What Is Integrated Business Planning and Why Your Company Needs it

Integrated business planning (IBP) is a strategy for connecting the planning functions of each department of an enterprise in order to align operations and strategy with the company's financial performance. It evolved from sales and operation planning, aimed at forecasting the demand and ensuring the necessary supply to satisfy it.

Effective integrated business planning results in better sales, balanced demand and supply, efficient logistics and financial planning, financial stability of the company, its growth and smooth operation at all levels. Integrated business planning strategy also helps HR managers in hiring and training employees, and provides higher business administrators and managers with a clearer view of each department's goals, functions, and performance, which enables them to better organize the business operation. Each department administrators also benefit from integrated business planning, as this type of planning allows them to make more informed decisions and align their work with other departments. Thus, integrated business planning relies heavily on departmental business plans, but, at the same time, it helps to plan the work of each department more efficiently and to avoid overlaps. Integrated business planning is most efficient when multiple department plans are integrated within each business line, and different business lines are integrated as well, which is quite hard to do, and requires a lot of cooperation and commitment from business executives.

Product demand and supply management and forecasting is the responsibility of sales and marketing department vice presidents. Inaccurate demand forecasts result in either too much inventory or too low supply. Operation and management VPs ensure adequate supply of goods and services to meet the demand. The human resources VPs are responsible for hiring and training employees that will meet the staffing requirements for each department. Strategy department VPs have to plan for the company's maintaining its competitive advantage. All these aspects of business operation require adequate funding and careful financial planning.

It is recommended to review the company's integrated business plan for the upcoming quarter on a monthly basis in order to keep track of the company's operation, and make the necessary adjustments to the plan, such as decisions about introducing new products and services, cooperation with certain partners, making investments, etc.