There are many discussions on what S&OP and IBP is. Lately, there are even more discussion on the difference between S&OP and IBP. Check out http://ibpnews.wordpress.com/2011/04/30/the-difference-between-sop-and-ibp/ for 7 different blogs on this topic only. But did any of these bloggers ask the simple existential IBP question; what is the purpose of IBP?
If you, confronted with this question, jump up and start talking about improved asset utilization, working capital, forecast accuracy and other supply chain and general business KPI’s, sit down and think again! Those KPI’s are goals of IBP, not the purpose!
What is the reason for being for this business process? And for the people who lead this process? Why does an IBP manager get up every day, go to work and does what he or she needs to do? Here is my view.
Disney’s purpose and reason for being is; ‘to make people happy’. Every person in the Disney organization gets out of bed to make people happy. Although the goal will still be to make money, the purpose for both CEO and cleaner in the DisneyPark are to make people happy.
In my 2010 survey on Supply & Operations Planning (S&OP); S&OP pulse check 2010. Survey participants nominated ‘improve cross functional communication’ as main reason to implement S&OP. A quote from an article on S&OP culture says:1 ‘the business result has led to the culture of the company being optimistic and positively minded, as opposed to pessimistic’. Combine the two and this can mean that the purpose of S&OP is to make people optimistic and positive (happier) through improved cross functional communication.
Now making people happy only is not good enough. We would like to have some results in our IBP purpose as well. That’s why I’ll borrow from another proven purpose. The smart fellows at McKinsey’s have the purpose; ‘to help leading corporations and governments be more successful’.
If we can position the IBP purpose in between Disney and McKinsey, the purpose of IBP is to: ‘improve cross functional communication and collaboration to help a company be more successful’
Is that good enough for you to get out of bed?
1. John E. Mello and Robert A. Stahl, How S&OP changes corporate culture, Foresight, winter 2011