Part 2 of the ‘IBP in High tech’ series – Business capabilities in High Tech IBP
To continue our discussion on Integrated Business planning from the previous blogPart 1 – Why is Integrated Business Planning (IBP) Critical for the High Tech Industry? , let’s examine the key business capabilities for an effective IBP in the high tech industry.
Per the definition of IBP, it is a decision-making process that realigns the tactical plans for the business functions and all geographies to support the company’s business goals and targets. Using this definition, we see the following attributes that should be represented in any effective Integrated
Business Planning process:
- Business goals and target – defined and agreed upon by senior executives in a way that is measurable
- Decision making process – a process that can receive inputs to be iterated between the planning and execution roles in a company
- Realignment of tactical plans – executable plans that can receive information on changes in the business environment and flexible enough to be adjusted accordingly
Key capabilities that are critical to a highly effective business planning process can be derived from these attributes:
- PLAN – Single Integrated Plan that connects the financial goals with the operational execution plan with Ownership by Senior Executives – the plan would reflect the business goals and targets approved by the company’s leadership. As seasoned professionals in the high tech industry are aware, it has a highly complex supply chain with several upstream and downstream variables – think outsourced manufacturing plants, 3PL warehouses, drop-ship components and more – the plan has to be robust enough to provide a strong linkage between the different execution arms of the enterprise.
- MONITOR – Monitor and Analyze Gaps between Business Plan and Current Performance, and Project Future Performance – used by the leadership to assess performance and make operational decisions based on gaps. It should also provide the ability to predict future trends so that plans can be adjusted accordingly. Companies in the High tech industry have to closely monitor several metrics that can impact the bottom line and cash flow like manufacturing yields, channel inventory, production in pipeline etc. – against the KPIs to do course correction as needed.
- RESPOND – Ability to respond to Dynamic market shifts – the agility to realign execution plans based on volatile changes in business environment. We see dynamic market shifts in consumer preferences and competitive products in the high tech sector (think computing devices with varying sizes, features and functions at different price points in a span of 12 months) that can challenge the planning and execution processes. An effective integrated business planning process should be able to provide the ability to manage and respond to these changes in a timely manner and manage the conflicting priorities in a way that optimizes financial performance. A true balancing act requiring a very high integrated capability.
In the next part of our continuing series on IBP, we will talk about integrating financial planning with Sales and Operations planning – after all, the buck stops with the dollar!
To learn more about SAP Supply Chain Management Solutions, please access these complimentary resources at: http://global.sap.com/campaign/na/usa/CRM-XU15-MFG-NAMESTPE/SCM/index.html?campaigncode=CRM-XU15-MFG-NAMESTPET