^ roadmap to linking
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I N T E G R A T E D
B U SIN ES S P L A N N IN G
R o a d m a p to L in k in
S O P a n d C PFR
By LarryS m i th , osephC r t d la s k f ,V I
E X E C U T I V E S U M M A R Y | U ncertainty and poor inform ation reduce decision-m aking effectiveness, increase
costs,and lower customer
service.
Yet, much of the inform ation we need to make decisions is known b y someone else in our firm
or supply
chain.
hisarticle shows tha t when tw o programsSales and Operations Planning (S OP) and Collabora tive Planning,
Forecasting and R eplenishment (CPFR)are integ rated , they p rovide th e in form ation we need for decision m akin g. Key success
factors and perform ance outcomes are also discussed.
L A R R Y S M I T H | Mr. Smith is Senior Vice President of Merchandise Plann ing and Replenishm ent at We
Marine. For the past 10 years, he has directed the Planning and Merchandising Operations functions at Wes
Marine creating a cutting-edge and scalable supplier collaboration (CPFR) program. He is a frequent speaker a
major industry conferences. He Is a member of the Board of Directors of the Voluntary Interindustry Commerce
Solutions Association (VICS) and Co-Chair of the VICS CPFR Committee, which is responsible for leading one
of the most successful interindustry supply chain collaboration initiatives. He is also a member of the Editoria
Advisory Board
of
Supply Chain
Management
Review
JO S E P H C . A N D R A S K I | Mr. Andraski is the President andCEO of VICS (Volun tary Interind ustry Co mme rc
Solutions Association), which provides a forum for parties to de velop supply chain processes and technology
Prior to join ingVICS,he held several positions wi th Nabisco Foods, Inc., incl udin g Vice President of Supply C ha
Management,VicePresident of CustomerMarketing,and Vice President of N ationalSales.He has been active w i
Grocery Man ufacturers Association, where he servesasthe Chair for the Logistics Com mittee, and wasamembe
of the Efficient Consumer Response Opera ting C om mittee . He recently created and launch ed th e VICS CPFR
Certification Program.
S T A N L E Y E . F A W C E T T | Dr. Fawcett is a visitin g distinguish ed professor of logistics and supply chai
management at Georgia Southern University. His current teaching and research interests focus on collaborative
business model design and global supply chain strategy. He has published over 100 articles and six books on
topics related to supply cha in, such as supply chain design, information techno logy as a collaboration enabler
leading a change through learning, performance measurement, and trust. He is the co-editor-in-chief of the
ournal of
usiness
Logistics
He has taught executive development programs in Asia, Europe, and North a
South America.
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ompanies succeed when they
identify customer needs, develop a
vital. Specifically, superb
levels of customer value. The
ons.The time horizon
wo uld oth erwise have to forecast.
world-class suppliers work with
both suppliers and buyers to build buffer
stocks to avoid risk, and without a shared
view o f consumer purchases, the planning
systems of both buyer and supplier tend
to build inventories based upon historical
shipment variability that is not related to
consumer buying patterns. As a result,
the buyer-seller relationship is often
adversarial.
What is needed is a mechanism to
orchestrate the value-added activities of
the fir m and the supply c hain. Fortunately,
tw o well-established process managem ent
models exist to help companies begin to
sing from the same sheet of music. Sales
and Ope rations Planning (S&OP) isa proven
process model designed to knock down
the walls that impede communication
and coordination among decision makers
wit hin a firm. Collaborative Planning,
Forecasting and Replenishment (CPFR)
is a time-tested approach to bridging
the gaps that limit collaboration across
organizational boundaries. By linking
S&OP and CPFR practices, it is possible to
establish synchronized operations across
an entire supply ch ain. The follo wing
sections briefly introduce S&OP and
CPFR, describe core goals, discuss key
imple men tation steps, and define essential
execution requirements. A case study tha t
demonstrates the viability of bringing
S OP
an d
CPFR
together
is
the n shared.
