A common IBP cycle has a monthly cadence providing an – up to 24 months – forward view of a business. It is often supported by a weekly control cycle, sometimes called Sales & Operations Execution (S&OE). This cycle plans demand & supply in more detail and over a shorter horizon, often around 12 weeks.
IBP is data and resource hungry. Planners spend up to 50% of their time gathering and manipulating data. Because of this, in most monthly IBP cycles, there is practically no time to prepare advanced simulations or strategic insights for executive level decision making.
Although IBP remains tactical at the most, both IBP and S&OE cycles run well in a reasonable steady state supply chain, with the normal risks, variances, and errors we learn to expect as experienced supply chain professionals.
There is no doubt that IBP has generated value for many organizations. However, when disaster like COVID hits, panic induced planning can’t support basic IBP or S&OE needs. Where in a steady state, common IBP capability does not support strategic decisions making, in a state of disruption, it can’t even support S&OE or tactical planning up to a competitive level. COVID has made clear that many organizations struggle to absorb disruption in their planning processes.
Times have changed, and to keep providing value, IBP has to change with it. Technological advancements have made it possible to reset IBP as we know it and make it future proof. It might sound like a paradox, but IBP can become more agile and strategic at the same time. And thereby, solve many of the issues that common IBP capability has.
In a steady state, a technology like cognitive automation can automate many of the planning processes and decisions in the S&OE horizon, support touchless planning in the tactical horizon and augment planners where needed to make smarter decisions at scale. Hereby freeing up valuable time for planners to finally start focusing on the strategic elements of IBP.
In a significant disruptive state like COVID, a company that is supported by cognitive automation can choose to dial down the decision automation in the S&OE horizon to take more human control, increase frequency of meetings and increase augmentation in support of human decision making. During this period of risk management, strategy focus will likely be dialed down too.
Some supply chains leaders already have displayed these capabilities during COVID. In a recent cognitive automation summit, Unilever’s head of supply chain Biswaranjan Sen shared in a panel discussion that, supported by cognitive automation, Unilever went from a 4 weekly planning cycle with a 12 week horizon, to a weekly cycle with a 4 week horizon. And then even pushed for a 3 day cycle to review key products in their massive supply chain. Unilever showed that during times of major disruption, it is possible to react with increased agility.
This has prompted Unilever’s Chief Supply Chain Officer Marc Engel to say; ‘At the end of the day, every dollar we spent on agility has probably got a 10x return on every dollar spent on forecasting or scenario planning.’
During major disruptive times a company might want to focus on human controlled agility, but after the disruption settles and we get back to an acceptable steady state, S&OE can go back to more automated decisions making and IBP can get back to more focus on strategic planning.
With the help of cognitive automation, IBP will become both more agile and more strategic. More importantly, given the circumstances, IBP innovators will be able to choose when to focus on automation and strategy and when to focus on human control and agility in any given planning cycle.
Soon, leading supply chains will indeed use their IBP capability on-demand.