The ID&AL (Interactive Design & Automation Execution Loop) architecture proposed by CXP (see below) represents the ultimate approach in agile and high-performance information systems, primarily for manufacturing and distribution companies, but also for other vertical industries (for more, read “IT Solutions for Industry: Differentiation with the ID&AL Concept (Interactive Design & Automation Execution Loop)”)
Not only does the tight integration of the ID&AL architecture allow the user to access reliable information thanks to an integrated data model, but above all the arrangement itself, of the application bricks between them gives the whole system a strong functional added value - and therefore a real value for the business. All pieces can interact seamlessly, when something changes.
All events - external and internal - affecting demand and resources can thus be applied, analyzed and fed back into the planning loop, giving the result a real relevance between planning and execution.
This interactivity is achieved through the notion of a loop. In this note, we focus on the loop that links IBP (Integrated Business Planning) and Analytics. Both are inseparable from an efficient management of the enterprise, but they are still too often treated in an unconnected way, and with very different tools.
Resource planning tools are often part of ERP (Enterprise Resource Planning), SCM (Supply Chain Management) or HCM (Human Capital Management) applications, complemented by dedicated EPM (Enterprise Planning Management) tools for purely financial management. As for the tools commonly referred to as "Analytics", they are still often technological tools in the hands of IT, used to provide dashboards by activity or department.
Source : CXP
Why is there so much interest in IBP (Integrated Business Planning)?
The main idea behind an IBP (Integrated Business Planning) approach is to be able to define a single business plan considering the needs of all operational and financial resources defined in order to meet the demand; to reach the objectives of turnover and result, while optimizing the financial and cash flows. And that this planning can easily be tuned any time one of the elements that feed it undergoes a change.
Some may say that they have already heard this definition during the advent of APS (Advanced Planning & Scheduling) tools two decades ago. However, IBP is part of a broader framework since it is not just supply chain-centric but also strongly integrates all the economic and financial aspects of the planning.
IBP is also increasingly represented as the successor to S&OP / MPS (Sales & Operations Planning / Master Production Scheduling), whose primary functions were to balance, in the more or less long term, the company's operational functions according to demand, over the budgetary period.
The operational aspect remains important, but IBP applies the financial dimension in a strong way and confers to the whole an integrity that makes the projections much more relevant and the piloting easier, because it responds unequivocally to the combination of the views of marketing and commerce, production and finance.
However, IBP is not only a strategic management tool. Following the S&OP / MPS relationship, IBP also introduces the tactical side of the production program. The most daring and innovative organizations go so far as to include the MPS within an "extended IBP".
IBP enables management to drive their business by aligning strategic and tactical visions through the proper use of all their internal and external resources (manpower, equipment, inventory, materials, time and money) to meet customer demand in a coordinated manner.
In this case, establishing strategic projections on the basis of product families and then tactical projections on the basis of individual product references, where applicable, and considering the use of resources whose costs are themselves directly related, provides management a certain piece of mind.
The IBP concept is therefore not a revolution in the sense of introducing a totally original management methodology, as its principle is based on obvious common sense. However, the limitations of information systems had until recently made it necessary to segment the data and the management layers.
The IBP review will then consist of a review:
- Business Plan / Sales Revenue Planning
- Introduction and retiring products from the catalog
- Introduction and removal of clients from the portfolio
- Review of business opportunities
- Review of sales, margins
- Etc.
- Customer Demand Management
- Demand forecasts
- Commercial actions
- Impacts of the evolution of the product range
- Etc.
- Sourcing & Procurement, Supply Chain Management
- Criticality of supply
- Load/Capacity Matching
- Impacts of the evolution of the product range
- Etc.
- Profit Based Supply & Demand Balancing Review
- Economic and financial impacts of product developments
- Economic and financial impacts of changes in demand
- Economic and financial impacts of supply chain changes
- Balancing the activity plan with the company's resources
Integration makes sense as IBP will make it possible to consider all the components of the ID&AL system.
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