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P&L Operations
Focusing on Business Planning
Synchronizing supply and demand has always been difficult. Before the unprecedented challenges created by COVID-19, it was a perennial struggle for most businesses. Most companies found ways to balance cross-functional trade-offs effectively or facilitated decision making to help their P&Ls.
IBP processes are essential for building high-performance supply chains. A well-functioning IBP process includes five building blocks: a business-backed design, high-quality management, accountability and performance management, data, analytics, and technology. Mature IBP processes significantly improve coordination and reduce supply chain surprises. The average mature IBP practitioner realizes one or two percentage points in EBIT over companies that lack an IBP process.
When IBP processes are set up correctly, they help companies to make and execute plans, monitor and adapt strategic assumptions, and succeed in their markets. Companies should treat IBP not just as a planning process upgrade but also as a company-wide business initiative.
IBP processes are essential for building high-performance supply chains. A well-functioning IBP process includes five building blocks: a business-backed design, high-quality management, accountability and performance management, data, analytics, and technology. Mature IBP processes significantly improve coordination and reduce supply chain surprises. The average mature IBP practitioner realizes one or two percentage points in EBIT over companies that lack an IBP process.
When IBP processes are set up correctly, they help companies to make and execute plans, monitor and adapt strategic assumptions, and succeed in their markets. Companies should treat IBP not just as a planning process upgrade but also as a company-wide business initiative.
Unlocking P&L Operations in 2023
Business-level planning is becoming a more important process as companies move from functional to business units. Business-level planning will help you coordinate strategies and tactics across traditional business functions. IBP doesn't have to be a separate process; however, it is much more effective when focused on decisions in the interest of the whole business.
IBP is one way to standardize information for P&L owners. The IBP process can create templates for this standardized information, so that P&L owners know up front which data, analytics, and impact information to provide. Other inputs affect the quality of IBP. 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 and monitoring adherence.
The success of an ntegrated business planning process depends on three conditions. It must be designed for the P&L owner, not individual functions in the business. Processes are built for purpose, not from generic best-practice templates. And people involved in the process have the authority, skills, and confidence to make relevant, consequential decisions
The IBP process requires clear authority, areas of responsibility and escalation routes for each step of the process. The design of an IBP process must therefore include decision-making authority and escalation paths for every step in the process. Capability-building interventions can help your team to ensure disciplined and effective decision making by enforcing participation discipline - that means ensuring everyone who needs to take part in a meeting actually attends
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