—local for local, global for global. To make this possible, data visible in real time and support for decision making in meetings are essential. This approach works best in companies with strong data governance processes and tools, which increase confidence in the objectivity of the IBP process and support for implementing the resulting decisions. In addition, senior leaders can demonstrate their commitment to the value and the standards of IBP by participating in the process, sponsoring capability-building efforts for the teams that contribute inputs to the IBP, and owning decisions and outcomes.

Fit-for-purpose process design and frequency

To make IBP a value-adding capability, the business will probably need to redesign its planning processes from a clean sheet.

First, clean sheeting IBP means that it should be considered and designed from the decision maker’s perspective. What information does a P&L owner need to make a decision on a given topic? What possible scenarios should that leader consider, and what would be their monetary and nonmonetary impact? The IBP process can standardize this information—for example, by summarizing it in templates so that the responsible parties know, up front, which data, analytics, and impact information to provide.

Second, essential inputs into IBP determine its quality. These inputs include consistency in the way planners use data, methods, and systems to make accurate forecasts, manage constraints, simulate scenarios, and close the loop from planning to the production shopfloor by optimizing schedules, monitoring adherence, and using incentives to manufacture according to plan.

Determining the frequency of the IBP cycle, and its timely integration with tactical execution processes, would also be part of this redesign. Big items—such as capacity investments and divestments, new-product introductions, and line extensions—should be reviewed regularly. Monthly reviews are typical, but a quarterly cadence may also be appropriate in situations with less frequent changes. Weekly iterations then optimize the plan in response to confirmed orders, short-term capacity constraints, or other unpredictable events. The bidirectional link between planning and execution must be strong, and investments in technology may be required to better connect them, so that they use the same data repository and have continuous-feedback loops.

Authorize consequential decision making

Finally, every IBP process step needs autonomous decision making for the problems in its scope, as well as a clear path to escalate, if necessary. The design of the process must therefore include decision-type authority, decision thresholds, and escalation paths. Capability-building interventions should support teams to ensure disciplined and effective decision making—and that means enforcing participation discipline, as well. The failure of a few key stakeholders to prioritize participation can undermine the whole process.

Decision-making autonomy is also relevant for short-term planning and execution. Success in tactical execution depends on how early a problem is identified and how quickly and effectively it is resolved. A good execution framework includes, for example, a classification of possible events, along with resolution guidelines based on root cause methodology. It should also specify the thresholds, in scope and scale of impact, for operational decision making and the escalation path if those thresholds are met.

Transforming supply chains: Do you have the skills to accelerate your capabilities?

In addition to guidelines for decision making, the cross-functional team in charge of executing the plan needs autonomy to decide on a course of action for events outside the original plan, as well as the authority to see those actions implemented. Clear integration points between tactical execution and the IBP process protect the latter’s focus on midterm decision making and help tactical teams execute in response to immediate market needs.

An opportunity, but no ‘silver bullet’

With all the elements described above, IBP has a solid foundation to create value for a business. But IBP is no silver bullet. To achieve a top-performing supply chain combining timely and complete customer service with optimal cost and capital expenditures, companies also need mature planning and fulfillment processes using advanced systems and tools. That would include robust planning discipline and a collaboration culture covering all time horizons with appropriate processes while integrating commercial, planning, manufacturing, logistics, and sourcing organizations at all relevant levels.

As more companies implement advanced planning systems and nerve centers , the typical monthly IBP frequency might no longer be appropriate. Some companies may need to spend more time on short-term execution by increasing the frequency of planning and replanning. Others may be able to retain a quarterly IBP process, along with a robust autonomous-planning or exception engine. Already, advanced planning systems not only direct the valuable time of experts to the most critical demand and supply imbalances but also aggregate and disaggregate large volumes of data on the back end. These targeted reactions are part of a critical learning mechanism for the supply chain.

Over time, with root cause analyses and cross-functional collaboration on systemic fixes, the supply chain’s nerve center can get smarter at executing plans, separating noise from real issues, and proactively managing deviations. All this can eventually shorten IBP cycles, without the risk of overreacting to noise, and give P&L owners real-time transparency into how their decisions might affect performance.

P&L owners thinking about upgrading their S&OP or IBP processes can’t rely on textbook checklists. Instead, they can assume leadership of IBP and help their organizations turn strategies and plans into effective actions. To do so, they must sponsor IBP as a cross-functional driver of business decisions, fed by thoughtfully designed processes and aligned decision rights, as well as a performance management and capability-building system that encourages the right behavior and learning mechanisms across the organization. As integrated planning matures, supported by appropriate technology and maturing supply chain–management practices, it could shorten decision times and accelerate its impact on the business.

Elena Dumitrescu is a senior knowledge expert in McKinsey’s Toronto office, Matt Jochim is a partner in the London office, and Ali Sankur is a senior expert and associate partner in the Chicago office, where Ketan Shah is a partner.

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Integrated Business Planning: A Complete Guide

Do your sales teams push for continuous promotions? Meanwhile, does your supply chain struggle with stock levels as finance grapples with margins? This familiar scenario often arises from operational silos within an organization. It leads to missed opportunities, operational inefficiencies, and uninformed decision-making.

How do you achieve seamless coordination across all departments? The answer lies in Integrated Business Planning. IBP is not merely a strategy; it transforms processes. It aligns your teams, enhances collaboration, and ensures every department works towards the same goals.

Are you ready to streamline your operations and improve decision-making across your organization? Dive into our comprehensive guide to discover how IBP turns your business challenges into opportunities for growth. Keep reading!

What is Integrated Business Planning?

IBP is a strategic approach that transcends traditional planning methods. It integrates diverse business processes to enhance overall corporate performance. IBP aligns departments such as sales, operations, finance, and marketing. This ensures every unit works towards unified goals. Such harmony is crucial for retailers facing rapid market changes and evolving consumer demands.

IBP operates on a rolling horizon, typically spanning 24 to 36 months. This enables retail leaders to make proactive decisions based on long-term forecasts and analyses. This forward-thinking approach aligns strategic and operational plans. It ensures that tactical decisions support the business’s overarching goals.

Consider a national retail chain planning to expand its product line. IBP coordinates new product development with sales forecasts . It aligns with supply chain capabilities and financial budgets. This strategic alignment prepares all departments to support the launch effectively.

Why is Integrated Business Planning Essential?

Before diving into Integrated Business Planning, we acknowledge its core, Sales and Operations Planning. S&OP traditionally focuses on balancing demand and supply within a shorter-term horizon. It establishes the operational groundwork necessary for effective integration. In retail, adapting quickly to market trends is crucial. S&OP ensures your operational capabilities align with immediate market demands. IBP builds on this foundation. It incorporates strategic elements like financial forecasting and long-term market analysis. This broadens the scope from merely operational to strategic.

IBP offers a cohesive approach to decision-making. It ensures that all business facets, from inventory to finance, are in harmony. Here’s why embracing IBP is crucial for your retail operations:

• Enhanced Visibility Across Departments: IBP integrates data and goals across various departments. This provides a clear overview of business operations. Such transparency lets you see how decisions in one area impact others. It leads to more informed decision-making. For instance, a decision to launch a new product line will involve input from the supply chain, sales, marketing, and finance. This ensures that all aspects are aligned and supported.
• Improved Forecast Accuracy: With IBP, you use advanced analytics and collaborative insights to refine forecasting. Insights come from various departments. This accuracy is vital in retail. It predicts market trends, consumer behavior, and potential disruptions. Accurate predictions directly influence stocking and marketing strategies. Better forecasting lets you adjust inventory levels more precisely. This avoids both overstock and understock situations, which erode profits.
• Strategic Resource Allocation: IBP links strategic goals with operational planning, ensuring efficient resource allocation. This strategic alignment drives investments in personnel, technology, and inventory. Investments are based on a deep understanding of business goals, market demands, and financial constraints.
• Faster Response to Market Changes: Market conditions shift rapidly due to factors like consumer trends, economic changes, and technological advancements. IBP allows swift responses to these changes. You adjust plans in real time, ensuring agility and resilience. For example, if a sudden fashion trend emerges, IBP lets you quickly increase production or distribution in targeted areas. This quick action enables you to capitalize on the trend.
• Increased Operational Efficiency: IBP breaks down silos within the organization, fostering collaboration and coordination. This approach boosts efficiency by getting departments to work together. They optimize workflows and reduce redundancies. Whether streamlining the supply chain or synchronizing marketing and sales, IBP ensures smoother, more cost-effective operations.
• Risk Mitigation: IBP incorporates proactive risk management, anticipating disruptions, and formulating strategic responses. This preparedness is crucial in retail, where supply chain issues significantly affect availability and sales. With IBP, you identify risks and weave risk management into your planning. This ensures your business stays strong against unexpected challenges.
• Sustained Competitive Advantage: IBP’s comprehensive nature provides a competitive edge. You stay ahead of the market and even shape future trends. This forward-thinking lets you innovate continuously. It also enables you to meet customer expectations effectively. Thus, you distinguish your business from competitors.

Integrated Business Planning Process

IBP is a strategic process that aligns demand, supply, new product development, and financial strategy into a cohesive plan. Here’s how you implement IBP effectively in your retail business, ensuring each step contributes to your overarching strategic goals:

• Strategic Review: Start by assessing your long-term business goals and market strategies. This foundation ensures that all IBP efforts align with where you want your retail business to be in the next three to five years. You examine trends, consumer behaviors, and potential disruptions that might affect your market.
• Demand Planning: This step involves forecasting customer demand for your products. You analyze historical sales data, market trends, promotional activities, and seasonality. This forecast forms the basis for all other planning activities. It ensures that you match your inventory and resources to anticipated demand.
• Supply Planning: Once you have a clear forecast of customer demand, you plan your inventory and procurement . This step involves scheduling deliveries from suppliers. You manage inventory levels and ensure logistics handle incoming and outgoing products efficiently.
• Product Portfolio Management: Manage your product portfolio by analyzing existing product performance. Plan the introduction of new products to keep your offerings competitive. Ensure your products stay relevant in the market. Base your decisions on lifecycle management, customer preferences, and profitability analysis.
• Financial Integration: Align your financial plans with operational strategies. This step involves budgeting, profitability analysis, and setting financial targets. Ensure these targets match your operational capabilities and constraints. Optimize all financial resources to support business growth and sustainability.
• Collaborative Reconciliation: In this crucial step, you reconcile all plans across different functions. These include demand, supply, product, and financial plans. Collaboration involves regular meetings with all stakeholders. This ensures every department understands and supports the integrated plan. Resolving conflicts between different areas is vital. Ensure the strategy is achievable and aligned across the organization.
• Execution and Monitoring: Implement the integrated plan across your retail operations. This step demands effective communication and the planned deployment of resources. Continuously monitor performance against the plan. Use key performance indicators and real-time data to ensure execution stays on track and meets expected outcomes.
• Continuous Improvement: The final step in the IBP process involves regular reviews of the outcomes. You analyze what succeeded, what failed, and the reasons. Continuous feedback loops adapt the planning process. This adaptation enhances accuracy and efficiency over time. Ongoing evaluation and adjustment maintain agility and responsiveness to market changes. These actions drive continuous improvement in business performance.

💡Fact McKinsey reports that companies with mature IBP processes reduce delivery penalties and missed sales by 40-50 percent.

S&OP primarily balances supply and demand. IBP extends beyond this. It integrates financial planning and product development into its framework. This makes it a broader, more strategic approach. It encompasses long-term goals and focuses on profitability.

