Integrated planning is critical to any company that hopes to realize its long-term goals. Organizations need an integrated strategic plan that aligns with their overall strategy to attract and retain top talent, improve efficiency, and boost revenue.
For instance, Oliver Wight leveraged integration planning to slash 120,000 items to about 10,000 while improving on-time delivery by 20%. Here's all you need to know about integrated planning.
What is integrated planning?
An integrated plan describes a cross-functional planning process involving all the stakeholders at the right time. Integration planning ensures your organization achieves its target outcome using operational, financial, and capital resources allocation to maximize profit.
An integrated planning approach is key to streamlined capital resource allocation, as it enables strategic data-driven decision-making. It will help you achieve the following:
- Higher profit margins
- Improved revenue and demand
- Better cash flow
- Enhanced service levels
- Optimal inventory management
What is the focus of integrated planning?
In response to the growing demand for data-driven decision-making among organizations, predictive analytics utilizes internal and external data augmented by machine learning to produce reliable demand forecasts.
Businesses can use accurate forecasts of future demand to adopt a "just-in-time" inventory strategy and avoid stock-outs. Detailed demand planning also results in more precise budget projections.
Product management review
Different departments often meet to assess the development of all product-related initiatives to ensure the availability of raw materials and production line space.
If adjustments are necessary, product managers update the master plan and make it public, along with the resources required to implement those changes.
For instance, Uponor initially focused on the supply chain and adopted S&OP processes, making the jump to IBP the following year. That led to a €1.1 billion rise in net sales, a 30% increase in on-time, in-full deliveries, a 50% decrease in inventories, and greater transparency.
Without borders to protect them, supply chains leave organizations vulnerable to the knock-on effects of equipment shortages and delays in other parts of the world.
Organizations need to be more agile than ever to adapt to the ever-changing standards and laws, adopting more rigorous planning and tighter budgetary measures.
In the face of global unpredictability, the only way to achieve this is through streamlining integrated planning procedures that reduce or eliminate communication delays and guides the entire team toward the company's objectives.
Now more than ever, the customer is king. As a result, organizations must adjust how they interact with new and returning clients to ensure they have a great experience. That offers tangible rewards: 84% of organizations with improved customer experience reported increased revenue.
To achieve universal customer approval, organizations must ingrain customer centricity. While siloed decision-making might seem a good idea to target sections of your customer base, it ignores crucial factors.
On the other hand, integrated planning allows companies to develop a cohesive image of their customers, efficiently providing customized services and initiative.
Why is integrated planning important?
- Provides a sense of purpose
Integrated planning ensures that your organization follows its stated purpose, long-term goals, and available resources. Organizations with strategies and plans know how to respond to day-to-day issues in readiness for the future.
Integrated planning provides the guiding star, shaping immediate actions that reinforce and complement long-term objectives.
- Directs attention toward desired outcomes
An organization implementing an integrated plan is more likely to achieve its goals. Moreover, it drives workers to keep the objective in mind.
Data gleaned from integrated planning during the integrated planning process equips top-level management with the knowledge they need to allocate resources in a way that helps the organization achieve its goals.
That will increase the organization's efficiency as employees will direct their efforts towards core activities.
- Builds the foundation for effective collaboration
An integrated planning process fosters cooperation and teamwork. Without integrated planning in an organization, diverse groups will struggle to work closely on joint projects.
When you implement integrated planning, everyone in the organization knows their roles. Moreover, all departments will utilize their skills and knowledge to achieve the stated goals. They realize how their efforts benefit the company, giving them a sense of accomplishment.
By including department and division heads in the goal-setting process, the management can lessen the likelihood of disputes. When people have a hand in setting financial performance goals, they feel more invested and are less inclined to reject consensus decisions.
- Facilitates problem-solving and adaptability
Integrated planning allows the leadership of an organization to have better foresight into potential risks and the opportunity to make proactive adjustments before they escalate.
Even though unexpected events can catch any company off guard, many market shifts are predictable. Preparation lessens the likelihood of making mistakes and absorbing unpleasant surprises.
