Integrated Business Planning vs. S&OP: What’s the Difference?

I’ve previously shared my thoughts on the need for a shake-up in the supply chain management realm, and my assessment of what integrated business planning really consists of.

All of this begs the question: Is integrated business planning really something separate from sales and operations planning (S&OP)? Or is IBP merely the latest evolution of S&OP?

Let’s look at what some of our leading industry minds are saying.

DS BlogSupply Chain Digest tackled this subject in 2011, back when the term “integrated business planning” was still quite new. Their opinion? The difference is “mostly just nomenclature.” They go on to say that IBP “simply involves more, specifically incorporating the company's financial plans and budgets into the S&OP process at various stages.”

What about Oliver Wight — the consulting firm that pioneered the discipline of S&OP and the new discipline of IBP? Do they see a clear difference between the two, or is this simply a case of updating the packaging to reinvigorate interest in a product?

Well, one clue to Oliver Wight’s stance is that they offer a white paper titled: “Integrated Business Planning (Advanced Sales & Operations Planning).”

Judging by that, IBP would appear to be a more mature stage of S&OP.

Digging more deeply into the white paper, we discover that Oliver Wight calls IBP “an integrated business management process through which the executive team continually achieves focus and alignment among all the functions of the organization.”

The paper goes on to make the following points:

1. When IBP is running correctly, a company’s leadership and management team continually re-plans on a rolling 24-month horizon

2. The IBP process should be driven by demand in the marketplace — not just internal supply chain priorities

3. The IBP process requires regular participation from the entire executive team

So, what’s my take?

As you may have guessed by now, I object to any characterization of IBP as just another name for a familiar set of processes. And I don’t accept the notion of simply aiming to use more financial data in the S&OP process. To me, that sounds like doing business the same way but with better data. That’s hardly a recipe for the kind of shakeup I believe this industry needs.

Rather, I would agree with Oliver Wight’s assessment that integrated business planning is about shifting the focus of S&OP beyond the supply chain team, so we can all benefit from the input of executive stakeholders while focusing on the needs of our customers.

A final note: If you want to do as the Oliver Wight paper does and think of IBP as “Advanced S&OP,” I think that’s fine. It’s not the name that’s important — it’s the relentless focus on growing the business in ways that benefit all stakeholders in the supply chain. Whether you agree or disagree, I’d love to hear your thoughts below. If you want to talk about how integrated business planning can benefit your company, drop us a line today.

______________________________

Bill Harrison, President of Demand Management, Inc., began his career in supply chain operations over 25 years ago on the loading dock of a True Value warehouse. He spent over 17 years with True Value Company, where he held a number of management positions, and personally designed and implemented a market-leading Replenishment Optimization System. He also has served as COO of Atrion/ClearCross, and held leadership positions at Manugistics and American Software before joining DMI in 2006.