Challenges of Integrated Business Planning

• Complex Data Integration: IBP synthesizes large volumes of data from sales, operations, finance, and marketing. Integrating and harmonizing this data presents significant challenges. If you rely on disparate systems that do not communicate seamlessly, the task becomes more complex. Ensuring data accuracy and consistency requires robust IT support. You also need sophisticated software solutions.
• Cross-Functional Collaboration: IBP requires ongoing collaboration across your company’s departments. Siloed operations and misaligned departmental objectives hinder effective IBP execution. Encouraging a culture of teamwork and aligned goals is crucial. Achieving this culture is challenging. It involves changing organizational behaviors and mindsets.
• Change Management: Shifting to integrated planning demands significant changes in your business processes and systems. These changes affect every organizational level, from top executives to operational staff. You must manage these changes effectively. Securing buy-in from all stakeholders often proves challenging. Overcoming resistance to change is crucial. Everyone must understand the benefits and their roles in IBP clearly.
• Skill Gaps: IBP demands advanced analytical capabilities, strategic thinking, and operational expertise. Combining these skills poses a significant challenge. You must find and develop talent with these cross-functional skills. Training and hiring new talent are necessary but require time and resources.
• Consistent Execution and Monitoring: Once implemented, applying IBP principles consistently across all business units is challenging. You must continuously monitor its performance. Ensuring the IBP process is dynamic and adaptable to market changes is crucial. This requires ongoing attention and refinement.
• Technology Adoption: Implementing the right technology to support IBP is crucial. Selecting, customizing, and deploying enterprise planning software to fit your specific needs is daunting. Additionally, technology alone is not a solution. You must align it with your business processes and train your team to use it effectively.
• Balancing Strategic and Operational Focus: Maintaining a balance between strategic objectives and operational realities is key. You ensure that long-term strategic goals do not overshadow immediate operational needs. This balancing act requires sophisticated forecasting. It also demands effective scenario-planning capabilities.

Embracing Integrated Business Planning positions you to manage your resources smartly. It keeps your business agile and aligned with market demands and growth objectives. It promotes sustained business success and differentiates your company in a competitive market.

Take the Next Step

Embrace Integrated Business Planning today with the right means and unlock the full potential of your business.

Elevate your forecasting strategies with integrated business planning that seamlessly integrates with your operations for synchronized decision-making, enhanced collaboration, and optimized resource allocation. Ensure success across every facet of your organization.

Frequently Asked Questions

What are the key differences between s&op and integrated business planning.

S&OP primarily focuses on balancing supply and demand and aligning production and inventory levels with sales forecasts. In contrast, IBP integrates these operational planning activities with strategic and financial planning, providing a more holistic view and a longer-term focus.

Is Integrated Business Planning adaptable to various industries or business models?

Yes, Integrated Business Planning is highly adaptable and can be tailored to meet the specific needs of different industries and business models. By adjusting the focus on key metrics, processes, and strategic priorities, IBP can effectively support unique operational and strategic requirements across sectors.

What metrics do companies use to evaluate the effectiveness of their Integrated Business Planning initiatives?

Companies assess the effectiveness of their Integrated Business Planning initiatives through various metrics: improved forecast accuracy, increased revenue, enhanced customer satisfaction, and reduced inventory costs.

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Integrated planning: The key to agile enterprise performance management

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Table of contents

What is integrated planning, change as a given: the truth about plans, planning across the organization, the ultimate integrated planning solution.

• Need for real-time insights
• Integrated planning
• Agile and ready organizations
• Integrated planning drives better results

Integration is key to streamlined planning, budgeting, and forecasting. In order to adapt to today's quickly changing business conditions, you need an enterprise performance management solution that creates a single source of truth and delivers speed and agility to your planning process.

Did you know that 33 percent of critical information is delivered late?

The delay of critical information can cause a ripple effect that drives poor decision making and poor results. Today’s business simply cannot afford this type of cost in our customer-centric environment, where data is one of our most valuable assets. To stay ahead of the competition, businesses rely on a solution that can deliver acceleration, agility, and collaboration in every part of the organization.

Integrated planning ensures all parts of the organization are connected and planning is streamlined.

A must in the culture of “now.”

In virtually all industries, work has become more interactive and collaborative. More sharing is required, and more data is available than ever before. Success means integrating information across strategic and operational perspectives, as well as different functional and external sources.

Integrated planning mirrors the modern way we do business — it elevates the critical value of collaboration and cuts through data silos, driving more access to information and faster insights. Leaders use highly collaborative approaches to plan, budget, and forecast. Business planning requires accurate and complete data and buy-in across the entire organization, both from the top down and the bottom up. It sounds simple, but organizational silos are some of the biggest obstacles to accomplishing good work because they hinder critical decisions that strategically steer the business. And at the modern enterprise, silos are everywhere.

Integrated planning starts with a sophisticated planning platform that everyone in the organization can use, creating one source of truth. Data from diverse data sources such as ERPs, CRMs, and HRMs is unified, so users can access the information they need when they need it. Integrated planning helps ensure that plans, budgets, and forecasts are created with a holistic approach. Trends are easier to spot and quickly act on with more accurate and reliable plans. According to analysts at the Aberdeen Group , those organizations that champion data accessibility and collaboration between stakeholders promote organizational accountability and decrease time-to-decisions while increasing revenue. 1

The fact of the matter is that without effective communication, coordination, and collaboration between stakeholders, there is no way to improve organizational performance. 1

Bringing together people, data, and technology leaves organizations well-poised for optimal performance. Most importantly, integrated planning enables employees to be agile in responding to changing circumstances and able make the best decisions possible — all at the speed of modern business.

According to an Aberdeen study, 1 leaders who adopt enterprise performance management tools show a keen understanding of the importance of collaboration. They recognize that to make data driven decisions, they need to make all information accessible by integrating data and breaking down silos. Figure 1 shows steps taken by leaders to democratize data and drive more accurate forecasts.

Leaders put a high value on data integration and accessibility. They see the value of providing real-time data to decision makers and taking the guesswork out of forecasting. These strategies create comprehensive, actionable visibility into overall company performance and drive better results.

Gartner Predicts by 2020, at least 25 percent of large organizations will increase planning accuracy by integrating key operational planning processes with financial planning and analysis. 2

Do you have an integrated view of your data?

I do not feel confident in where to find comprehensive data, even for just my department

I have a good handle on my own departmental data (but only mine)

I have access to my data and that of other departments that impact my planning

IBM Planning Analytics helps Deutsche Bahn unite its global enterprise

Deutsche Bahn AG is a German railway company, and one of the largest IBM Planning Analytics customers with over 6,000 users worldwide. Deutsche Bahn uses IBM Planning Analytics to unite their wide-ranging operations across the globe, ensuring that the most accurate data is being used to create critical plans and forecasts that drive their business forward.

The truth about plans is that they always change. The goal of a dynamic, integrated planning approach is not to create a perfect, fixed plan. It’s to use all the resources available to create the most accurate, flexible and transparent plan possible, using a solution that does more than just plan — it analyzes data, reveals trends, and allows for real-time iteration.

Better, quicker access to data means faster and more informed decisions, laying the foundation for an organization to be agile and ready to pivot when changing business conditions demand.

If you’re reading this and thinking, “great, the finance team integrates all our plans, so we are off the hook,” think again. While we’d like to think that finance is the well-informed master of plans, miraculously weaving them together in perfect harmony and balance, that’s not always the case. In fact, it rarely is. Many, many finance teams rely on the manual collection of data into spreadsheets, which are often disconnected. Remember that much of an organization’s critical planning starts outside of finance and never gets communicated back up the chain or across the organization. There are simply too many top-down and bottom-up communication problems. Spreadsheets only complicate smooth communications. When a finance person is collecting and analyzing budget spreadsheets from across the organization, there is high risk for error in the process of combining and editing, causing confusion at the highest levels. Contradictory data can inhibit a clear picture of what is actually going on and identifying business drivers or detractors. Spreadsheets have proven over and over to be a highly imperfect yet highly common business practice.

With real-time access to data, companies take the guesswork out of planning, decreasing time involved in forecasting and increasing forecast accuracy. 3

Bye bye, silos. Hello, cross-functional planning.

A centralized, automated solution for performance data and planning allows coordination between different parts of the business and enables more streamlined, accurate plans. Leadership needs to understand what is truly driving the business — what causes increases and decreases in revenue or demand. At every level, access to a full range of data is critical to understanding how change (both internal and external) impacts the business. Though planning often starts with finance, other areas of the business can benefit from a dynamic planning solution as well. Let’s dive into a few use cases.

Supply chain planning

The term “operations” covers an enormous range of business activities. But one that’s almost universal is supply chain management. Supply chain planners are under constant pressure to reduce costs, increase efficiency and improve margins. Unfortunately, too many of them lack visibility into data and are misaligned with other teams. One centralized tool can help connect operational tactics with financial plans to allocate resources more effectively in response to market opportunities or competitive threats. This helps planners avoid mismatched data across multiple spreadsheets and enables them to pivot in the case of supply chain disruptions.

“ Our managers all have quick, easy access to the latest operational data via detailed reports that help them make better-informed decisions to improve the efficiency of the entire supply chain. ”

- Homarjun Agrahari, Director, Advanced Analytics, FleetPride

Learn more about supply chain planning

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Workforce planning

A company is only as good its people. That’s why it’s so important to hire and retain the right talent. Alignment between HR, finance and operations is crucial to ensure that the right people are in the right roles at the right time in order to meet organizational demands. This is rarely a simple task and too often it involves manual spreadsheet-based processes. Ensuring that departmental staffing targets are in sync with broader organizational objectives requires high levels of planning integration.

“ Our business is based on people. IBM Analytics is helping us manage that critical asset much more efficiently and effectively than ever before. ”

- Nadia Bertoncini, Coordinator of Governance, Projects and HR Analytics for Latin America, Natura Cosméticos

Learn more about workforce planning

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Sales planning

Misalignment between finance, marketing and sales could lead to investment in the wrong initiatives, missed opportunities and inaccurate revenue forecasts that can severely hinder sales growth. And in a fast-moving market, manual processes and siloed systems are detrimental to agility. Decisions that are based on outdated information can lead to misguided sales strategies and thus lost sales and lost revenue. It’s critical to unite data under one roof for one single view to boost sales and effectively manage sales people.

“ The sheer level of detail that IBM Planning Analytics provides is very impressive … We can calculate our sales and gross margins for each SKU in IBM Planning Analytics and generate insightful reports at the click of a button. As a result, senior managers can rapidly access the comprehensive information they need to make effective strategic decisions. ”

- Vince Mertens, Group Accounting and Consolidation Manager, Continental Foods

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Marketing planning

Constantly changing customer preferences and rising customer expectations require marketers to interpret high volumes of data and respond appropriately. But siloed data systems give only a partial picture and hinder smart decision-making. In addition, marketing teams can be fragmented and often disconnected from sales. Siloed planning causes misalignment with overall marketing goals, driving misallocated spend on the wrong elements of the marketing mix. Manual, siloed processes reduce visibility into how marketing activities affect one another, how marketing and sales touches move a lead through the funnel and how marketing helps achieve overall financial and business goals.

“ We first needed a better handle on our sales data. With so many lines of business, channels, and franchisees, collecting and consolidating this information was something that we knew we could do better. ”

- Donald Neumann, Demand Manager, Grupo Boticário

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IT planning

With IT, you need a business case for every dollar spent. But balancing the IT needs of an entire organization with digital transformation objectives and constant technology innovation is no simple task, and often requires additional resources. That’s why it’s so important leverage a planning solution that keeps IT focused on the projects that matter, automates planning tasks, gives a clear view into resources available and helps measure ROI. It’s also critical to coordinate with both finance and human resources to ensure the right resources are provided for IT initiatives and projects.

“ A few years ago, my team probably spent around half their time just keeping everything running — now it’s around 10 percent. With the move to IBM Analytics in the IBM Cloud, we have 40 percent more time to focus on working with the business to add value. Instead of asking ‘how do I make it work?’ we ask ourselves ‘how do I make it better?’ It’s a quantum shift in mindset. ”

- Vimal Dev, Vice President – IT, Global Enterprise Applications Leader, Genpact

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Operations, sales, marketing, human resources and other departments and disciplines all have a need for fast, flexible planning and analysis. And all of them can use the same tools to provide insight and manage performance. When people in one part of the organization see how their decisions affect other parts of the organization, all of the activities will be better coordinated and drive better results. In fact, according to Aberdeen, leading organizations are those who align planning across departments at double the rate of laggards in areas like sales, marketing and finance.