- Includes criteria for making decisions
It would help if you always considered future outcomes when making decisions. Without long-term objectives, management has few standards against which to measure the merits of potential options when faced with a choice today.
Traditional planning infrastructure can turn decision-making into organizational boundaries and fragmented processes that often function at cross-purposes. However, integrated planning guarantees that all key stakeholders are pursuing the same objective with full awareness of each other's actions and the organization-wide effects of those actions.
- Acts as a prerequisite for carrying out any other forms of management
It is challenging for the management of organizations to carry out the other fundamental managerial activities like organizing, staffing, leading, and controlling without integrated planning.
- Increased accountability
It's impossible to overstate the value of an accountability process. In a poll, 91% of respondents pinpointed accountability as the most valued commodity in the workplace.
A reliable strategy is essential for productive performance management. Without a solid, tried-and-true plan, ensuring that individuals stay committed to seeing through on their commitments can be challenging.
For instance, if an employee knows the tasks assigned for the day, you can measure their output against a predetermined goal. Integrated planning is thus critically important to the control function. Further, you can use budgetary control to manage expenditures effectively.
- Encourages innovation and creativity
Businesses must constantly generate new ideas and be open to new ways of thinking to stay ahead of cutthroat competition.
Integrated planning is essential for productive management since it allows for reflection, creates a conducive atmosphere for idea generation, and helps keep everyone speaking the same language.
How do you develop an integrated plan?
To successfully execute integrated business planning, you must first have a well-defined set of roles and duties and a coordinated calendar that helps to align multiple functions for maximum efficiency during the integrated planning process.
And you would want to do that, as poor implementation is why 67% of well-planned strategies fail. When your organization uses integrated planning, everyone works toward the same goals.
Here are five factors to consider when developing integrated business planning:
- Share your long-term plans
To achieve your organization's planning goals, you need a well-defined strategy. Make sure you focus on realistic financial targets contributing to the organization's long-term business strategy for success.
This strategic process must include realistic financial goals for the expansion. The strategy needs to detail your steps, product categories, target markets, and the most valuable customer segments.
- Include relevant stakeholders
The best way to pinpoint requirements and shortcomings is to have multiple departments chip in with suggestions. It is also essential that your planning groups incorporate customer and consumer feedback at this point.
When your planning team assimilates key stakeholders' insights and includes their participation at every stage of integrated planning, the planning efforts are much more likely to be successful if they own processes leading to the creation of the integrated plan.
You can make more informed planning decisions if you have the most relevant data. Cooperation between different departments is key to successful reorganization and realizing growth targets.
Including stakeholders in planning talks also identifies essential account needs and incorporates customer and consumer feedback.
- Make sure you have the timing down.
Sometimes you need to make planning decisions fast to respond quickly and efficiently to emerging issues. You should prioritize and work towards the organization's mission and the actions that support it, even though its specific focus may shift from time to time in response to changing circumstances or on the advice of management.
- Continuously develop common KPIs.
You should always communicate openly and quantify the current state of affairs and your budget projections using key metrics.
Collaborate across the planning teams to create a set of standard KPIs and ensure that everyone understands and agrees on the typical definitions of these KPIs. Researchers found that 67% of employees do not understand their roles after the launch of new growth initiatives.
Good governance encourages cooperation, builds confidence in information, and opens lines of communication. The planning processes will go on without a hitch if everyone speaks a common language.
- Put together a plan with the help of tools.
For integrated planning success, you need a central repository for all your data sources, access to advanced analytics, and reporting capabilities. These will help manage your portfolio and create a list of selected strategic initiatives.
Having reliable integrated planning tools at your disposal will ensure that you can offer advice and information to leadership whenever they need it.
One of the best ways to implement integrated planning is to abandon the traditional planning process and set strategic priorities that target improved efficiency and cash flow.
Strategic planning and decision-making is at the heart of integrated planning as it champions a data-driven planning framework, data tracking and evaluation, and risk and challenge identification.
Integrated planning is a cross-functional process involving cross-functional groups that will help your organization prioritize and coordinate resource usage, thereby improving your bottom line.