S LES N D O P E R T IO N S P L N N IN G
S&OP eme rged in the 1980s as a produ ct ion- p lann ing too l .The goal was to create th e
vis ib i l i ty necessary to ba lance supply w i th dem and . The key was to set up a process
that would br ing the customer-facing and supply-facing sides of the organizat ion
togeth er o n a freque nt and regular basis. In essence, by increasing com mu nicat io n,
a l l o f the essent ia l va lue-added act iv i t ies o f the f i r m could agree on and w ork of f a
single set of numb ers. This one-for ecas t pla nnin g leads to greater responsiveness,
less was te, and less finge r p oin tin g.
Over time, S&OP has become more
strategic, involving higher-level executives
and incorporatingagreater unders tanding
of the external environment into the
planning process. Although the goal
remains to establish a consensus one-
forecast plan, mo re emphasis is placed on
understanding the business environme nt,
supporting the corporate strategy, and
synchron izing the value-added activities of
the firm. In essence, S&OP seeks to shape,,
not just forecast, demand. By marshaling
the entire organization's resources to mee t
customer needs, competitive advantage is
sought. Palmatier and Crum (2010) define
S&OP as follows :
Sales & Operations Planning is a process
led by senior manag emen t that evaluates
and revises time-phased projections for
demand, supply, product and portfol io
changes, strategic projects, and the
resulting financial plans. This is done on a
mo nthly basis, typically over a 24-mo nth
rol l ing plan ning horizon. It is a decision-
making process that realigns the tactical
plans for all business functions in all
geographies to support the company's
business goals and targets. A primary
objective of S&OP is to reach consensus
on a single operating plan, to which
execut ives of the man agem entteam hold
themselves accountable and al locate the
crit ical resources of people, equipment,
inventory, materials, t ime , and money
to rf st effectively satisfy customers-in a
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T
Figure1
|
The S OP Process
Product Strategy
Straegic Ptannin :
NewProduct Introductior
Product Re-posit ioning
Oiscontlnuance
Operatir} Review:
Product Profttabtlity
olume
Penetration
Portfolio Valu Effect
Competitive Strategy
emand Strategy
Strotefic Pionning;
Portfolio Management
Piiclng Strategy
Brand M
Operatins Review:
Demand PUnnin
Forecast Review
Economc Analysis
Promotion Planning
Consensus Forecast
upply trategy
Strategic Plannins:
Make
vs.Buy
Manuf acturtng Capacity
Supplier Development
Operatins Review:
Production Scheduling
Order Management
Invwitory Planning
Logistics Planning
Expediting
AignedBusness Pannng
Strategic Reconciliation
Operating Reconciliation
profitable way.
Figure
1
exennplifies
the
basic S&OP
planning process. An ongoing scanning-
and-planning process develops
a
corporate strategy
to
leverage core
organizational capabilities
to
achieve
a competitive advantage. Thedefined
strategy then directs
the
continued
development
of
product, demand,
and
supply strategies and operations. Within
this context, five monthly review meetings
take placetomake sure that everyoneis
workingina coordinated way to support
overall corporate goals andcreate
an
integrated operating plan that effectively
aligns supply and demand.
Product Management Review
|
Ensures that the product plan, including
new products and assortment plans
as
well asother strategic growth activities
of the company, is on track for time, cost,
demand,
supply, and resources, and that
all
of
these plans are
in
alignment with
strategic goals.The Product Management
Review assuresthehealth ofthe firms
innovation pipeline and informs demand
and supply planning.
2 emand Review|
chieves
consensus on a valid, unbiased demand
plan that will become
the
request
for
product from theend-to-end Supply
Chain aswell
as
integrated financiis
and gapmanagement activities within
and across trading partners. The output
of the Demand Review
is an
unbiased
demand plan over
a
rolling 18-to-24-
month horizon with assumptions, risks,
and opportunities identified aswellas
Table 1
|
Performance improvements Attributabie to S OP
enefits Rangeof Percent Improvement
Increased Forecast Accuracy
Increased Sales Revenue
Improved On-Time Delivery
Reduced Inventory
Reduced Safety Stock
Increased Productivity
18-25
10-15
10-50
18-46
11-45
30-45
Source Pamaier GeorgeandColeenCumTranstionngfromS OPtoIntegratedBusnessPannng
Oiver Wight WhtePaper Series 2010
action planstoaddress gaps inan
and strategic business objectives.