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With IBM Planning Analytics , you can break down silos and generate an integrated view of your departmental or organizational performance. The solution enables you to create more accurate forecasts, identify potential performance gaps before they occur and make resource allocation decisions quickly and intelligently. Using multidimensional modeling and scenario analysis, IBM Planning Analytics lets you drill down into your data to examine the ripple effects of alternative courses of action and understand how your decision will affect related areas of the organization and ultimately impact the bottom line.

Using what-if scenario analysis to make smarter decisions

With IBM Planning Analytics, you can build multidimensional models and perform “what-if” analysis to explore scenarios or test business assumptions. Creating and maintaining sophisticated models with advanced sandboxing capabilities is simple. Easily test business assumptions and model scenarios to immediately see the impact of alternative courses of action on before deciding to implement changes.

IBM Planning Analytics offers all areas of your business — finance, operations, HR, sales, marketing, operations, IT and more — the ability to solve problems today and respond to new challenges with agility tomorrow.

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Integrated Business Planning

Succession planning

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Captial planning

What is Integrated Business Planning (IBP), and Why is It Important?

There’s nothing that can bring a business to grinding halt faster than lack of collaboration between different departments and poor visibility of processes within and between departments.

But creating a business plan that integrates all aspects of your organization can be challenging as each business process is often measured by its own, unique set of metrics, and some are more important than others, depending on which department is “running the metrics.”

For instance, while the demand forecast accuracy is a top priority for your supply chain managers, your procurement department may be more interested in reducing the price of raw materials, and your manufacturing division might aim to maximize its capacity utilization. Organizations with inconsistent planning practices risk running inefficiently, which can result in a substantial loss of time, energy, and money. 

So, how do you align the many strategies, operations and functions from each of your departments to make informed decisions about market policies, investments, and even new product or service introductions? 

One widespread method that is used to connect diverse business strategies is Integrated Business Planning (IBP). Developing and implementing an integrated business plan for your organization gives you a clearer understanding of your goals and how to plan to achieve them.

What is Integrated Business Planning (IBP)?

Companies have multiple operational functions – ranging from finance to supply chain, to product design and development, to marketing and sales, ad infinitum. By using IBP, you can link your strategic plans and be more aware of how resources, capabilities, and results relate to one another. This enables you to reach your maximum potential and enhance collaboration across supply chains. 

With digitization driving success, IBP is becoming a “best practice” tool for business planning. From sales to operations to finance, data from every facet of an organization can be incorporated seamlessly. This method of incorporation allows companies to maximize output and understand how their resources, abilities, and outcomes are all working together. It also helps companies analyze what role each sector plays in the business.

Why Is Integrated Business Planning Important?

How can your business benefit from integrated business planning? Let’s take a look at a few benefits:

• Increasing visibility Organizations can integrate data from financial reports, supply chain projections, and strategic plans into their business plans using IBP. By doing so, businesses gain insights into how each part of the supply chain works both independently and collectively. As a result, it enables businesses to discover and resolve problems in an efficient manner.
• Increasing accountability With more visibility, employees are more plugged in and aware of the impact their actions can have on the business as a whole. This makes them more accountable and provides a clear understanding of exactly what their responsibilities are, which increases employee engagement and boosts compliance with processes and procedures.
• Aligning goals and actions An organization with visibility and accountability can get a clearer picture of what it is striving for and helps to ensure that everyone is taking the necessary steps to achieve it. In addition to enabling individuals to do their jobs more effectively, this will also allow the whole organization to run more efficiently.
• Allowing for better decision making An integrated business process enhances a company’s ability to evaluate data, the relevant context, and the big picture at the same time. By analyzing the results, they can make highly informed decisions based on the information they are presented with.

These benefits are desirable for any organization, but implementing integrated business planning successfully can be a complex process. Following best practices for IBP increases your odds of success and improves your outcomes.

Tips and Best Practices for Successful Integrated Business Planning

IBP is potentially valuable for your business. However, when you try to integrate additional functions and strategic planning into your traditional sales and operations planning (S&OP) cycle, it can initially lead to many challenges. Let’s take a look at a few tips for successful integrated business planning.

• Effective governance To make an IBP work, everyone needs to work together as a team and fulfil the company’s objective. Charting the roles and responsibilities of your employees and implementing policies and incentives to create an environment where everyone can work together can help improve team cohesion.
• Clear goal Start with a clear goal for implementing an IBP and how it will benefit your business (and individual contributors).
• Organized process When your process is already designed to align with your organization, it is easier to achieve the desired outcome.
• Right talent The backbone of an organization is its workforce. Choose your employees wisely; look for the skills, experience, and core competencies that are vital to IBP. You’ll need team members who are well-versed in strategic planning, financial planning, and supply chain planning. You will be able to more successfully adopt IBP across the company if you have talented and experienced people on board.
• Insightful analytics Businesses need to be proactive to remain ahead in their respective markets. Real-time analytics enables you to adapt swiftly to disruptions and market changes and make data-driven decisions based on your business strategy.
• Powerful technology Businesses are moving ahead with digital transformation. IBP, being a cross-functional initiative, needs a strong cloud-based technology platform to perform.

IBP has become an integral element of the day-to-day operations of many businesses, ensuring transparency and efficiency throughout the fast-paced supply chain right from procurement through manufacturing and delivery. As an increasing number of companies make the shift to digitization, the implementation of an integrated business planning (IBP) approach is vital.

By Jaime Marijuán Castro     January 29, 2024

What is integrated business planning and what are the benefits.

If there is one thing any business analyst can forecast is this: sustained uncertainty. And organizations can't do much to change this. What organizations can do though, is to prepare to deal with market variability by addressing the business challenges internal organizations may have: disconnected and lengthy planning processes, an insane amount of time collating data, siloed decision-making, lack of forecasting accuracy, poor sight into operational assumptions and what is driving margin. That's what Integrated Business Planning is aiming for.

What is Integrated Business Planning (IBP)?

Integrated Business Planning aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. A trusted, common view of the numbers provides a robust baseline for agile decision-making and keeps all teams together, collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line is that IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

IBP Process: How Does it Work

The Integrated Business Planning process is a framework to address the C-suite needs and help them implement the business strategy and manage uncertainty to improve decision-making. The secret sauce of IBP is a collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance, that's how the C-suite gets value from it. Consequently, finance plays a central role within IBP.

IBP typically focuses on 24- 60 months horizons, as opposed to short term: that's Integrated Tactical Planning or Sales and Operations Planning and Execution. The process must be fully integrated, so it should remove the departmental silos and it must adapt to the organizational construct of every business (it is not a one size fits all type of process).

Figure 1 outlines the five core elements of the IBP cycle with its responsibilities:

The most efficient way to foster this collaboration is by having a unified solution and data model that caters the needs of the various agents involved on each review. Figure 2 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

IBP Business Benefits

The benefits an organization can expect from an IBP implementation are diverse. In the big picture, IBP can certainly improve financial and business performance. Figure 3 outlines some of the most remarkable KPI improvements.

Want to learn how you can maximize the benefits of your IBP process and get your CEO onboard, read our blog on the 5 Considerations to Help Your CEO Trust the IBP Process .

Related Resources

The Ultimate Guide To Integrated Business Planning

Are you looking for a way to streamline your business planning process? Integrated Business Planning (IBP) is the perfect solution. It’s an approach that combines all aspects of business planning into one comprehensive strategy, allowing you to make decisions quickly and accurately. This guide will help you understand how IBP works and how it can benefit your organization.

With IBP, you can save time by having all of your data in one place, making it easier to identify trends and opportunities as they arise. You’ll also be able to make more informed decisions based on real-time data analysis instead of relying on outdated information or guesswork.

Read this Ultimate Guide To Integrated Business Planning (IBP) now!

What Is Integrated Business Planning?

Integrated business planning (IBP) is a powerful process that could become central to how a company runs its business. It is one generation beyond traditional sales and operations planning (S&OP) and combines financial and operational data from across the organization to create an aligned, cross-functional plan for the future. IBP enables businesses to make decisions based on key assumptions that are documented and updated regularly, helping them to achieve corporate goals.

IBP solutions help align financial and operations plans, giving companies greater planning accuracy and operational performance. This process also incorporates forecasting and demand response , demand-driven supply management, inventory optimization, production scheduling, transportation optimization, and more. With business planning processes in place, companies can make better decisions faster by leveraging real-time data from across their organization.

What Is the Difference Between Sales & Operations Planning and IBP?

Sales And Operations Planning (S&OP) and Integrated Business Planning (IBP) are two different integrated processes used to manage the supply chain. S&OP is a cross-functional process that focuses on aligning demand forecasts and supply in volumes in a tactical range, while IBP has a broader scope that looks at aligning all aspects of the business to ensure better decision-making.

Sales and operations planning processes typically have medium-term planning horizons that rarely extend beyond 18 months, while IBP naturally has a longer time scale. Additionally, IBP starts at the executive level, and each month or planning cycle culminates in a performance review against plans.

Both S&OP and IBP are important for managing the supply chain and ensuring successful operations. However, it’s important to understand their differences to choose which process best meets your needs.

Benefits Of Integrated Business Planning

The main benefit of implementing IBP is increased revenue, followed by forecast accuracy and improved Perfect Order Delivery. Other benefits include creating transparency between strategic goals and financial and operational activities, unlocking P&L performance through coordinating strategies and tactics across traditional business functions, creating more collaborative decision-making, providing higher agility in responding quickly to the business environment and market volatility, and generating insights on developments in the market.

IBP is important because functional and technical silos across organizations can result in flawed decision-making. Transitioning to IBP can help companies enhance their performance by improving their ability to respond quickly to changes in the market.

Challenges Of Integrated Business Planning

Integrated Business Planning (IBP) is a powerful process that can revolutionize how companies run their business. However, it is not without its challenges. IBP requires an organization with the right technology, processes, and people to succeed.

One of the biggest challenges of IBP is getting all departments within an organization on board with the process. It requires buy-in from all levels of the organization, including executives, operations, and finance teams. Without this unified approach and skilled and experienced employees, getting everyone working together towards a common goal can be difficult.

Another challenge of IBP is data integration. In order for IBP to be successful, data must be collected from multiple sources and integrated into one system. This can be difficult due to different systems used by different departments or even different countries within an organization. It also requires a high level of accuracy and consistency in order for the results to be meaningful and actionable.

Finally, IBP requires constant monitoring and adjustment as market conditions change over time. Companies must stay up-to-date on changes in demand, supply chain disruptions, and other factors that could affect their plans. Without regular monitoring and adjustments, companies risk making decisions based on outdated information, which could lead to costly mistakes down the line.

Why Is Integrated Business Planning Important?

Integrated Business Planning (IBP) is an important process for businesses to align their goals with their financial, supply chain, product development, marketing, and other operations. It helps companies to create a unified plan that can be used to make better decisions and reach corporate objectives.

IBP is a powerful tool that allows businesses to consider all the different elements of their operations when making decisions. This means they can make more informed choices about allocating resources, developing products and services, and managing their finances. By taking into account all these factors, IBP enables companies to make better decisions and more informed strategic plans that will lead them toward success in the long run.

Another benefit of an Integrated Business Planning process is that it helps businesses become more agile and responsive to changes in the market. With IBP in place, companies are able to quickly adjust their plans based on new information or changing customer needs. This allows them to stay ahead of the competition and remain competitive in an ever-changing business landscape.

Overall, Integrated Business Planning is essential for businesses looking to stay ahead of the competition and reach their goals. By considering all aspects of operations when making decisions, IBP provides companies with a unified plan that can help them succeed in the long run.

