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Critical Success Factors in IBP Implementation - Leadership

Mike Reed
IBP challenges

Part 1 - Leadership

In the first of a five-part series, Mike Reed, Partner at Oliver Wight, explains the importance of leadership in implementing, sustaining, and evolving Integrated Business Planning (IBP).

The power of IBP is being realised by more and more Australian companies and increasing numbers are looking to incorporate it. IBP is widely referred to as advanced Sales and Operations Planning (S&OP). S&OP stood firm for three decades as the process of choice to improve business performance, but IBP has brought with it a far more holistic approach, more robust financial projection and a tighter integration of all company processes; aligning strategic and tactical plans each month, and allocating critical resource -people, equipment, inventory, materials, time and money - to satisfy customers in the most profitable way.

But it must be led from the top; leadership is essential for any change to be successful.

Firstly, the senior leadership team must champion the change program. Their active involvement and commitment will be necessary. However, commitment without understanding is a liability. It is important the senior team fully understand the key principals underpinning IBP to enable them to give the right guidance to those charged with re-design and implementation.

The leadership team must also provide the resource necessary for effective implementation. This will mean making the necessary people available for the project team and process re-design teams, and ensuring -they have enough time to participate properly. Additionally the senior team must remove any roadblocks and ensure momentum for change is maintained. This may mean also dealing with any internal resistance - either active or passive.

Key roles that must be identified within the leadership team are those of the various Executive Process Owners. For IBP to be successful and to be sustained these roles cannot be delegated. There are typically five Executive Process Owners - corresponding to the five steps of the IBP Model (Product Management, Demand Management, Supply Management, Integrated Reconciliation & Financial Appraisal, and the Management Business Review).

The following table shows the typical Executive Process Owners in both a manufacturing company and a retailer:

Process Element

Manufacturer

Retailer

Product Management

Marketing Director/VP (sometimes R&D Director/VP)

Merchandising Director/VP

Demand Management

Sales Director/VP

Director/VP of Replenishment (sometimes Director/VP of Stores Operations)

Supply Management

Supply Chain Director/VP (sometimes Operations Director/VP)

Supply Chain Director/VP

Integrated Reconciliation & Financial Appraisal

Chief Financial Officer

Chief Financial Officer

Management Business Review

CEO/MD

CEO/MD

The Executive Process Owners play a crucial part in implementation and also have an on-going ownership role. The following are their key responsibilities:

  1. Sponsor and lead the design and implementation for their process element;
  2. Appoint and guide the design team for their process element;
  3. Ensure process element is designed in detail & fully communicated;
  4. Ensure process element is implemented in line with the implementation plan;
  5. Ensure on-going management of process. This includes on-going chairing of their respective review.

The leadership team provide the first stage of the enthusiasts who will pull the organisation through its journey in IBP implementation and position the organisation to take full advantage of the power of this process. The active support and commitment of this team is critical to success and sustainability. With CEO/MD championing the implementation and remaining the process owner for the MBR, IBP will soon gain momentum and quickly evolve to being the way that the business is managed.

In the next edition of Six Degrees Connected, Mike will examine the importance of deploying an organisation structure that enables the process.