3. Suppiy Review|Ensures supply c
bilityincluding manufacturing capac
supply chain inventory, transportati
and logistics/DC capacityand resour
can meet thedemand plan, custo
service, quality, and cost object
The Supply Review makes certain th
contingency plans
are
identified
address additional demand risks
opportunities identified by the Dema
Review.
4. integrated Reconciiiation
|
Iden
and resolves
key
imbalances ident
in
the
Product, Demand,
or
Sup
Reviews. Additionally, this step utiliz
the Demand and Supply plans to deve
the integrated financial plan includ
revenue, margin, and other P&L, balan
sheet, and cash flow effects.
5. Management Business Review
Approves
the
consolidated operat
and financial plan from
the
steps
and
makes decisions regar
imbalances that were identified,
bu
resolved during
the
monthly cycle.
Management Business Review alig
plans anddecisions with thedef
business strategies.
To summarize, S&OP
isan
alignm
process that gets
althe
diffe
functions
of an
organization
pull
inthe
same direction. S
helps
an
organization move fro
traditional annual planning proce
to
a
continuous re-planning proc
Importantly, improved decis
making leads
to
impressive opera
improvements (see Table 1), as well
more trust and better relationships
the leadershipteam.Overtime,wor
together tosolve problems and b
capabilities becomes easier and yie
new competitive opportunities.
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P L A N N iN G
PFR
recognizes tiiat p ianning and execution can be improv ed furthe r whe n trad ing
as
S OP strives to get all of the functiona l areas with in
to pull tog ether to achieve the company's strategic goais, CPFR argues tha t
ation across organizationai iines
can
heip aiign supply
chain
efforts t o
vaiue
creation.
For
exam ple, in S OP,
a
central
goal is
to develop
a
consensus,
is,
a one-num ber forecast of demand to estimate
as
accurately
as
possibie what
companycanexpect to
sell
to customers over
a
specified tim eperiod.
PFR
argues
someone already know s, with much greater ce rtainty, what a company's saies
be.
Thatsomeone
is
th e customer, if customers
are
w iiling tosharetheir purchase
including promotion scheduies and other drivers of variation, suppliers can
rove the ir forecasts and operating efficiencies.
t of customer dema nd. CPFR
ies and m arketing best practices,
cs costs.
y variant of the modei
performance.
The
model also applies
upstream buyer
and
seiier relationships.
. Strategy Planning | Estabiish the
Demand Supply M anagement
as weli as order and shipment
ements over the planning ho rizon.
Execution| Place orders, prepare and
products on retail shelves, record sales
transactions,
and
make payments.
4 .
Analysis | Monitor planning and
execution activ i t ies for exception
condit ions caused by unforeseen
environmental or market risk events.
Figure 2 |T he CPFR Process
supp ly cha in d i s rup t ions , o r a
performance breakdown. Aggregate
resuits and calculate key performance
metrics. Share insights and adjust plans
for continuously improved results.
While these collaboration activities
are presented in iogicai order, most
companies are involved in all of them
at any moment in time. There is no
predefined sequence of steps. For
example, execution issues can impact
strategy, and analysis can iead to
adjustments
in
forecasts.
Like S OP programs, CPFR programs
have clear calendars of weekly, monthly,
quarterly, and annual activities that
govern the coiiaborative planning and
execution cycle.These plann ing meetings
involve managers at all levels of the
trading partner organizations. Specific
responsibiiities
are
described below.
Executive Level | Sem i-annual or
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annual meetings of the trading partners'
senior management team define and
redefine strategies, align organizational
goals, allocate resources, and establish
appropriate high-level measures to
document progress. Similarly, executives
are tasked with evaluating continuous
improvement opportunities and seeking
renewal opportunities.
