I’ve seen it before and I’ll probably see it again, but it still takes me by surprise every time. In the last 6 months I’ve observed two 2 billion $ well-respected FMCG companies with some very well-known world brands make the same mistake with IBP.
First they build up the burning platform for IBP. Their customer service levels are not up to scratch, waste levels are rocketing, they don’t meet their budgets. There is not enough collaboration between function. No one exactly knows the reasons, but IBP will solve it all! Hell they even mention in their annual earnings report that a turnaround might happen due to renewed IBP capability.
Then they engage with a well known consultancy with a proven model and a proven track record of implementing IBP. So far so good!
The next step is to recruit somebody that can implement IBP and create a sustainable IBP culture of constructive behaviours and continuous business process improvement. So what did these two companies do after careful consideration? They appointed somebody with no previous IBP experience!
I’m note surprised that this happens, but I am surprised that this happens with large, well-respected, sometimes global companies, that have been struggling with the concept of IBP for a long period. Would any of these companies hire a marketing manager without previous marketing experience, or sales, finance, procurement, HR, or…? NO
So why does this happen for IBP? Maybe because as young, only 30 years old business process, IBP hasn’t deserved a seat around the table yet. Maybe a lack of knowledge, a bit of ignorance about the IBP role, or a bit of arrogance that this planning stuff just needs to be solved by somebody! Maybe the decision makers didn’t know that an IBP leader needs to be able to have conversations, drive change and coach people across functions about:
- Marketing: portfolio management, product life cycle management, NPD growth funnel health. Stage & gate process and criteria. Project priorities and project resourcing.
- Sales: sales volume, promotional plans, NSV and GP projection. The gap to budget and the plans and projects to close these gaps. Market assumptions on distribution depth, pricing, growth, competitor activity.
- Supply: production and distribution capability. Rough cut capacity plan and their assumed costs in COGS, labour, overhead and yields. Underlying capacity assumptions on crewing, waste, throughputs and plans to improve these. Inventory strategies. Finished goods and WIP projection and the impact on working capital, waste levels and customer service levels. Procurement strategies and the impact of PPVs’.
- Finance: The gaps and drivers of the latest projected P&L or EBIT projection. A clear summation of risks and opportunities and the commercial impact. A clear commercial decision-making process on what type of risks to take in a P&L projection.
- IT: define maturity levels of the supporting IT systems, define the requirements and define a roadmap on how to get from current status to the desired one.
- Behaviours: lead in constructive and disciplined behaviours and provide well formulated feedback to peers and executives to run and improve effective IBP meetings where issues can be tabled and discussed to improve decision-making.
A long, but a true list of capabilities that an IBP leader needs to have to be really effective across all the different functions this role operates. Maybe the list is too long, too cross functional, has no focus and therefore IBP is seen as the general management or the babysitting of a business process.
Dr. Mathias Krichmer, executive director for Business Process Management (BPM) at Accenture and author of ‘High Performance Through Process Excellence’, defined the top 10 tips for success and top 10 mistakes for implementing BPM. Amongst other, treating BPM as a project or a technical exercise are common mistakes. You can find these lists at the end of this whitepaper: Accenture_BPM_High_Performance_Through_Process_Excellence
To succeed, his top 10 tips for success does not mention ‘involve experienced and capable business leaders that understand process, change, behaviours and systems’. I think it definitely belongs in that list for success. Maybe I’m wrong or maybe Dr. Krichmer just assumed that hiring capable people was a given when implementing BPM!