I’m assuming, of course, that you intend implementing integrated business planning. After all, what’s not to like about a situation where finance, supply chain, and sales are working together to create plans that maximize profitability?
So what’s the best way to begin such an implementation? Where should the coordination and alignment begin?
Start with your big quick wins.
In the case of the component manufacturer I mentioned last week, the big quick wins were at the tactical level.
First – and fundamentally – the sales and supply chain departments needed to be connected. Sales needed to know what to sell based on the available production capacity and product mix. The supply chain department needed to know how sales was shaping demand so it could flex production appropriately.
Once sales and the supply chain were aligned, the next phase involved plugging finance into the planning process. In practical terms this meant:
- Replacing the quarterly financial plan with a rolling plan that incorporated the sales and supply chain plans
- Using powerful what-if capabilities to explore the financial impact of decisions made by sales and the supply chain
The goal of this two stage process is always complete alignment. While finance provides a common language, the essence of integrated business planning is collaboration. Given that certain products are more profitable, or that production capacity needs to be better utilized, what shall we do? For example, while the figures may indicate that a certain product family should be dropped, there may be other ways in which it contributes to the bottom line – ways that only the sales department is aware of.
So here’s the thing. Like planning for profit, collaboration among your finance, supply chain, and sales departments is fundamental. Now what are you waiting for?
Why integrated business planning (really) matters