Tactical Level | Quarterly planning
meetings involve process owners and
fo cu s o n d e f i n i n g /u p d a t i n g sp e c i f i c
tac t i cs and de l i ve rab les fo r the
collaborative init iative. More frequent,
rout ine communicat ions
(i.e.,
weekly
or monthly collaborative meetings or
conference calls) review the results
of initiatives and manage exceptions.
These meetings can be relatively brief or
extended, depen ding on the nature of the
initiative being discussed as well as the
importan ce of the specific trading partner
relationship. Suggested agenda items
include 1) reviewing current metrics, 2)
managing team initiatives, 3) resolving
supply constraints, and 4) reviewing
changes to the demand forecast caused
by promotional planning, assortment
planning, or any other changes to the
demand p lan.
To summarize, CPFR is an a l ignment
p roce ss th a t p ro m o te s i n fo rm a t i o n
shar ing among t rad ing pa r tne rs to
enhance c o l labora t i v e p lann ing . CPFR
he lps t rad ing pa r tne rs move f rom
re a c t i ve m a n a g e m e n t t o p ro a c t i ve
p la n n in g a n d e xe cu t i o n . Im p o r ta n t l y ,
improved co l labora t ion leads to
impress ive opera t ing improvements
(see Table 2) as well as more trust and
better re la t ionships among trad ing
partners. Over t ime, working together
to solve problems and build capabil i t ies
enables partners to expand their efforts
beyond seeking improved efficiencies to
unlocking va lue through co l laborat ive
innova t ion .
Table 2 1 Performance Improvem ents Attributa ble to CPFR
Benefits
Improved Forecast Accuracy
Increased Sales
Increased M argin Rate
Improve d On-Time Delivery
Increased In-Stocks
Decreased Inventory
Decreased Opera ting an d Logistics Costs
Range of Percent Improvem ent
20-30%
10-30%
2-6%
5-10%
2-7%
10-30%
10-28%
Source:
VI S
CPFR Case Studies and C ollaborat ive Com merce Awa rd Winners.
LINKING S OP AND CPFR:
A CASE STUDY
Because resources are scarce, developing a large-scale CPFR program dictate
d ist inct leve ls o f re la t ionsh ip in tensi ty. Al tho ugh a CPFR lead partner may cata lyz
change among many of i ts t rad ing partners, on ly a l imi ted number o f in tens
col laborat ions wi th key trad in g partners can be pursued. Amo ng these stra teg i
a l l iance partnersh ips, the opportun i ty exists to l ink S&OP and CPFR to create
col laborat ive, synchronized end-to-e nd supply chain.
Both S&OP and CPFR are best practice
collaboration processes. S&OP is a
strategic management process that
aligns centers of functional excellence
in a coordinated internal col laborative
process. CPFR is a strategic ma nage me nt
process that al igns the complementary
capab i l i t i es o f t rad ing pa r tne rs in a
c o o r d i n a t e d e x t e r n a l c o l l a b o r a t i v e
process. By lin kin g S&OP and CPFR, a
two-stage, integrated business planning
process emerges. Stage I involves the
creation of go-to-market strategies that
are informed by customer insight. Stage
II focuses on executing the operational
plan to create the pro mise d value. This
combinat ionknowing exact ly what
value to create as well as being able to
actually manage core processes to create
itis the source of
a
winn ing com pet i t ive
strategy. The Lowe's H ome Impro vem ent
engagement with Whirlpool reveals how
such an integrated business plan can be
developed.
