From Good to Great: Embracing IBP for profitable and sustainable growth 1

White paper

From Good to Great:

Embracing IBP
for profitable and
sustainable growth
From Good to Great: Embracing IBP for profitable and sustainable growth 22

Supply chain-led IBP processes

are holding companies back
from achieving the full potential
of an integrated IBP

S&OP Next-Gen IBP process Is the promised next-gen IBP going to

truly optimize business decisions and
•  Lack of decision-making focus •  End-to-end value chain visibility their ESG impacts?
•  Cumbersome presentation preperation •  Predictive analysis
Today, industry leaders are already on a clear
(excess of 100 sildes!)
•  Simulation & optimization path towards next-generation IBP, which
•  Missing data and short-term focused encompasses the integration of commercial,
•  Digital user experience supply chain, and finance-driven decisions,
•  Long meeting time and too many meetings enabled by bi-directional propagation of the
•  Circularity and product life time value impact of such decisions across the value
•  Vague action plan & follow up chain and different time horizons. However,
•  Decision-making focused even next-gen IBP falls short of what the
future demands. We will show that there’s
an increasing need to move beyond the notion
of what might happen to a more proactive
approach centered on what needs to happen
to achieve both Financial
and Environmental goals.
Let us first unpack what next-gen
IBP encompasses. The future of IBP
necessitates a significant shift in thinking,
driven by the new normal of volatile supply
and demand. Increasing numbers of
companies are recognizing the importance
of bringing together the three key functions
involved in planning decisions (commercial,
supply chain, and finance); breaking free
of siloes, and revolutionizing the way or-
ganizations approach demand management
and decision-making. To realize this, it is
necessary to explore the implications of
next-gen IBP across these three core areas.
Each domain presents unique opportunities
and challenges that must be navigated to
unlock the full value potential.

Furthermore, organizations must

consider how to bridge the gap between the
current state and next-gen IBP. This journey
requires a holistic approach, contemplating
questions related to data challenges and
embracing the necessary changes that
become pivotal steps toward achieving the
desired future state.
From Good to Great: Embracing IBP for profitable and sustainable growth 33

Digital representation
of value chains

It should be noted that in an increasingly complex and volatile

environment, timely decision-making requires a digital representation
of one’s extended value chain (with the required granularity) within
an organization’s IBP process. By leveraging a digital representation of
the value chain, businesses can break down functional data silos
and achieve a “cross-functional view of the truth” that is consistent
across different planning horizons. Modern cloud-native solutions
allow for the representation of complex relationships between entities,
such as products, parts, brands, markets, customers, and suppliers,
ensuring a holistic understanding of the (extended) value chain, using
so-called graph modeling.
From Good to Great: Embracing IBP for profitable and sustainable growth 4

Such a digital representation of a company’s

value chain enables companies to optimize Demand Planning collects the building blocks of demand and generates the volume forecast
decision-making in two ways. First, by
considering various functional views visually,
Financial Planning monetizes the volume forecast and generated the financial forecast
and second, by understanding the trade-
offs and constraints between these
functions. A digital representation of a
company’s value chain in the form of a graph
S&OE (Weekly Cycle) S&OP (Monthly Cycle)
model can also easily incorporate relevant
external information. These three factors
drive optimal decision-making and, in turn,
more efficient operational execution. Demand Supply S&OE Product Demand Supply Integrated Management
Control Control Review Management Management Management Reconcilitation Business
Review Review Review Review
Moreover, such solutions offer flexibility
and extensibility; the former because they
are able to easily adapt to changing business
rules and configurations, unlike legacy IBP
systems. The latter, because it is easy to add
e.g. new products, markets, or categories.

Incorporating eight key meetings which enable true cross-functional integrated planning
From Good to Great: Embracing IBP for profitable and sustainable growth 5

Case study: next-gen IBP

foundation and future-proofing

At one of the world’s largest food & beverage companies, the

implementation of the :o9 platform and its IBP Solution has facilitated
a forward-thinking setup and laid the foundation for further
use cases (to be discussed later in this paper). At this company, the
next-gen IBP program is a critical program in bringing their digital
transformation ambition to life and delivering on this company’s
aspirations of being faster to react to market opportunities, and
more resilient in the face of demand and supply shocks across the
value chain.
From Good to Great: Embracing IBP for profitable and sustainable growth 6

