Integrated business planning

Integrated business planning (IBP) is a process for translating desired business outcomes into financial and operational resource requirements, with the overarching objective of maximizing profit and / or cash flow, while cutting down risk. The business outcomes, on which IBP processes focus, can be expressed in terms of the achievement of the following types of targets: Revenue and demand Service levels Inventory levels Profits and margins Cash flow Integrated Business Planning is defined in different ways. One challenge in developing a common definition of IBP is that there is no universally agreed way of describing different degrees and forms of integrated processes. Mature IBP processes enable organizations to bring together different elements of planning into a single process. This includes, but is not limited to, the following: Supply and demand Finance and operations Functions and business processes Strategy / Outcomes and business processes Financial and non-financial measures Cash flow, costs and revenues The role of IBP is to balance these different objectives in a way that achieves the best overall result. One way of accomplishing this is with prescriptive analytics. These tools are often employed in these processes to mathematically optimize parts of a plan, a classic example of which is inventory investment. The most mature IBP processes try to mathematically optimize all aspects of a plan. The history of integrated business planning can be traced back to sales and operations planning (S&OP), a process that balances demand and manufacturing resources. According to Gartner, there is a 5-stage maturity model for S&OP, and in this model, integrated business planning is denoted as Phased 4 & 5. Over time, IBP has evolved, combining Enterprise Performance Management (EPM) and S&OP to enhance planning capabilities for financial and operational professionals. IBP platforms leverage predictive analytics. and machine-learning technology to optimize plans across multiple constraints.