Unti l recently, most of the com mu nicatio
between Lowe's and Whirlpool wa
through their Merchandising and Sale
organizations. The relationship wa
often strained. Each firm made decision
tha t adverse ly a f fec ted the o the r
the adverse affect often came from
lack of communication rather than a
inherent confl ict. For example. Whirlpoo
introduced a new l ine of wh ite good s. A
W hirlpool team leaders described the new
product line and its launch, both Lowe'
and Whirlpool w ere excited to get the l in
into the store
as
quickly
as
possible. Whe
the launch date was set, the team leade
from Lowe's asked, When did you know
you were going to bring this l ine to th
market? The answer was, We've know
for months. If Wh irlpool had shared thi
in format ion, the two companies coul
have avoided the need to negotiate th
split for tens of thousands of dollars o
l iquidation costs required to sell out th
existing line. A little trust and share
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Figure3 Lowe s/Whirlpool StageI Traditional Demand/Supply Planning
(2007-2008)
Figure
4
Visibility s Influence
Lowe's S OP
Business
Planning
Whirlpool S OP
Sales
Planning
1
l
Operations Planning (CPFR)
Planning Horizon - 0-3 Months
Execution Zone
Store Execution
Logistics Planning
information would have saved both
companies aggravation and money.
Thus,
three years ago, the two firms
embarked on multi-phase collaborative
journey. Today, Lowe's and Whirlpool
are in the early stages of running an
Integrated Business Planning process.
Stage I began with a focus on collabor-
ative demand planning, concentrating
primarily on order forecasting, with
limited discussion of sell-through or
inventory. Figure 3 shows the linkage
between Lowe's and Whirlpool at
the operational level. Collaborative
discussions were focused on the near-
term horizon, typically less than three
months, with very little consistent mid-
range or long-term planning. Demand
planning activities were more heavily
dependent upon statistical forecasting.
Execution Zone
Manufacturing Planning
Logistics Planning
with very little enrichment applied to
the forecast. Limited visibility to each
company's go-to-market plan created
disconnects in objectives. The two
companies basically had independent
business plans driving their individual
sales and operationa l plans.
After stabilizing the collaborative de-
mand planning process, Lowe's and
Whirlpool moved more towards supply
planning. Lowe's initial focus was
on recognizing the capabilities and
limitation s of Whirlpool'smanufacturing
divisions. Both companies worked to
develop
n
understanding of
e ch
other's
required target inventory levels and the
importance of product transition
plan-
ning relative to inventory. Their
supply chain organizations became
actively involved with the sales
IN-SEASON
REPLANNING
EXECUTION
PERIOD
and merchandising organization
Importantly, collaboration at this stag
typically existed at the operational lev
of the organizations and was focuse
on demand and supply planning a
the item level, with forecasts reviewe
between forecast teams. Becaus
higher-level collaboration was sporad
and inconsistent, sales plans seldom
accountedforfutureadvertising, pr om o
tion,
and product-transition initiative
Operational planning in each organ
zation was therefore based on inaccura
demand forecasts. Without visibilit
performance targets were easi
missed and the costs of resolutio
were
high.
For example, Lowe's us
the process as shown in Figure
to emphasize the importance o
increasing forward visibility. Conside
progressing through a season from
left to r ight, going from the mos
fo rw ard - lo ok ing p lans to a mor
tactical execution. The far right wa
the point in time where the produc
was moving and was close to landin
at the stores to be
sold.
When movin
through the year, changes occurred
causing disruptions. But as forwar
visibility increases, more options ar
available and the costs of those op tion
are lower. Higher-level CPFR linkage
improve visibility and relationshi
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5 Lowe's/Whirlpool StageI I: Integra ted Sales
Operations Planning (2008-2009)
Figure
Lowe's/Whirlpool Stage
II I :
Integrated Business
Planning(2010)
Lowe's S&OP
Business
Planning
Whirlpool S&OP
Sales /
Marketing
Planning
Demand
Planning
Execution Zone
Store Execution
Logistics Planning
Marchandising ft Operations
Planning (MaOP)
Plannin Horizon - 3-6 Months
StrangthflnedCollaboration with common
BustnesiPlanning Tools that co-exist
betweenLowe's and Whirlpool
Operations Planning
Planning Horizon - 0-3Months
Demand Review / Supply Review
Demand
Planning
Execu t i on Zone
Manufacturing Planning
Logistics Planning
Sa les /
Marketing
Planning^,
Lowe's S&OP
Business
Planning
Strategic Account Plannlna
Planning Horizon 6-12 Months
Whirlpool S&OP
Business
Planning
Merchandis ing & Oprat ions
Planning tHgiOP)
Planning Horizon - 3-6 Months
Act ion i tems from
CPFR serve as inpu ts
into monthiy S&OP
Business Reviews
Operat ions Planning (CPFRl
Pianning Hof izon - 0-3 Months Demand
Planning
Demand Review / Supply Review
wh ich is depict ed in Figure
OP
process to provide the infrastructure
salesand mark eting planning,
to change the
ews drove business planning towards
ligned forecasts and sales
ns. Throug h strengthened produc t
calendar for each product category
emerged. Greater forward visibility al-
lowed the two companies to extend their
planning horizon to three to six mon ths.
