How to transform your IBP plans into reality using Integrated Tactical Planning
05 May 2021
It’s not surprising to hear that many companies have been looking at upgrading their short-term demand and supply balancing processes over the last year. We have all seen the chaos caused by the events of the past year and can easily recognise that many companies were not set up to deal with the level of change that has become our reality.
However, what is surprising is that companies think that they should be looking to Sales & Operations Planning (S&OP) as the answer to this problem.
Whilst traditional S&OP is a demand and supply balancing process it was always intended to be run on a monthly cadence, and at a level of aggregation beyond that appropriate to be used on a day to day basis. And let’s face it – looking at things monthly just doesn’t work when you’re trying to manage change in the here and now. So it was never intended to manage the execution of the plans it created.
So what is needed?
Well, every business does need a planning process that runs to a monthly cadence and looks at an aggregate level of detail over the next 2-3 years. That’s Integrated Business Planning (IBP) in our world.
But then it also needs good executional processes to take that IBP plan and translate it into the detail needed to make it happen, and then react to changes as they inevitably occur through that executional period. That’s Integrated Tactical Planning. So what does it involve?
- First, you need to identify the right time horizon where you need to take control – where you move from planning to execution. This has to be the cumulative lead time or the time that it takes your supply chains to respond. If you focus on too short a time period then you’re setting yourself up for constant fire-fighting, poor customer service, high costs and a heap of stress for everyone involved.
- Then you need to have key individuals assigned responsibility for the execution of the plans and with decision rights to authorise and respond to change. Some of these roles typically exist such as supply planner, demand manager and customer services manager, but they often don’t talk to one another or speak the same language.
- These people need good solid execution processes to manage product & portfolio, demand and supply in an integrated way. Master scheduling has long lost its appeal to businesses who prefer to either automate the planning in a tool or ignore it and only plan the next few days or next week. Rigour and detail is the name of the game.
- Once you have the people and processes, they need the cadence of regular weekly reviews to ensure they look at the right things, recognise and consider the changes, and then re-align themselves.
- And to do this they need a good suite of metrics to tell them if they are winning and to drive continuous improvement.
Integrated Tactical Planning is not rocket science. But it is something that many companies do not do well. They often do not realise that many of their problems are self-inflicted by not managing their plans or the changes to them quickly enough or in the right level of detail – they spend their timing fixing and responding to problems rather than implementing the processes that would protect them from the problems occurring in the first place. They should roll up their sleeves and just get stuck in because these problems can often be fixed in a matter of weeks and the impact they can have on the overall business, as well as the quality of their lives, is transformational.