What does a best-in-class, next-gen IBP

process look like?
Within Supply Monthly Review (SMR), we
At a high level for this successful manu- enable the Supply Chain teams to evaluate
facturer, :o9 has enabled monthly tactical the cost to serve and the supportability of
planning models driving IBP decisions related multiple demand scenarios; combining LP
to material and capacity plans. This is optimizers with Heuristics Solvers.
then connected to weekly planning models
supporting short-term Sales and Operations As part of Financial Re-
Execution (S&OE) decision-making processes. conciliation and Monthly Business
Review, we have enabled finance
Within this IBP process sits the and P&L owners to hone in on
Demand Monthly Review (DMR), where we are the scenario that best meets
integrating commercial and demand plans the financial goals and risks that
enabling the financial simulation of commercial the company can then execute.
levers to create different demand scenarios. Within S&OE, we have enabled
This is game-changing when compared in-platform analysis of different
with typical legacy solutions which supply options at weekly
require an overnight batch job of the entire granularity based on heuristics
Commercial plan to be able to understand and customer allocation rules.
the potential financial implications of different
demand scenarios. Or the default way of
working for many blue chip companies — a
complicated Excel or besproke database to
run Scenario planning, often governed by
only a few who understand it and typically
unexplainable to the rest of the organization.
From Good to Great: Embracing IBP for profitable and sustainable growth 7

Balancing medium-term optimal decision-

making with short-term agility
The Enterprise Knowledge Graph connects DP, SP and Financial Planning
This setup enables optimal decision-making in
the mid-term, whilst providing the short-term
agility required to address fluctuations as they Demand Analysis Commercial Supportability & Cost-To-Serve what ifs Executive/Finance IBP
—KPI review & Portfolio performance review —SC Planning Policy Review —Financial Review
arise. Thus, the :o9 platform drives seamless —Current Cycle’s Must Win Battles —Supportability —Directional Monetization
horizontal integration of decision-making —YTD/YTG —YTD/YTG —Scenario Review & Approval
—Performance to plan KPIs —Incremental + Non-STD cost analysis —Decisions, Actions, Escalations tracking
and pushes the decision made directly to the —TPO (Total Portfolio Optimization) —Supply options feasibility analysis
planning systems of record. Let us dive a little
further into the framework. Commercial Simulations (Gap Closure) Supply Risk What-ifs (Supply Chain Simulations) Executive Business Plan Review
—Gap Closing —Cost changes and limits —Commercial Review & Approvals
—AOP/PxF —Constraints — Gap Analysis
Commercial IBP —Idea Tracker —Demand shaping considerations — Supply Review & Approvals
—R&O Simulation — Supportability
The commercial side of the IBP process —R&O Monetization —Constraints
provides valuable insights to the organization —Process, Business, Diagnostic KPIs
—Financial Review & Approval
in terms of conducting gap analysis by
comparing targets to forecasts, assessing
forecast changes cycle-over-cycle,
evaluating year-to-date and year-to-go
performance, analyzing demand share
and its underlying drivers, and more.