Lowe's and Whirlpool both realized
another benef i t f rom implement ing
a join t sales and marketing planning
process. Their own internal collab oration
efforts improved substantial ly due to the
discipl ine required to runajoin t sales and
ma rketing plan ning process. Yet, desp ite
the improvements, several challenges
remained.
The plannin g h orizon was still
too short and senior management was
not routinely involved, wh ich l imited
their abil i ty to achieve their goal of an
Integrated Business Planning process.
Stage III, show n in Figure 6, was initiate d
to address these shortfalls. New CPFR
linkages were created to extend their
planning horizon to 6 to 12 months
including directly connecting the Opera-
tions Planning process v^ith the Merchan-
dising and Operations Planning process
to create
a
closed-loop plann ing process.
Notice that information flows from the
top down. Driven by monthly leadership
reviews with senior management, both
companies achieved a more developed
joint strategic planning process buil t
around joint business objectives. These
join t objectives were driven thro ugh each
of their internal sales and operational
planning processes. Such integrated,
objective planning is providing value-
added direction for existing CPFR
processes across the operations. In
the event that Lowe's and Whir lpool
need to ad just the ir jo in t p lans due
to changing business condi t ions, th is
model o f longer p lanning horizon wi l l
provide the necessary forward vis ib i l i ty
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to adjust their p lans with optimal
impact on sa les and pro f i tab i l i ty .
Importantly, the journey to integrated
business planning has helped Lowe's
and Whirlpool to realize improvements
in several key metrics. Unit sales gro wth
over the last three yearsis up 12
while overall inventory costs are down
5 . On-time shipments have improved
by th ree po in ts . Moreover , bo th
companies are driving faster, more
ef f ic ient dec is ion making, which
improves f lexibi l i ty andbu
predictability. Lowe's and Whir
believe that a primary dr iv
these business improvements
the creation and evolution of
collaborative model.
R E Q U I R E M E N T S
FOR
IN T E G R A T E D B U S IN E S S P L A N N IN G
To better understand the essential elements of a successful integrated business planning initiative, we evaluated nomin
forms for the
VI S
Collaboration Innovation Award for the years 2005-2010.
We focused on the 16 award finalists/
winners. These companies represent
leading-edge collaborative practice.
Figure 7 ident i f ies the ten most
frequently emphasized keys to success.
Not surprisingly, linked information
technology was the most frequently
cited requirement (88 ). Both CPFR
and S&OP are data intensive. Success
requires that accurate, relevant, and
timely databeavailabletodecision
makers at both partner companies.
Linked systems reduce data-entry error
and assure timely sharing. Somewhat
more surprising was the equal emphasis
placed on a cultural predispositionto
share relevant information (88 ).If
managers insist on hoarding sensitive
information to maintain power or avoid
vulnerability, linked systems will not
enable better decision making. Process
redesign was also emphasized by 88
Figure
7
Requirements for a Successfui Journey to integrated Business Planning
Periodic Review
Change Management
Trust
Early Results
Align Goals
nter-organizat ional Teams
Execut ive Com mitme nt
Share Data
Process Redesign
Linked IT
l l l j l l l l i l l l l l l 5
t
>
^ ^ ^ 3 6 3
l l l
J 1 1 I 1
|MH MB|^MBHHHHBHBap88
0 2 4 6 8 100
Percent of Com panies
of the nominating managers. Clea
core goal of both CPFR and S&OP
build
a
better de cision-making p
which will require a new approa
doing business. Managers who ar
willingtochange the way they
will not be able to implement CPF
S&OP.The integrated business pla
and its benefits will always rema
of reach.
