Assignment #22 Integrated
Business Planning
Student’s Name: Giselle Rivas Alcantar
NUA: 415485
Answer the following study guide questions.
What is “Integrated Business Planning” (IBP)?
Integrated
Business Planning (IBP) is a process by which financial and operational
requirements are determined by the collaboration of all the departments of an
organization to generate a greater amount of profit while, at the same time,
minimizing the risks of losses.
What is “Sales and Operations Planning” (S&OP)?
Sales and operations planning, as its
name implies, is the planning of all sales and operations in the supply chain
of an organization.
What are the similarities between IBP and S&OP? Mention and describe them.
Monthly process:
It is reviewed and adjustments are made, if necessary, each month.
Cross-functional
approach: They bring together people with different skills to work together and
thus achieve organizational objectives.
Driven by
business strategy: Objectives are established and a plan is created to be
followed and achieve those objectives.
Tactical
planning at an aggregated level: the short-term goals that each department must
reach are specified. What each person must do is decided and explained.
What are the differences
between IBP and S&OP? Mention and describe them.
·
S&OP processes support
medium-term planning horizons while IBP supports horizons greater than 18
months, which makes it long-term planning.
·
The IBP measures performance in
monetary figures while the S&PO does it through activities. This makes the
IBP better at identifying and making decisions that increase the profitability
of the supply chain.
·
S&OP is focused on supply
and demand while IBP involves all of the departments in the planning process.
How does the IBP process work? Describe in detail.
The Ibp works by aligning the financial
forecast with the annual budget cycle. This means that the IBP helps to
identify the amount and where the income and expected costs are going in order
to see if the figures obtained monthly are what they should be based on the
estimate they have for a period of one year or more.
What are the
challenges of IBP?
The challenges of IBP are found in the
exchange of information between those in charge of the supply chain and those
in charge of the financial side. They speak a different "language".
Those in charge of the supply chain speak in units and products while those in
charge of the financial side speak in terms of money and currencies, which
causes difficulties when understanding and communicating with each other.
Which are the
most common difficulties/problems when implementing IBP?
·
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
What are the
advantages and disadvantages of IBP?
Advantages
·
Reduces errors and consequently
economic losses.
·
Improves collaboration between
the departments of the organization.
·
Planning time is reduced as
staff becomes more efficient.
·
All processes in the supply
chain are aligned.
·
Processes are optimized.
Disadvantages
·
There may be a lack of
understanding of the process itself.
·
Staff belonging to S&OP are
not trained
·
If the process does not evolve
to the needs of the company, there is a gap between the results obtained and
those expected.
What is the
importance of IBP nowadays?
IBP is important in these times because it creates a collaborative environment in a company, which helps it become more efficient. It is essential that all departments are considered for decision making, especially when making a plan of action for an organization with thousands of employees. The fact that all employees are coordinated to comply with a plan benefits everyone.
The IBP represents many risks, these have caused many companies to abandon their projects, however, if they want to obtain greater benefits, the risk must be implicit and it is something that all companies must go through.
ResponderBorrarI agree with the disadvantages listed. If teams are not trained, this process is likely to fail. Businesses need commited employees and managers in order to achieve goals and reduce the gap between production (obtained results) and demand (required/expected results).
ResponderBorrar