Elements Of Integrated Business Planning

The three main parts of integrated business planning are categorized as “Plan,” which involves creating a strategy, “Execute,” which involves carrying out the plan; and “Monitor and Adjust,” which involves reviewing and making changes as needed.

The Plan element involves the initial step of creating a strategy. This includes identifying key goals, objectives, and expectations around the company’s products and services to understand better how those should be used in an overall strategy. Additionally, it includes developing plans for specific initiatives that will help advance those goals.

The Execute element is about carrying out those plans. This includes everything from setting timelines, allocating resources, and developing procedures to ensure the plan is implemented properly.

Finally, the Monitor and Adjust element involves reviewing progress on the strategy and business performance and making any necessary changes or adjustments. This could include changing timelines for certain initiatives, modifying business processes, or introducing new initiatives to stay ahead of competitors. This element is important to ensure the plan remains up-to-date and relevant in an ever-changing business environment.

The Integrated Business Planning Process

To be successful, integrated business planning needs to occur on a regular basis, usually every month or every quarter. This strategic planning process should be undertaken to align the different parts of the business and create a unified plan that everyone can work towards.

1. Product Management

A cross-functional team meets monthly to review the status of all product-related projects. This includes managing the entire product portfolio, identifying any new risks or opportunities, prioritizing high-value products, and aligning them with business goals. The ultimate aim is to ensure that raw materials and manufacturing floor capacity are available as needed. Whenever necessary, product managers update and publish a master plan that outlines the required resources for delivering the changes.

2. Demand Planning

Demand planning is a team effort that involves members from sales, marketing, and finance. Its goal is to meet customer demand and reduce excess inventory while avoiding supply chain operations issues. Improving profitability, customer satisfaction, and efficiency are all benefits of demand planning. The team works to create a demand plan that accurately estimates future demand, tailored to the right markets and methods. KPIs such as sales forecast accuracy, inventory turns, fill rates, and order fulfillment lead times are used to measure success.

3. Supply Chain Planning

Supply chain professionals aim to find a cost-effective way to meet expected demand efficiently. To achieve this goal, having visibility into complex supply chains is crucial. One way to accomplish this is through a formal supply chain optimization project, which helps identify and fix potential weaknesses, such as low inventory levels or order fulfillment challenges. The ultimate goal of supply chain management is to reduce the cost of goods sold (COGS) .

Supply chain leaders should deeply understand the production process from raw materials to finished goods. By understanding upstream and downstream processes, supply chain professionals can better anticipate customer needs, uncover new opportunities for cost savings, and mitigate risks. Additionally, they should build relationships with key suppliers and develop strategies to ensure a consistent flow of materials.

4. Financial Planning

Financial planning involves setting short-term and long-term goals for a company that are achievable through the best use of resources. This includes understanding financial trends, managing budgets, monitoring cash flow , financial forecasting, and making decisions about investments.

Financial planning gives organizations an understanding of their current economic environment and helps them create plans to achieve their objectives. It also helps to reduce risk and maximize profits. Ultimately, financial planning is essential for success in any organization.

Integrated planning can be challenging for organizations used to a traditional budgeting process. However, companies can improve their overall financial performance and better meet customer needs by taking a more strategic approach. This requires data-driven insights to inform decisions and the ability to quickly shift resources in response to changing market conditions. The finance team’s influence is driven by their ability to analyze and recommend quickly.

5. Customer And Channel Plan Development

Customer and channel planning are integral components of a successful business. These plans involve researching customer needs, segmenting target audiences and creating strategies to reach them. Additionally, customer and channel plans help determine the most effective marketing tactics for each target audience with the goal of increasing sales and brand loyalty.

This includes selecting the best delivery channels (offline or online) that suit certain markets and target audiences and considering customer preferences when designing products or services. Through customer and channel planning, organizations can create a more successful marketing strategy and reach their desired goals.

4. The Integration Team

The integration team, which is usually composed of individuals from the finance organization, combines the initial product, demand, and supply plans into a single strategic plan that covers a 24- or 36-month period. As necessary updates are made, significant changes are identified by the teams. Decisions that require higher-level approval are prepared for executive review.

The integration team also leads scenario planning . This process involves considering different potential business plan outcomes and helping identify risks. The teams then help develop strategies to mitigate risk, thereby ensuring the success of the overall planning process.

5. The Executive Team 

The executive leadership team addresses disagreements and shares the revised plan with the entire organization. This management team is responsible for making final decisions on the plan and ensuring it reflects the organization’s objectives. Additionally, they review progress made against the plan and make adjustments as needed.

The executive team also considers external factors such as market conditions, customer expectations, competitive environment, and other factors to ensure the organization is on track to reach its desired goals.

6. Supporting Software

Many organizations use software to support their IBP process. This software may include budgeting and forecasting tools , customer relationship management (CRM) systems, financial analysis programs , and inventory tracking applications. Such software assists in streamlining the process of gathering data from multiple sources and increasing overall efficiency within the organization. It can also assist with scenario planning.

7. KPI Assessment

At regular intervals, organizations assess the performance of their plans using key performance indicators (KPIs). These KPIs provide a snapshot of progress and help determine whether or not the plan is on track to achieve its desired outcomes. By evaluating KPIs on an ongoing basis, organizations can identify areas that need improvement and adjust their plans accordingly.

Software To Support IBP

Software solutions are available to support Integrated Business Planning processes. These enterprise performance management solutions provide a comprehensive view of the entire business, allowing you to analyze financial data in real-time data analysis from multiple sources. This helps organizations make informed decisions based on accurate information and forecasts. Additionally, software solutions can automate many of the manual processes associated with IBP, such as data collection and analysis, which helps streamline operations and reduce costs.

Organizations looking to transition to Integrated Business Planning should consider investing in cloud based technology and software solutions supporting their IBP initiatives. Many software solutions can support financial forecasting processes with new tools like predictive analytics ,and feed right into your financial plan.

Frequently Asked Questions

What does ibp stand for in business.

IBP stands for Integrated Business Planning. It is an integrated approach to managing a company’s resources, operations, and goals across multiple departments and functions.

What Does IBP Mean In Sales?

IBP in sales refers to Integrated Business Planning, which is an integrated approach to managing a company’s resources, operations, and goals across multiple departments and functions. This includes aligning the objectives of each department with the overall business strategy. IBP helps organizations achieve their sales goals by analyzing data, optimizing processes, and improving customer experience.

What is an example of an integrated business model?

An example of an integrated business model is a supply chain management system. This type of system links different parts of the organization, from the production and inventory to customer service and sales. It leverages data to streamline operations, improve efficiency, and reduce costs. By integrating processes across departments, businesses can gain greater visibility into their operations and make better decisions faster than ever before.

What are the benefits of Integrated Business Planning?

The main benefits of IBP include improved visibility into operations, better decision making, more efficient processes, and reduced costs. By having an integrated view of their business operations, organizations can identify areas for improvement and make informed decisions based on data-driven insights. This helps them improve customer experience, optimize resources, and maximize profitability. Additionally, IBP helps organizations maintain compliance with changing regulations and policies while minimizing risks.

Quick Recap

Integrated business planning (IBP) is a comprehensive approach to managing an organization’s operations. It is designed to help companies improve their strategic decision-making by providing a unified view of all operational data and processes. IBP can revolutionize how companies run their businesses, but it comes with its own challenges.

In order for IBP to be successful, data must be accurately collected, integrated, and monitored on a regular basis. Additionally, IBP requires the cooperation of multiple departments and stakeholders throughout an organization to succeed. Despite these challenges, companies that successfully implement IBP can gain a competitive advantage by optimizing their operations and increasing their efficiency.

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FP&A Leader | Digital Finance Advocate | Small Business Founder

Mike Dion brings a wealth of knowledge in business finance to his writing, drawing on his background as a Senior FP&A Leader. Over more than a decade of finance experience, Mike has added tens of millions of dollars to businesses from the Fortune 100 to startups and from Entertainment to Telecom. Mike received his Bachelor of Science in Finance and a Master of International Business from the University of Florida, laying a solid foundation for his career in finance and accounting. His work, featured in leading finance publications such as Seeking Alpha, serves as a resource for industry professionals seeking to navigate the complexities of corporate finance, small business finance, and finance software with ease.

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Integrated Business Planning: A Detailed Exploration of Strategy and Execution

✅ All InspiredEconomist articles and guides have been fact-checked and reviewed for accuracy. Please refer to our editorial policy for additional information.

Integrated Business Planning Definition

Integrated business planning is a management process that synergizes sales, marketing, finance, operations, and logistics to drive an aligned operational plan and business strategy, balancing demand and supply while also considering financial objectives and the allocation of critical resources. It embraces short, medium, and long-term business planning and assists in decision-making, reducing risks, and increasing profitability.

Importance of Integrated Business Planning

The crucial role of integrated business planning.

Today’s businesses exist in a world that is, to say the least, complex and full of rapid changes. In these circumstances, integrated business planning plays a pivotal role in navigating through the turbulent times by bridging the gap between the company’s strategic ambitions and their operational constraints.

As a unifying framework, the process provides a link between the top-level strategic planning and day-to-day operational activities. It eliminates silos between departments providing a holistic, transparent and real-time view of the business. By mapping all operations to strategic goals, it ensures that all decisions and actions are pulling in the same direction toward the fulfillment of those goals.

Aligning Strategic, Operational, and Financial Planning

With integrated business planning, synchronization becomes achievable at an elevated level. It enables businesses to align their strategic objectives with operations and finances, thus ensuring a smooth flow of processes. When strategy, operations, and finance harmoniously work together, it eliminates any disconnects, resulting in effective and efficient decision-making.

From a strategic perspective, the approach aids in prioritizing goals and developing responsive and realistic plans to achieve them. On the operations front, it identifies bottlenecks, assesses risk, and ensures that all operations are in line with strategic objectives. Lastly, the integration with financial planning leads to accurate financial forecasts, effective cash management, and robust financial control.

To put it another way, this integrated view of business planning is akin to a well-conducted orchestra. Each section of the orchestra, be it strategic, operational, or financial, knows its role, its tasks, and how it contributes to the overall performance of the melody; which in this case, becomes the successful completion of strategic goals.

The Outcome: A Resilient Business Model

In the face of evolving markets and shifting customer demands, integrated business planning empowers businesses to quickly identify, adapt, and respond to changes efficiently. The approach supports timely and informed decision-making, improves communication and collaboration, and nurtures a proactive business culture focused on future growth.

The process also provides a robust system that facilitates scenario planning and risk mitigation. It promotes informed and rational decision-making, thus creating a resilient business model capable of withstanding market uncertainties and disruptions.

In summary, integrated business planning offers a comprehensive, more intelligent approach to business management—one that aligns strategy, operations, and finance towards a common goal while driving performance and sustainable growth.

Core Components of Integrated Business Planning

At the epicenter of integrated business planning is demand. Understanding current customer needs and predicting future ones is key to running a profitable operation. This involves market research, analysis of historical data and forecasting. By getting an accurate approximation of demand, businesses can take proactive measures to efficiently meet those needs.

Supply Management

It’s not just enough to understand the demand. A business must have a competent supply management system that can meet the anticipated demand. This is achieved by coordinating all elements of procurement, production, and logistics to effectively fulfill customer needs. A successful supply chain management strategy incorporates everything from sourcing raw materials, managing inventory, production planning, to eventual delivery.

Product Management

Product management is a very significant part of integrated business planning. It’s the process by which a business decides what products to offer and how to position them in the market. Product managers work cross-functionally with other teams like marketing, sales, and engineering, to ensure that the product aligns with company goals and customer requirements. They also analyze market trends, competitive landscape, and customer feedback to inform product features and enhancements.

