By Ian Ortega
More than ever before, the role of a business planning manager is becoming increasingly crucial and necessary for dynamic and expanding businesses. In fact, it’s now suicidal for a business not to have this function.
In the manufacturing industry, this function was often played through the Sales and Operations planning route. There existed one person who interfaced the demand forecast from the sales teams and then cascaded it to the supply operations. In this way, supply through its sourcing and production functions knew how much to make available for logistics to send out to the sales team.
However, businesses have been suffering from the common ‘bullwhip effect’ where a small change in demand forecast can result in large changes in inventory. Consider a beer company that reports a 5% growth in beer sales in a territory. The sales team will report this growth with even a higher magnitude. Then, the planning team will also put in a buffer as it sends this out to production. Production will effectively also ask for even more from the sourcing and procurement teams. In the end, this 5% growth results in a 50% growth in inventory.
As organizations strive to become more productive, cash efficient, and run lean operations, the role of the Integrated Business Planning is becoming crucial. And this is now taking over the role of the S&OP manager.
Departments within organizations can no longer function as silos. Organizations now need to know in real time what it means to respond to the 5% growth in sales. What does this mean for warehousing costs? What does this mean for overhead costs? And where are the constraints? Someone in the business ought to be seeing the overall picture in real time, able to spot the waste where it’s emerging and drive continuous improvements at the right points of intervention within the business.
Think of the Integrated Business Planning Manager as the Pulse of the company. They can do all projections, do all scenario and sensitivity analysis, and can show how every decision affects the system. They are not just data analysts, they are finance managers, supply chain professionals and commercially led people. They are the future of every organization.