What return on investment can you expect from your Integrated Business Planning process?
03 Feb 2021
One question which I am often asked by prospective clients is “what sort of return will I get for my investment into Integrated Business Planning (IBP)?” This is a fair question, and in short, the answer is usually between five and ten times the investment. In some situations, it can be much more. The payback time is also relatively quick with hard benefits often being realised within the first year of deployment.
The financial benefits can come from a number of business opportunities which are often identified through improved visibility of the business plans and performance metrics. Here are three of the most common benefits I see as a consequence of deploying IBP:
- Increased revenue. This can be generated from improved order fulfilment and stock availability, more structure regarding demand generation activities and an ability to react faster than your competitors when market conditions change.
- Inventory reduction is another significant and common benefit of deploying IBP. By integrating the business plans and aligning the resultant inventory holdings you can be very specific about what value of inventory you want to hold. IBP has been used numerous times by our clients to drive inventory reduction, resulting in a one-off release of cash bringing benefit to the bottom line through reduced inventory holding costs.
- Asset utilisation especially across multi-site businesses is another opportunity which IBP can help you to exploit. The visibility of demand, product and supply plans to the business across multi-regions and sites can allow you to build scenarios to test different supply routes and manufacturing locations to reduce transit time and cost. It can also allow you to have more visibility on how to better utilise your assets across your network. In some instances, additional capacity will be identified here which was not visible prior to IBP and instantly impacts manufacturing and supply costs resulting in an improved bottom line.
There are many more benefits to deploying IBP both from a financial and a business culture ‘people and behaviours’ perspective. Less stress, more engagement and an improved work/life balance all amount to improved productivity and creativity. These benefits will, without a shadow of doubt, contribute to improved profitability and business growth.
Find out more about IBP here or join our LinkedIn IBP forum group.