Financial Planning

Lastly, financial planning provides the fiscal framework for integrated business planning. It involves budgeting, revenue projection, expense tracking, and monitoring financial performance against these predictions. A detailed financial plan enables a business to execute its strategies within available resources, capitalize on opportunities and respond timely to market changes. Financial planning is indispensable for a sustainable long-term business growth.

Each of these components works seamlessly with the others in integrated business planning. While demand, product, and supply chain management ensures that the business retains a competitive edge in the market, financial planning provides the necessary oversight to ensure the business remains profitable while doing so. This alignment across all the key functional areas is what makes integrated business planning so critical to the success of a business.

The Role of Integrated Business Planning in Corporate Decision Making

In a dynamic business environment, integrated business planning helps corporations quickly adapt and respond. It operates as a navigational tool, guiding decision-making processes at various levels of an organization, from operational to strategic.

Operational Decision Making

At the operational level, integrated business planning aids in managing immediate and short-term decisions. It provides a detailed view of the current business operations- from sales forecasts, customer demands, supply chain management to available resources.

For instance, consider a rise in demand for a product. An operational decision might involve assessing the production capacity and inventory levels, which integrated business planning can readily provide by unifying data from multiple business functions. This allows the organization to react swiftly and efficiently to unexpected changes.

Tactical Decision Making

Tactical decisions contributing towards achieving short-term goals also benefit from integrated business planning. It aids in providing a firm ground that aligns operational decisions with corporate strategy.

Key functions like marketing campaigns, collaborations, or prodigious investments often hinge on the insights captured through integrated business planning. It not only allows companies to seize up-to-the-minute market opportunities but also helps in mitigating potential risks.

Strategic Decision Making

At a strategic level – where decisions have long-term implications and contribute directly to the achievement of an organization’s mission – integrated business planning is instrumental. It provides organizations with forward-thinking views, predicting future scenarios, and laying out a roadmap to achieve the desired goals.

For instance, making decisions about entering new markets, launching new product lines, or obsoleting older ones are all powered by the insights from integrated business planning.

Thus, integrated business planning is central to decision-making processes, underpinning them with a clear, synchronized view of business functions. It enables corporations to respond effectively and swiftly to business environment changes, maintaining their competitive edge.

Integrated Business Planning and Risk Management

Integrated business planning (IBP) plays a crucial role in managing business risks. It enables organizations to align strategic, operational, and financial plans to achieve overall corporate objectives.

Assessing and Managing Risks with IBP

With IBP, an organization can continually assess potential risks and adjust its plans based on a comprehensive and timely understanding of possible implications. This process reduces the likelihood of sudden impact from unanticipated events and enhances the resilience of the business.

For instance, IBP can help in foreseeing economic downturns and prepare for them by diversifying income streams or increasing savings. Similarly, if a company anticipates a shortage of raw materials, it may use IBP to develop contingency plans such as seeking alternate supply sources, redesigning products, or adjusting manufacturing schedules.

Identifying Opportunities

On the flip side, integrated business planning also plays an essential role in identifying opportunities. This comprehensive approach can uncover potential synergies, efficiencies, and strategic initiatives that would otherwise go unnoticed. Leveraging integrated data, businesses can identify market trends early, allowing them to deploy new solutions or services ahead of their competitors.

Consider an organization that notices an increase in the use of sustainable materials via integrated data analysis. With IBP, the company can assess the possible financial and operational implications of shifting to eco-friendly materials, then devise strategies to capitalize on this trend.

Holistic View of Business Landscape

Furthermore, the holistic view provided by integrated business planning assists businesses with identifying both threats and opportunities. By providing viably comprehensive, cross-functional views of the business landscape, IBP allows companies to anticipate changes, react effectively, and seize the opportunities these changes bring.

In conclusion, integrated business planning’s role in risk management is immense. It promotes resilience by enabling organizations to anticipate potential risks and build strategies to navigate them. It also encourages innovation by highlighting emerging opportunities, leading to improved competitiveness and sustainability.

Tailoring Integrated Business Planning to Different Business Models

Applying integrated business planning (ibp) to service-based businesses.

The successful application of Integrated Business Planning (IBP) in service-based businesses can prove to be unique due to the nature of service delivery and customer expectations. Unlike in a product-oriented business where the primary goal is to manage the supply chain, service-based businesses encounter market variability and require a flexible planning process.

IBP helps these businesses by providing a platform to align their operational plans with strategic goals. For instance, the nature of the service can dictate the planning horizon and the frequency of revising plans. A healthcare provider may need a more immediate planning horizon compared to a consultancy firm due to the unpredictable nature of medical emergencies. Hence, IBP can be tailored to accommodate these different planning horizons.

Adapting IBP for Product-Oriented Businesses

Product-oriented businesses, on the other hand, often have tangible inventory and a visibly structured supply chain. Here, IBP comes in handy to integrate various components like sales, operations, and finance to ensure the business stays on track to achieve its strategic goals.

By synchronizing all critical business units, the company can ensure demand forecast accuracy, reduce stockouts and overstocks, and optimize cash flow. For instance, in a manufacturing business, the use of IBP can be pivotal in decisions ranging from raw material procurement to production planning to order fulfillment.

Implementing IBP in Hybrid Business Models

A hybrid business model, a mix of service and product-oriented business, calls for even more flexible application of IBP. Hybrid businesses need to balance the complexities of both models, and this can be achieved by integrating decisions about service delivery and product supply.

The outcome is a more harmonized strategic plan that accommodatively factors in both the intangible and tangible aspects of the business. For instance, a software company that offers both software products (product-oriented) and software services (service-oriented) may use IBP to synchronize the timeline for product development and service delivery.

In conclusion, while the fundamental elements of IBP remain the same, its implementation can and should be tailored to the unique needs of specific business models. The flexibility of IBP lies in its ability to adapt and accommodate the diverse patterns of businesses, ensuring alignment of strategic goals with operational plans. This is what makes IBP not just an effective planning tool, but an innovative business methodology.

The Relationship between Integrated Business Planning and Corporate Social Responsibility

In the application of integrated business planning, it’s important to consider its impact on a corporation’s social responsibility (CSR) practices. Integrated business planning has direct implications, as it can form a strategic platform for organizations to proactively manage their social and environmental responsibilities, in addition to driving financial performance.

When considering a business’s social and environmental responsibilities, it’s clear that these elements can significantly influence planning processes. This is because businesses, especially those operating in sensitive sectors such as mining or manufacturing, must account for the potential social and environmental impacts of their operations.

Effect on Planning Process

Understanding this, the planning process under an integrated business planning model needs to not only focus on traditional economic factors, but integrate CSR into the heart of their business strategies in a structured and systematic way. This might involve predicting potential social and environmental risks and planning appropriate mitigation strategies, or identifying socio-environmental initiatives and integrating them into the business’s operating model.

Asset Utilization and ESG Compliance

Moreover, integrated business planning can allow businesses to better utilize their assets in the service of both financial objectives and CSR. For instance, a manufacturing facility might plan to use more energy-efficient technologies, demonstrating commitment to environmental sustainability, while also potentially reducing operational cost.

Furthermore, a solid integrated business planning can enhance a company’s efforts in Environmental, Social, and Governance (ESG) compliance. It allows the business to consistently align its operational activities and financial planning with its CSR policies and governance standards. This, in return, may improve the public image, customer trust, and overall market reputation of the company.

Aligning Business Goals with Societal Values

Ultimately, a key aim of integrating CSR into the business planning process is to ensure that an organization’s business goals are well-aligned with societal values and environmental sustainability. Doing so not only helps businesses to fulfill their moral and civic duties, but is also increasingly recognized as a powerful driver of long-term financial performance.

Software Tools for Integrated Business Planning

In order to successfully implement integrated business planning (IBP), businesses need to make use of a variety of software tools. These tools not only make the complex process more manageable, but they also increase accuracy, improve collaborative efforts and provide meaningful insights for better decision-making.

Popular Software Tools

One popular tool is SAP Integrated Business Planning (SAP IBP) . This tool is lauded for its real-time supply chain management features. SAP IBP offers features for demand planning, supply and inventory planning, sales and operations planning, and response and supply control.

Another widely adopted software is Anaplan . Anaplan’s platform helps businesses model and visualize their data, and is known for its capability to handle extremely large data sets, making it ideal for large organizations.

Oracle Demand Management Cloud is also worth mentioning. It provides predictive analytics to understand and manage demand, and it integrates well with other Oracle applications, making it an attractive choice for businesses already using the Oracle ecosystem.

Kinaxis RapidResponse stands out for its scenario planning features, allowing businesses to simulate and compare various situations and their outcomes.

Role of Technology in IBP

Technology plays a pivotal role in IBP, simplifying and enhancing the process. With the vast amount of data businesses deal with today, manually managing such processes would be time-consuming and prone to human errors. Software tools automate most of these tasks, ensuring accuracy and efficiency.

Moreover, these tools often provide data visualization features, converting complex data into easy-to-understand charts and graphs. This not only makes data more accessible to all stakeholders, but also aids in quicker decision-making.

One significant advantage of using these tools is the ability to collaborate in real-time. Multiple users can work together on the same data sets, breaking down silos within the organization. With everyone on the same page, the alignment between different business functions improves, boosts the overall business performance.

Lastly, with features like predictive analytics and scenario planning, businesses can better anticipate future scenarios and prepare accordingly, reducing the risk associated with unforeseen changes in the market or supply chain.

Thus, with the help of software tools, integrated business planning becomes a more streamlined, accurate, and collaborative process.

Implementing Integrated Business Planning

Essential considerations for successful implementation.

To ensure a successful transition to using integrated business planning, several key aspects must be considered.

Employee Training

A central aspect of this change-over is the training of employees. Your employees need to understand the principles of integrated business planning and how they can apply these principles in their day-to-day activities. This training could be delivered through workshops, seminars, or e-courses, depending on what’s most effective for your employees.

Ongoing mentorship and support are also beneficial, helping employees adjust to the new system over time. By providing continuous learning opportunities, you keep your employees engaged and motivated, thus enhancing the adoption of integrated business planning.

Technological Requirements

The transition to integrated business planning is not only about changing mindset, but also about updating your technology stack, as this approach often relies on advanced software solutions. The exact technology needed may vary depending on the scale of your business and the nature of your operations, but a comprehensive business planning software suite is usually a baseline requirement.

Additionally, you would need to evaluate your current IT infrastructure to check if it can support the new systems. It might be necessary to upgrade certain components to ensure seamless operation. Remember, your new software should be user-friendly to promote ease of use among your employees.

Embracing Cultural Change

Implementing integrated business planning can bring about a significant shift in your company culture. As an approach that emphasizes collaboration and transparency, it requires a shift away from organizational silos. Employees at all levels need to get used to sharing information and making collective decisions.

Promoting this cultural shift can be challenging. Clear, effective communication will be crucial. Explain the advantages of the new system, engage employees in the planning process, and make sure everyone understands their responsibilities. Celebrating small victories can also help to promote positive feelings towards the change.

By paying attention to these critical aspects – employee training, technology, and culture change – you can lay the foundation for a smooth transition to integrated business planning.

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What is Integrated Planning? (And How to be Successful at it!)

Amber Larkins

January 19, 2022

In this article

What is integrated planning.

Integrated planning is a cross-functional process that ensures all stakeholders are involved at the right time to align priorities across an organization.

Integrated planning gives a complete view of resources and commitments. It makes sure that financial and capital resources are aligned in order to support strategic decision-making. Without integrated planning, planning activities can becomes fragmented, resulting in confusion about priorities and use of resources.  

Integrated planning helps to set strategic priorities and to better coordinate the use of resources. It also can assist with showing transparency and accountability in activities throughout a public sector organization. 

What is the difference between strategic planning and integrated planning?

