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What is ‘integrated business planning’ and what does it mean for my supply chain?

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In earlier posts I’ve explained why existing enterprise management solutions are limited (hint: it’s stale data), and why I believe that the new generation of cloud platforms will enable a new kind of ‘social’ supply chain that looks and operates very differently from what we are used to today.

For example, many of the major challenges for companies today are related to process and measurement. What do I mean? Well, first, companies are entering a period of significant change where employees are going to be expected to learn something new almost every day with changes in markets, products, buying behavior, channel structure, transportation modes, trading partners, analytical tools, and process design; Second, the way that employees and trading partners work within a supply chain is changing in ways that include problem identification, problem diagnostics, and problem resolution. Finally, M&A activity has increased significantly and the synergies used to justify these transactions require immediate absorption as a valued participant in the overall supply network.

I believe that advanced Integrated Business Planning (IBP) solution frameworks, by providing the ability to interact with operating and execution environments on a continual basis, are the key to solving these problems.

Under the old technology paradigm, the systems and thus the processes were burdened with significant information latency at various nodes upstream in the supply chain. Thus there really weren’t any measures put in place related to real time demand and supply responsiveness other than flexibility related to volumetric shifts. Given that information latency, there weren’t any financial measures put in place that projected financial performance based on current process performance. It makes sense; why would anyone risk taking action on projected financial performance when the base operating data driving the projection is probably 3 weeks old?

However under our new IBP paradigm, the technology platform and processes are real time responsive and the underlying enterprise social graph/supply network is representative of the actual trading environment, including the business rules, processes, policies and contracts in force between trading partners. For example in transportation , users can now access logistics visibility that shows all their company’s inventory around the world which is in motion so they can quickly see where shipments are and if they are late, drill down by carrier or customer to address problems as they arise.

Because with cloud-based IBP technology, your metrics and process platform capabilities are well in hand, you can deploy a measurement system which enables the ability to manage a supply network as it physically exists, in real time, based on a single version of the truth. The includes the ability to project future financial performance using real time operating data, giving employees the confidence to make changes in both planning and operations, from the board room to the boiler room.

To read more about this subject, I suggest you read the new whitepaper, Integrated Business Planning & Execution, where I also discuss the cloud, S&OP, and why a holistic approach is needed for supply chain management.