The nature of procurement is changing. In response to contextual forces, technological adoption, and growing complexity, the procurement function is being pressured to become more agile, resilient, and more strategic.
As a result, older approaches to business planning are starting to feel inadequate. Sales & Operations (S&OP) based procurement has been employed widely throughout the industry for years. Now, some argue, meeting the challenges of the modern procurement environment requires a fresh approach.
In a recent episode of the Supply Chain Management podcast, Ben Sellers, a business advisor for Oliver Wight, argues that the time may be right for the industry to shift to a new, more modern approach called Integrated Business Planning (IBP).
Many procurement functions with an S&OP approach, he argues, struggle to plan for “easy-to-predict tasks, let alone for more complicated or unknown disruptions”. IBP solves that problem by more effectively preparing organisations to pivot when necessary. Also, the approach supposedly creates a more holistic understanding of the procurement process between traditionally siloed departments. Not only that, but it emphasises constant reevaluation and updating of the planning procedure. “Two-year planning cycles need to be updated monthly and even in some cases weekly or daily,” Sellers argues.
What is IBP?
Integrated business planning is an approach that uses software tools and a platform approach to integrate and streamline all aspects of the business planning process. This includes procurement, manufacturing, distribution, and sales.
Using clever AI tools, an IBP tool can pull data from multiple areas of the business. It can then process it, and display the results through a single platform. This greatly improves the procurement team’s ability to understand the needs of the business. Not only that, but it also creates essential visibility into external forces that may create pain points outside company walls.
According to Sellers, “it often takes a crisis for a company to acknowledge a different approach is needed.” IBP, on the other hand, enables good management and leadership and through constant evaluation ensures the company is positioned properly for change.