Integrating involves merging distinct elements to create a cohesive entity. While strategic planning anticipates and adjusts for the future, and operational planning handles short-term resource allocation, integrated planning delves into how an organization can coordinate across various functions, levels, locations, and other divisions—both natural and artificial. This planning approach extends beyond the organization's internal efforts, aiming to examine external economic, social, political, and environmental impacts.

By combining internal and external integration, integrated planning enables a comprehensive evaluation of all available options, facilitating the formulation of well-suited courses of action. Moreover, it encompasses various social dimensions and hinges on active participation from all stakeholders and entities affected by the process.

Features of Integrated Planning Process

• Transparency – Your planning process should be known, understood, and accessible to those in the organization. Communication amongst stakeholders is key to effective integrated planning.
• Comprehensive – Participation from all relevant stakeholders is necessary to best integrate organizational goals.
• Structured – integrated planning should be completed using a framework that includes timelines and deadlines throughout the planning cycle.
• Results – Integrated planning should include real decision-making results, with resources attached to those decisions. It should be tied to a common purpose or mission that propels the organization’s vision and priorities forward.
• Consultative – Stakeholders should be involved and there should be opportunities for leadership to offer advice and guidance for emerging initiatives.
• Action-oriented – The budgeting and planning process should be robust and principled so that it results in decisions on the allocation and re-allocation of resources.
• Streamlined – Efficiencies should be built into the process to reduce duplication of effort. Organizational effort should be focused on selected strategic initiatives, keeping bureaucracy to a minimum.
• Flexible – The process should provide a way to respond to changing conditions and emerging opportunities.
• Accountability – The process should link decisions to responsibilities and results. There should be a way to explain those decisions to a variety of communities and stakeholders. Budgeting should be delegated to operational decision-making. Information should be provided on what resources are needed, organizational data, budget projections and other documentation.

Integrated planning creates the foundation for evaluating and understanding the needs of an organization, both now and in the future. It helps to identify the best strategies and activities for mitigating risks and choosing the best course for action.

Though some organizations in the public sector have taken innovative approaches to planning, there is a need for sound integrated planning across every level of the government.

Why should I use integrated planning?

• It aligns every part of the organization to higher echelon priorities, and to the organization’s mission, strategic plan, and budgetary resources.
• It supports both current and future needs of the organization
• It helps to justify how resources are used
• It helps reduce the politics of budgetary planning by creating common organizational goals
• It helps managers and leadership to meet their responsibilities and to be accountable to one another
• It promotes initiatives that support, attract, and retain an engaged and competent workforce
• It leads to a supportive workplace and culture of learning
• It helps performance to improve through the development of performance measures that require regular reporting

What are the key principles of good integrated planning? 

• Planning that occurs at all levels – Integrated planning should take place at all levels of an organization.
• Data-driven planning framework– Information needs to be up-to-date to inform planning processes and decisions based on current and future needs.
• Risk and challenge identification – Integrated planning helps to find challenges and key risks to deliver on priorities and find methods for mitigation of potential issues.
• Transparent, justifiable decision-making – Integrated planning should be values-based, transparent, and communicated regularly to employees and stakeholders.
• Regular reporting – The organization should establish regular intervals for reporting that shows planning efforts and results.
• Monitored, measured, and evaluated – Performance and progress towards objectives should be monitored.

What are the five steps to determine current and future needs in integrated planning?

• Determine your organization’s goals
• Analyze your current environment to identify whether you have the resources necessary to meet current and future needs
• Assess gaps in your resources
• Initiate strategies to close any gaps and to get what resources are required
• Review, monitor, and measure progress and success towards efforts

How to be Successful at Integrated Planning

Linear function-driven planning (the traditional approach to planning), no longer works. At many organizations planning is managed by multiple functions, but each of these functions operate separately and are only responsible for one part of the plan. Different parts of an organization may have different plans, with different measures of success, and different systems and sources of data rather than operating from a single source of truth. This creates a disjointed planning process where hours of work must be spent reconciling numbers.  

Traditional planning makes it challenging to ensure everyone is aligned and can execute on projects because information ends up siloed, and opportunities and potential risks are identified too late.

To implement integrated planning, an organization needs clearly defined roles and responsibilities from the get-go, as well as a coordinated calendar that aligns various functions so that they can work as efficiently as possible. Using integrated planning, your organization can ensure alignment on key organizational objectives.

What are the benefits of Integrated Planning?

Below are the benefits of an integrated planning approach over traditional planning: 

• Iterative vs. Linear – Cross-functional partners work together to develop and refine the plan continuously.
• Collaborative vs. Siloed – Groups across functions unite to share data and make decisions.
• Aligned vs. Disjointed – Definitions of metrics and goals are common knowledge to the organization and data is from a singular source of truth, which aligned across all planning groups.
• Strategic vs. Reactionary – The line of sight to strategy is clear and all decisions and plans are made based on looking at the bigger picture to support the organization’s overall mission.

Integrated planning ensures that all functions within your organization are speaking the same language and that everyone can work together towards a common strategy.

What are the five factors for integrated planning success?  

Integrated planning often involves big changes within your organization’s people, processes, and technology. You can have success if you keep the following tips in mind:

• Share your organization’s vision.  Make sure that your long-term strategic plan is well-documented with clear objectives, and that it is communicated across your organization. Your organization’s strategy should clearly define how you plan to reach your objectives and what milestones are along the way.
• Involve the right stakeholders. Good integrated planning decisions are made when all key stakeholders across the organization are involved to provide information and take part throughout the planning process.
• Ensure the right timing. In order to act quickly and efficiently requires that some planning decisions be made quickly. Though directions may change, based on organizational needs or input from leadership, the overarching mission of the organization and activities that support that mission should be prioritized and worked towards.
• Use a common language for performance indicators. Ensure that those across the organization understand key performance indicators and that measures of success are agreed upon and in alignment to improve trust in the information and facilitate communication. A single source of truth is essential in today’s rapid-paced planning environment.
• Use tools to support your planning. A single system to host your data with some level of analytics and reporting tools, as well as tools to support you in managing your portfolio and developing your 1-n list is essential to integrated planning success. Your organization can benefit from reliable integrated planning tools that ensure you are always at the ready with information to present to leadership.  

What tools can help with integrated planning? 

Finding new tools to support your integrated planning efforts, rather than relying on outdated tools and linear methods can help your organization to fulfill its requirements and be successful in its mission. Decision Lens has been modernizing public sector planning for 15+ years, evolving our solution to meet the needs of today while delivering the cutting-edge capabilities of tomorrow.

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• Integrated Business Planning

What is Integrated Business Planning (IBP)? And what are the similarities, but also differences when compared to S&OP? In this article, Inchainge discusses everything you need to know about IBP.

What is integrated business planning (IBP)?

Integrated Business Planning (IBP) is the business planning process that extends the principles of Sales and Operations Planning (S&OP) throughout the value chain . It is to create a bridge between strategy and execution. IBP is a next step for companies that already have an S&OP process in place. It is a next step because it integrates the Financial Planning Cycle. The financial function will become part of this cross-functional process. In most companies the business owner of this process will change as well.

Similarities between IBP and S&OP

Integrated Business Planning and Sales and Operations Planning have several similarities between them. These are as follows:

• Monthly process
• Cross-functional approach
• Driven by business strategy
• Tactical planning at an aggregated level

Differences between IBP and S&OP

However, Integrated Business Planning includes content on top of Sales and Operations Planning:

• Financial function involved
• Integration financial planning cycle, like financial budget and forecast
• From volume planning to volume and value planning
• It drives the overall business performance

How does the IBP process work?

Companies have an annual budget cycle, based on their strategic plans and targets. The annual budget projects planned revenues and costs for the year.

In traditional S&OP companies go through a monthly process during which they project for the next 6 to 24 months where demand will go, and what resources need to be available to meet that demand. When gaps are discovered between expected demand and available resources looking this far ahead into the future, this often provides ample time to balance supply and demand, so that by the time real customer orders are submitted, demand can be met.

Suppose that during this monthly S&OP cycle, one would also look 6 to 24 months into the future where expected revenues and costs will go. And how these financial figures would look compared to the annually budgeted revenues and cost. Most likely gaps will occur here as well between the annually budgeted numbers and the monthly updated numbers. Actions could then be taken to address these gaps. Integrating a financial view. When this happens, we actually practice IBP. In IBP the relationship with the financial performance management cycle is very important. Budget and financial forecasting must be aligned and integrated with the steps from the original S&OP cycle.

The challenges of IBP

IBP is a next step in maturity after companies have implemented a proper S&OP process. Integrating finance sounds simple but is not easy at all. People from the physical supply chain side of the business, often speak a different language than people who operate on the financial side. Supply chain people often speak about units, products, and product families, whereas financial people often speak about money, currencies, etc. That also causes both functional areas to be assessed differently with the KPIs that they use. This calls for other participants in the IBP process, compared to participants in the S&OP process.

The 8 common pitfalls when implementing IBP

Be aware of the following risks related to integrated business planning:

• Lack of commitment in some of the needed departments
• If the S&OP process was not yet implemented or stable, IBP is too big of a step
• Targets and forecasts are mixed
• Information not available
• Discussion about numbers instead of the underlying assumptions
• Discussing only short horizon instead of midterm
• Too granular plans and discussions
• Thorough understanding of trade-offs is lacking

Want to know more? Experience IBP!

Because IBP is simple but not easy, a real-life experience creates enormous value for learning about this topic. The participants will feel and recognize the important issues in this process. In our business simulation game, The Cool Connection ,  we have incorporated the most important functions and decisions.

In this business game the team is forced to make a yearly financial budget and quarterly forecasts. The objective is to close the gaps between prediction (the budget and forecasts) on one hand and attained performance on the other. The best performing teams are both profitable and predictable at the same time. In business game The Cool Connection the team is almost experiencing a real-life IBP process.

Besides our business games, you can learn more in our articles about topics such as Total Cost of Ownership (TCO) , strategic alignment and external alignment and collaboration .

Now you know

Now you know that IBP is a next step for companies that already have an S&OP process in place, by integrating the financial planning cycle in this cross-functional process. IBP prompts companies to include planned revenues and costs in their annual budget cycle. Budget and financial forecasting must be aligned and integrated with the steps from the original S&OP cycle. Integrating finance sounds simple but is not easy at all. Supply chain people and finance people tend to speak a different language. Make sure to be aware of the 8 common pitfalls when implementing IBP.

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When buying new equipment, the price tag only tells you part of the story. Energy costs, maintenance, and repair fees are often several times higher than the initial price! But often these are left unconsidered and hold nasty surprises further down the line. Calculating the Total Cost of Ownership is an important step when planning new investments.

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Understanding what strategic alignment really is and why it is important can make the difference between being a successful company and failing. Due to its complexity, the supply chain often faces challenges in aligning its strategy properly and working as one. In this article, Inchainge discusses everything you need to know about strategic alignment.

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5 Steps To A Successful Integrated Business Planning (IBP)

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Integrated Business Planning (IBP) is a method for identifying the gap between company objectives and expected outcomes. IBP is a cyclic monthly procedure that enables collaboration planning and departmental alignment through cross-functional inputs. 

Which Businesses Can Use Integrated Business Planning? 

Integrated business planning can assist any company, whether you’re a big company with many assets or a small business.   

IBP isn’t prescriptive. It can be customized to your company’s needs. Regardless of size or complexity, an integrated business planning approach can align departments. 

1. Identify What Is Preventing The Company’s Success

The complexity of a company’s functions varies greatly. 

2. Create A Product Prioritization System 

When IBP is enforced, only the initiatives that are assured to be profitable are funded. Similarly, products are ranked. A company may also have to discontinue a product line with minor growth prospects, even if it’s currently profitable. 

When IBP is implemented, cost-benefit analyses (CBA) become critical. Project managers must first conduct CBAs to ensure that the estimated costs and benefits line with the company’s aims. 

3. Ensure IBP Process Is On Track 

A strategically aligned IBP process can transform a firm. Rather than just balancing supply and demand predictions, IBP can assist professionals in making decisions that maximize overall corporate profit.  