As the Lowe's/Whirlpool case de
strated, executive commitmen
involvem ent (81 ) as we ll as s
inter-organizational teams (81
a prerequisitetosuccess. Only
senior executives areinvolve
committedtothe process, onl
needed resources will be dedicat
the implem entation initiative. Like
only senior managers have the
to remove the physical and cu
constraints that impede bala
supply and demand. Effective t
are them echan ism for w
across organizational boundaries
ul t imately gett ing the work
Both theexecutive leadershi
the inter-organizational teams
responsible for iden tifying appro
initiative objectives, aligning th ei
organizational goals to these
goals, and then puttinginpla
measures needed to communicat
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ent (63 ) is ove rlooke d,
uccesses se ldom end ure beyo nd
rs t d is rup t ion .
the
change management process
). Early results (63 ) are needed to
As early wins are turned into success
mo me ntum for collaborative
planning builds. People like to be
associated with a winning team. Similarly,
trust (63 ) is needed for managers to be
willing to share sensitive information,
experiment with new working styles, and
accept the risks associated with both of
these behaviors. Ultimately, although
significant investments in information
technology are needed to support
integrated business planning, behavioral
issues will de term ine an initiative's success.
Finally, management needs to establish a
periodic review process (56 ) to iden tify,
evaluate, and resolve problems that arise
throughout the transformation process.
An appropriate scorecard is invaluable
to this process. The bot tom line: Mo ving
towards integrated business planning is
a journ ey th at requires frequent checks
against milestones as we ll as rapid course
corrections. Periodic reviews are
the
signposts that guide th e journey.
PFR and S OP offer impressive m arket and operating benefits. When the tw o initiatives are iinked, a new, coiiaborative
operating th e business can emerge. Indeed, the process of implem enting and vaiidating CPFR and
OP programs yields many intangible benefits that prom ote a new w ay of working together to create customer vaiue.
8 s u m m a r i z e s s o m e o f
gible benefits achieved
by the final ist companies. Both groups
achieve impressive benefits in the areas
of better communicat ion and improved
wo rk i n g re l a t i o n sh ip s . Ho we ve r , t h e
award winners ach ieved substan t ia l l y
better serendipitous benefits in the areas
8
Intangible Benefits Associated with th e Journey to Integrated
Business Planning
er Im p lementa t ion
of Nev^ Ideas
Accountabil i ty
Stepping Stone to New
Opportun i t ies
More Trust
More Time
Strategic Planning
Improved Customer
Satlsfication
Better Working
Relat ionship
Better
Communica t ion
Finalists
Winners
1 2 3 4 5 6 7 8 9 1
Percent of Com panies
of improved customer satisfaction,
more
t ime for strategic planning, and greater
trust.Finally,about half ofailthe nominees
reported that their CPFR initiatives had
o p e n e d d o o r s t o n e w c o l l a b o r a t i v e
opportun i t ies that extend beyond
the
operating realm of information sharing,
forecasting, and inventory management.
Such benefits are vital to keeping senior
executives engaged in the process. As
companies work together to solve
the
problems encountered in the CPFR and/
or S&OP implementation processes, they
build the skills and the relationships
to p u rsu e co l l a b o ra t i ve i n n o va t i o n .
Unlocking this potential wil l lead to
new venues for sustainable competit ive
advantage. info@ibf org
REFERENCES
1.PALMATIER, GEORGE AND
C O L L E E N C R U M
| Transitioningfrom
S OPto IntegratedBusinessPlanning Oliver
Wr ight W hite Paper Series, 2010.
2.
V I C
S
IUnking
CPFR
andS OP:A
Roadmap to IntegratedBusinessPlanning
VI S
Voluntary Interindustry Com merce
Solutions. Lawrenc evil le, N ew Jersey, 2010.
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8/11/2019 '^ Roadmap to Linking
10/10
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