Once a corporation has determined its strategic competencies, it needs to implement or improve them. It will include an update on the plans’ status, risks, mitigations, and progress. The update provides sensitivity analysis around the techniques to achieve the strategic capability’s goals. 

4. Set Common KPIs 

5. adopt ibp-supporting technologies, conclusion .

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By  Niels Van Hove , Supply Chain consultant, Mental Toughness coach and S&OP/IBP expert at  Truebridgese

As S&OP found its origin in the supply chain, IBP is often biased with supply chain terminology and reasoning. It can be argued that current IBP development is still driven by a supply chain bias. With this lack of diverse thinking, IBP innovation runs the risk of being not truly ‘integrated’.

Contrary to most current defined maturity phases of IBP, one can find on the internet, we also can define IBP maturity phases from a more strategic angle.

Many experts agree that IBP has a monthly check and balance with the budget and the strategic intentions of a business. Therefore, a well-executed IBP cycle will provide monthly visibility and measures progress against business objectives and strategy in the long-term horizon. Furthermore, we can say that a business strategy and the required strategic resources and capabilities have the goal to get a company closer to its vision.

According to Collins and Porras, a company vision exists from its core values, core purpose, a BHAG (big, hairy, audacious goal) and a vivid description.

• The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfill a strategy, you can’t fulfill a purpose.
• Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations.

Well defined, integrated and truly lived, purpose and values will drive companywide behavior. Imbedded company behaviors will drive a sustainable company culture, which will last over time.

A well-defined achievable BHAG with a vivid description provides employees with an envisioned future they can identify with and which creates an emotional attachment, which makes them go the extra mile. As CEO Bob McDonald says on the emotional component and innovation at P&G; ‘People will innovate for financial gain or for competitive advantage, but this can be self-limiting, there is a need for an emotional component as well – a source of inspiration that motivates people‘.

If a company wants to track its budget and strategy and we use this vision framework and IBP as the planning process to support the business, IBP can be defined with the following maturity phases:

1. Integrated planning:

In this phase, companies start to focus on integrated planning between previously siloed functional areas. Some functions are more advanced than others. A company might have focused on the state of the art finance processes and systems, but doesn’t reap the full benefits of that due to lack of integration of other functional areas into the finance process. Some integration exists, but not across all functional area’s and there is not enough integration with finance to make a monthly financial prediction on EBIT level in the long term horizon. S&OP as most define it will be in this phase.

2. Dynamic budget planning:

In this phase, enough functional areas plan in an integrated way for the process to provide their input to the P&L to create a fully-loaded forward projected P&L. Finance understands the ‘volume’ input and the other functional areas understand the financial ‘value’ planning. This will provide the company visibility on how it is tracking versus the budget or annual operating plan on a monthly basis on EBIT level.

Why EBIT level? Because I heard too many times in a boardroom the argument, when only gross profit was on the table; ‘we can’t decide on this because we don’t have EBIT a number’ . We can also expect these companies to deliver monthly balance sheet and cash flow prediction. For these companies, there is no separate budgeting or forecasting cycle. Every month can be the budgeting cycle. Dynamic indicates that opportunity and risk scenarios across all functional areas are integrated into the financial projection.

3. Dynamic strategy and capability planning:

In this phase, the company has defined its strategic goals, measurements, and targets and is capable of checking and communicating monthly if they are on track to meet the strategy in the horizon beyond the budget. The strategic intent, which can be defined on lower levels like product segment, country or business unit level, will also guide in decision making for decisions on the budget horizon.

The company has also defined its core strategic capabilities to meet its strategy. There are many strategic capabilities possible.  Ideally, a company shouldn’t have more than a handful as if it will define more it will erode the focus on these capabilities. Some examples are:

• Risk management: for companies that have extended and complex networks that are sensitive and dependent on changes in global and geopolitical events. For example companies with global supply chains, but also the Finance industry.
• Innovation: for companies that in a highly competitive market can outpace their competitors based on innovation and new product development. Often seen in the technology industry and CPG
• Commodity trading: for companies that are highly influenced by commodity cycles as the commodities can be more than 80% of the COGS of their core products. For example, food & beverage companies that have crops and livestock as core raw material.
• Demand is driven supply chain: for companies that can get the competitive advantage from driving their business from the front end of the supply chain. For example food, beverage and consumer package industry. Often in retail and consumer environment, which are promotional driven and where POS information is available,
• Knowledge management: for companies that are highly dependent on knowledge workers and the exchange of knowledge between people and business units. Companies that have IP to integrate, sell and protect. For example Consultancies and software industry.
• Supply exploration: for companies that have to spend high amounts of capital to find new or increase the supply of their core product. For example the oil and mining industry.
• Collaboration:  Collaborative IBP can be a separate phase for companies that see the strategic advantage in collaborating with their suppliers and customer in the longer horizon and therefore want to integrate their business plans. For companies that have the power in the supply chain through size or uniqueness of offering this will most likely not be a strategic focus.

The list can go on and on with Technology, Sustainability etc. Once a company has defined its strategic capabilities and has defined goals, measurements and targets for these capabilities, it needs plans to implement or improve these strategic capabilities. An update on status, progress, risks and mitigations for those plans will be part of the IBP cycle in this phase. Dynamic indicates that sensitivity analysis around the plans to reach the goals of the strategic capability is part of the update.

4. Integrated vision & purpose:

In this phase, companies have a well-defined purpose, values and an achievable BHAG with a vivid description that people can identify with and which create an emotional attachment. The company aims to integrate this with the IBP cycle.  A company can decide not to pursue strategic opportunities because doing so would compromise their core purpose or values.

A large multi-billion dollar beverage company, for example, decided not to enter the very lucrative market of premium RTD’s (Ready to Drink) alcoholic beverages because the alcohol content was too high. Although the opportunity was achievable and margins were very interesting, the alcohol content would not be in line with their core purpose of ‘bringing more sociability and wellbeing to our world’ . The purpose guided decision making in the strategic horizon.

The company values and the emotional attachment will be tracked in the monthly IBP process and have actions, goals, and measurement. Executives follow progress to understand if employees believe and identify with the companies values, BHAG, and purpose and show emotional attachment. This can be done by 360 degrees feedback, engagement surveys or roundtable discussion between executives and employees. Executives also have to lead by example in behaviour and actions. Their own behaviour will have goals and measurements and progress is tracked,

For all phases, communication is important , although it can be argued that it’s most important when developing an emotional connection. An IBP document on the key decision, outcomes, progress and wins in the IBP cycle can be communicated to a well-defined stakeholder group in the company. This will both give the stakeholders an understanding of business performance, priorities, improvement opportunities and successes, as well as keep the engagement with the company vision, purpose, and the IBP process.

Executives have to realize and appreciate that this communication document is the results of all the hard work from middle and lower management to gather all required IBP information for the executives to make decisions in the IBP meeting. This communication makes sure the IBP meeting is not seen as a ‘black hole’ which only sucks up information and doesn’t provide feedback.

Once a company masters these four phases, it tracks and plans on a monthly basis the budget, the strategic intent and strategic capabilities, the company values, and purpose and the emotional attachment of the employees. If a company then links these plans with shorter-term control plans and execution, we might call it real Integrated Business Planning.

Would these four phases be IBP innovation?

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Why July is an ideal time for a mid-year money check-in

Money experts share how to implement a plan to achieve your short-term goals, long-term aspirations.

'Don't leave money on the table': Why 401Ks are under tremendous scrutiny

Wealth Enhancement Group senior vice president and financial advisor Nicole Webb discusses whether Americans are saving enough to retire on 'Making Money.'

July is often thought of as a time for home improvement projects, well-deserved vacations and leisurely day trips. In addition to these activities, financial pros say that the mid-year month of July is an ideal opportunity to assess your financial situation so you’re better prepared for the rest of the year.

FOX Business asked money experts about why it’s important to take the time to check in on your money matters and how to implement a plan to achieve your short-term goals and long-term aspirations. Here’s how to get started.

Why is now an ideal time for a mid-year money check-in? 

While you should always have a handle on your spending, savings, budgeting, investing and your overall financial plan regularly, it’s important to take a closer look at the big picture.

"With spring over and tax season complete, it’s a time to reflect on the past six months and make any changes to your plan to meet your year-end goals," said Nicole Cope, senior director at Ally Invest. "Taking the time to evaluate your finances now allows ample time at the backend of the year should you need to readjust any debt pay-down or savings strategies."

While you should always have a handle on your spending, savings, budgeting, investing and your overall financial plan regularly, it’s important to take a closer look at the big picture. (iStock / iStock)

What are some expenses that should be reviewed mid-year?

Review bank fees

As you’re checking in on your finances, take a closer look at bank fees, which add up over time. Here are some fees that could cost you. 

Monthly service fees: Cope said account holders can typically avoid monthly fees by opening both a checking and savings account at the same bank or by setting up a monthly direct deposit.

Overdraft/insufficient funds fees: To prevent this fee, Cope suggests signing up for overdraft protection or low balance alerts, so you can replenish your account before it dips too low.

"Some accounts may even waive overdraft fees in certain situations – be sure to ask your bank," she said.

ATM fees: To avoid these fees, use your bank's website to find an in-network ATM. 

So, when evaluating whether a bank is right for you, take a moment to reflect on how you spend and save.

TOO MUCH INFO? PARENTS WORRY ABOUT SHARING THEIR MONEY WOES WITH THEIR KIDS

"Compare minimum opening deposits and balance requirements, monthly fees, interest rates and customer service reviews and determine if they’re in line with your spending habits so that you can keep your banking fees low," said Cope. "Your banking partner should be helping you meet your financial goals and helping along the way." If after some research, you realize your current institution isn’t meeting you needs, it might be time to make the move to somewhere else.

Look over i nsurance coverage: Mid-year may be a time to take a closer look at your insurance needs, what your premiums are and whether you can snag some bundling discounts.

When evaluating whether a bank is right for you, take a moment to reflect on how you spend and save. (iStock / iStock)

"You can’t always negotiate insurance rates, but you’re also not contractually bound to stay with your current provider," Cope said. "Just as you would when opening a new bank account, shop around and compare rates against your current statements, including bundling options, premiums, benefits and more." 

Assess your savings strategy: Halfway through the year can also be an opportunity to set goals for saving, and having a plan can make this goal more attainable, experts say. Even small amounts of money earmarked for savings is important.

"There’s no one-size-fits-all strategy when it comes to saving and your savings strategy can look different than someone else’s, but any amount you can put away consistently will add up," Cope said.

Keep in mind that when it comes to saving, time is on your side. So, whether you’re conducting a mid-year review of your current approach or starting fresh, consider the following:

WHY JANUARY IS AN IDEAL TIME TO REVIEW YOUR INSURANCE POLICIES

Set a monthly savings goal: Get in the habit of saving regularly and often. 

Start small: Cope said micro-saving with spare change or saving a small amount automatically can help more than you might think.

"Many people find success in using a ‘pay yourself first’ strategy, where they put away small amounts from each paycheck to build up savings," she said. "And if you can slowly increase how much you’re saving – even better."

Boost your emergency savings: No matter how well you plan, emergency expenses like unexpected bills, hospital visits, and unforeseen home and car repairs can set you back.

No matter how well you plan, emergency expenses like unexpected bills, hospital visits, and unforeseen home and car repairs can set you back. (iStock / iStock)

"When building an emergency fund, a general rule of thumb is to have three to six months of typical expenses set aside," Cope said. If you have earnings from a side gig, a work bonus or any unused cash, you can use it to pad your emergency fund for those unexpected bills, she said.

Review credit card debt: The second half of the year can bring more credit card use, so a July review can be a way to plan accordingly.

"For many consumers, year-end brings higher spending due to holidays and once-a-year sales," said Emily Irwin, head of Wells Fargo's advice center.

She suggested using a spreadsheet or other organizational method to understand your spending and set a plan to pay off any debt that you already have accumulated on your balance sheet.

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"Remember, not all debt is bad (e.g., mortgage, student loans, auto loans), and it can serve the purpose of building credit; but credit card debt that is accumulated at high interest rates can drag down your finances," Irwin said.

To that point, there are two ways of attacking debt. First, the "avalanche" payoff strategy is best from a pure financial standpoint. With this strategy, described by Irwin, you pay the highest interest rate loan first and continue to make payments against that loan (minimum payment + extra) until it is paid off. 

A second method is the "snowball" payoff strategy, which is best for people who need quick wins.

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"With this strategy, you pay the lowest balance loan first and continue to make payments against that loan (minimum payment + extra) until it is paid off," said Irwin. She said a key benefit is that you'll likely feel a sense of satisfaction once the debt is paid off, and it’ll motivate you to continue to tackle other debts. 

Why you shouldn’t wait until the end of the year

Putting your financial check-in on the back burner could have consequences.

"If you wait until the end of the year to look back on your finances, you’re likely to get overwhelmed and give up," said Cope. "A financial mid-year check-in is a more digestible opportunity to not only evaluate your current financial situation but look at your future goals as well."

• What is financial planning? 

6 steps to create a financial plan

Benefits of financial planning.

• The bottom line

Financial planning basics: How to create a financial plan

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• Financial planning is a practice that helps you track and manage your money with the purpose of reaching your financial goals.
• Create a strong financial plan by setting goals, tracking cash flow, budgeting, investing, and paying down debt. 
• A CFA or CFP can assist you in creating a personalized financial plan.

Life may be full of twists and turns, but a strong financial plan can help you stay on track toward reaching your goals. From paying off your student loans to buying a house, a comprehensive individualized plan is the best way to go. 

Financial planning is a broad and encompassing practice that aids you and your family in better managing your money and preparing for potential risks. No matter what your current financial situation is, a solid financial plan offers guidance and insight beneficial to all households.

Read about our picks for the best financial advisors here.

What is financial planning? 

Financial planning is essential to achieving long-term and short-term financial goals, while also preparing you for potential future risks and obligations. No two financial plans are the same. Your plan should accurately reflect your own financial needs, goals, and best course of action. 

"The purpose of a financial plan is to help clients — whether it be an individual, family, or business — achieve their financial goals and objectives by creating a structured roadmap for managing their finances effectively," says Chloe Wohlforth, CFP, Partner at Angeles Wealth Management . "A well-crafted financial plan considers a person's current financial situation, future financial goals, and risk tolerance."

Financial plans often address retirement savings, wealth-building strategies, emergency savings plans, tax optimization strategies, college funds, and debt consolidation .

To create a comprehensive plan, you'll need to thoroughly evaluate your current financial situation, such as household income and debt (including car payments, loans, and credit card debt). Most plans tend to involve budgeting, saving, and routine investing. 

You can craft a financial plan yourself or enlist professional assistance. Search for the best online financial advisors or planners, or look for in-person advisors.

"Financial advisors can help you create a financial plan by understanding your goals, values and risk tolerance, and then building a customized path that they can guide you along to enrich your life to its fullest potential," says Jordan Gilberti, CFP and senior lead planner at Facet.

Financial planning isn't as hard as you might think. Here are six steps you can take to create your own financial plan. 

1. Set financial goals

The first step in creating a strong financial plan is identifying your goals. Whether by yourself or with a partner, you should know what you're aiming for. 

"Set your goals and priorities by envisioning a future for yourself over the short, medium, and long term, and what you would like to achieve financially," says Gilberti. "Get yourself organized by gathering all relevant financial documents, including your investment accounts, insurance policies, debts, and other assets."

You can start by asking yourself: What do you want to achieve in five years? How about in 10 or 20 years? Are you looking to buy a house? Have kids? Plan a huge trip? 

Financial planning should feel intentional, and you can more easily draw motivation from clear, obtainable objectives. Consider at least three goals with the following information: 

• How much will it cost? If you're looking to save for a house or pay off student debt, for example, you should have a number you're aiming for. For instance, how much will it cost to buy a house and how much are you needing to save to make it happen?
• What is my deadline? Once you know how much you need to save, you'll need to set a realistic timeline. For example, how long do you think it will take to save up for a down payment on a house? 
• Where should I store the funds? While you can store all your funds in the same bank account, you may want to separate your funds into different savings accounts or brokerage accounts. 

2. Track your finances

What's coming in and what's going out? Before you can start responsibly budgeting, review your cash flow to reveal more ways to save. While some expenses — like rent or gas — are mandatory expenses, you may uncover nonessential charges that are draining your funds.

"The best way to budget is to ask for help. Often clients don't budget because they don't know where to begin. An advisor can help you think about your expenses in different categories. What is discretionary, what is non-discretionary? What is an expense that might be costly now, but only for a fixed amount of time?" says Wohlforth.

Once you have a grasp on your spending habits, you can budget. A beginner-friendly method of budgeting is the 50/30/20 rule , which is suitable for both consistent and irregular-income households. Basically, this plan is a rule of thumb that designates 50% of your income to mandatory expenses, 30% to wants, and 20% to debt or savings.

But keep in mind that everyone's financial situation is unique and the 50/30/20 budget plan won't be suitable for everyone. 

3. Create an emergency fund

Part of establishing a realistic budget is setting aside cash in case of emergencies.

"An emergency fund is typically a savings account that serves as a safety net from unforeseen financial difficulties that you may face throughout your life," Gilberti says. "Examples may include a job loss, disability, home appliance breaking, and more."

Emergencies are unexpected, so having the extra funds on hand can help you pay for medical emergencies and other sudden bills. An emergency budget may also protect you against racking up credit card debt and interest. 

Check out Insider's picks for the best budgeting apps

4. Reduce and manage debt

Reducing and managing debt is a crucial step in financial planning. Even if you're storing a good chunk of cash in a savings or brokerage account, high-interest debt will weigh you down. The longer your debt accumulates interest, the more money you'll lose in the long run. 

You may want to pay down expenses like credit card balances, student loans , and car payments sooner rather than later. You may want to include regular debt payments in your budget plan. 

5. Diversify your investment portfolio

One of the best ways to save for future financial goals and build wealth is through investing. While investing can be risky, a diverse portfolio of stocks, bonds, ETFs, and alternative investments can significantly lower the risk. There are plenty of beginner-friendly online brokerages, robo-advisors, and investing platforms.

The best investing apps for beginners and the best online brokerages for beginners are low-cost and best for passive traders. These sites also allow you to customize your investing portfolio based on your financial goals, risk tolerance, and time horizon.

Automatic investing platforms like SoFi Invest , Fidelity Go , and Wealthfront are also ideal for new investors. Robo-advisors are a flexible and accessible way for hands-off traders to buy and sell assets. 

6. Plan for retirement

A retirement account is one type of investing account. Early retirement may even be one of your long-term financial goals. The best retirement plan for you depends on your individual situation. 

One of the easiest ways to start savings for retirement is through an employee-sponsored retirement plan like a 401(k) , 403(b) , or SEP IRA . These are tax-advantaged accounts that collect a portion of your salary. Some plans, like most 401(k)s, may offer to match an employee's contributions up to a certain percentage. 

In order to grow your account faster, find out how much your employer matches and contribute enough to reach the maximum contribution amount.  In 2023, you can contribute up to $22,500 if you're under 50 years old (people age 50 or older can add an additional $7,500), but keep in mind that you can't withdraw funds until you're 59 1/2. 

Another option is an individual retirement account (IRA), which functions similarly to a 401(k) but it is not sponsored by an employer. IRAs are also tax-advantaged accounts and are often more flexible. In 2023, you can contribute up to $6,500 if you're under 50 (up to $7,500 if you're 50 or older). You also can't withdraw until you're at least 59 1/2. 

A well-thought-out plan not only helps you meet your financial goals but will also map out an accessible course of action based on your individual circumstances. Not only can you better your understanding of your own finances, but you can also focus on reaching important steps. Plus, you're more likely to reach your goals faster. 

While it may be stressful in the beginning, having a clear insight into your income and spending can reduce future stress and financial worry. The more you understand your own financial needs, the more realistic your expectations about the future.

You may also be better prepared for emergencies, like disability or financial trouble. Routinely contributing to an emergency fund is a great way to reduce financial stress and prevent your savings from being drained if trouble arises. 

Financial planning frequently asked questions (FAQs)

Financial planning means that an individual(s) tracks cash flow, budgets expenses, saves for retirement, pays down/manages debt, and invests funds in order to reach long and short-term financial goals. It's a personalized plan based on individual values, risk tolerances, and time horizons.

An example of financial planning may look like a young couple with dual income devising a plan to buy a home in five years based on their current cash flow. In order to reach this goal, the couple establishes a reasonable budget based on necessary monthly expenses (including debt payments), consistent monthly income, and what's left over to save. They develop a plan to pay down their high-interest credit card debt first. Then they open a high-yield savings account and put savings for their down payment into this account, while also contributing to an emergency fund in case any unexpected expenses come up in the next five years.

You can start financial planning by determining your financial goals and tracking your cash flow. If you're struggling to start, you can reach out to a financial planner, financial advisor, or financial consultant for help. 

How to start financial planning

Everyone can benefit from financial planning, no matter what your current financial situation is. A plan can lay out the steps you need to take to reach your long and short-term goals. Whether it's early retirement, buying a house, savings up for a wedding or creating a college fund , a personalized financial plan can help you get there. 

You can start planning by setting goals, tracking your cash flow, budgeting, paying down debt , investing in a diversified investment portfolio, and saving for retirement.

But remember that financial plans aren't static. You'll need to consistently reevaluate your plan in order to make sure it reflects your current situation and goals. 

"While you should be constantly monitoring and adjusting your plan as your life changes, some typical triggers for an update in your financial plan may include a change in income/employment, change in marital status, birth of a child, receiving an inheritance, and much more," says Gilberti. 

If you're having trouble getting started, a certified financial advisor or financial planner can guide you through the process. You can find a financial advisor through online reviews or by talking with friends and family. 

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Benefits and Key Performance Indicators (KPIs) Improved through SAP Integrated Business Planning for Supply Chain

After completing this lesson, you will be able to Identify SAP IBP benefits .

Benefits and KPIs Improved Through SAP Integrated Business Planning

Benefits from Logistical Complexity and Volatility

A company can benefit from logistical complexity and volatility by gaining an advantage over their competitors. The following exemplary factors can influence this competitive advantage:

In recent years, Supply Chains have become more volatile due to major geographic and demographic trends.

Market power has shifted towards the end consumer, which was amplified by the financial crisis.

Maturity of the millennial generation who require individualized products that are delivered immediately and purchased through new channels.

Emerging middle class in the developing markets, which has resulted in a global rebalancing across geographies.

Complexity of growing logistics requirements.

An automotive service parts wholesaler guarantees their dealers and end-customers a 30 minute replenishment cycle.

Suppliers such as Amazon have introduced a distribution center strategy, which allows them to deliver products ordered through their website within two hours.

Retailers such as Walmart have introduced a process to deliver directly from the closest store to a customer when an order is placed online. This requires an excellent replenishment process between the distribution center and the store to avoid stock-out or an out-of-shelf situation.

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Kate Abnett covers EU climate and energy policy in Brussels, reporting on Europe’s green transition and how climate change is affecting people and ecosystems across the EU. Other areas of coverage include international climate diplomacy. Before joining Reuters, Kate covered emissions and energy markets for Argus Media in London. She is part of the teams whose reporting on Europe’s energy crisis won two Reuters journalist of the year awards in 2022.

China surprises with cuts to key rates to support weak economy

China surprised markets by lowering a key short-term policy rate and its benchmark lending rates on Monday, in efforts to boost growth in the world's second-largest economy.