One crucial aspect driving a successful

Commercial IBP for :o9 customers is the
ability to perform commercial simulations
in-platform, which our clients utilize to
bridge any gaps to target.
From Good to Great: Embracing IBP for profitable and sustainable growth
By having a comprehensive list of initiatives
available for investment, users can simulate
various scenarios such as running an
additional promotion, advancing the
launch of a new product introduction (NPI),
and more. The ability to simulate this in-
platform — because the commercial team
trusts the :o9 platform—drives an accurate
understanding of how these actions would
impact the demand forecast and their
potential to close the gap in relation to the
overall plan.
Ultimately, a Commercial IBP process with
the :o9 platform provides a holistic overview
of the current situation, identifies additional
strategic options to enhance the demand
plan and scenarios, and demonstrates
how the manufacturer can contribute to
achieving the desired targets.
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Supply Chain IBP
The demand scenarios are combined with
a focus on the Supportability and Cost to
Serve aspects within the :o9 Supply section
of the IBP platform. This involves assessing
the ability to deliver the plan, conducting a
total cost-to-serve analysis to determine
if their supply chain can effectively produce
the required goods, and performing
incremental cost analysis to understand
the additional expenses associated with
delivering promotional activities.
Furthermore, the :o9 platform enables
effective supply risk analyses, considering
potential disruptions and delays in the
supply chain. Real-life events, such as the
Ukraine war affecting flour or sun seed oil
delivery to this company’s manufacturing
plants, highlight the importance of evaluating
and preparing for such “what if” scenarios.
Considering the lessons learned from recent
events, this analysis has become increasingly
necessary in today’s business landscape.
From Good to Great: Embracing IBP for profitable and sustainable growth
Executive/Finance IBP
After conducting the Demand and Supply
steps of the IBP process — the process
moves to the Executive/Finance IBP.
These Demand and Supply inputs
inform the baseline plan and recommended
demand scenarios, which then transition
to the Executive IBP phase. At this stage,
critical executive and finance trade-offs are
made by considering the commercial review
and approvals, supply-side considerations,
and the overarching financial perspective.
The integration of these three inputs cul-
minates in the publication of the final plan to
the system of records, effectively aligning
the entire organization.
This framework represents the core
essence of Next-Gen IBP practices. This
company’s journey has been guided by a
strategic vision to progressively enhance
automation and leverage analytics for better
and faster decision-making, e.g. prescriptive
gap closing recommendations, automated
resolution scenarios and optimized
portfolio management.
9
Data
An important part of the journey has been Ultimately, part of the journey is to
— and continues to be — the focus on data, increasingly institutionalize the tribal
including rectifying data-related challenges knowledge that resides within the minds
by migrating data onto the :o9 platform and of planners and across functions on the
developing advanced analytics capabilities :o9 platform.
to augment the decision-making process.
For example, demand assumptions were
previously scattered across multiple platforms,
including spreadsheets, emails, and individuals’
knowledge, lacking a centralized record
system. To address this, this company
embarked on a series of steps:
1. U
 nderstanding the data model of demand
assumptions: A comprehensive and
extensible data structure was crucial to
establish a solid foundation for future
enhancements.
2.  Building a repository: By carefully
selecting and analyzing specific
demand assumptions, a repository was
constructed. This repository not only
stored valuable data but also facilitated
the application of advanced analytics.
Multiple scenarios, such as combining
different assumptions and assessing
their impact on volume, could now be
explored in a seamless manner.
From Good to Great: Embracing IBP for profitable and sustainable growth 10

Beyond next-gen IBP

Having discussed the next-gen IBP of today, we now set the stage
for the IBP of tomorrow, which includes shifting the focus from
historical and predictive analytics to prescriptive decision-making.
Tomorrow’s IBP entails even closer integration and alignment
of the commercial, supply chain, and finance functions, with
ESG considerations embedded into the core of decision-making
processes. By institutionalizing knowledge and leveraging data
insights, organizations can achieve profitable growth while meeting
sustainability targets. Recognizing emerging market trends, we
anticipate several key characteristics that will shape tomorrow’s IBP.

Tomorrow’s IBP Further increase transparency and visibility to Integrate beyond the four walls of the Sustainability by design
—Customer & consumer intimacy the DNA of demand value chain —CO2, water, energy
—Innovate & plan for it —Portfolio analytics and optimization —Global procurement consumption
—End-to-end connectivity and visibility —Fequent proce/pack architechture planning — Logistics partners —Packaging
—Risk/agility management —Revenue Initiatives & spend management —Suppliers —Zero landfill
—Circularity and product lifetime value —Risk/agility management
—Continuous learning and self-improvement —Brand, category, ATL, external inputs Raw material & packaging scenario modelling

→ What happened
→ What might happen
→ What needs to happen

Ability to enable more decision-making “building blocks” using the Digital Supply Chain Model (Enterprise Knowledge Graph) as the foundation
From Good to Great: Embracing IBP for profitable and sustainable growth
How this will look in general
From a Commercial perspective, the focus
turns to establishing closer connections
with customers and consumers. This
entails exploring avenues for innovation
and developing forward-thinking strategies
to anticipate consumer trends and
accommodate their evolving needs both
in terms of product and business
model innovation.
On the Supply Chain front, extended
connectivity and visibility become paramount.
The challenge lies in establishing multi-tier
visibility, encompassing capacity, inventory,
and other critical factors. Extending this
visibility beyond the first tier of suppliers
proves particularly challenging; however, it
is essential to effectively plan for risks and
foster agility across the entire supply chain
network. This necessitates obtaining reliable
data from suppliers further down the chain
and ensuring data quality when integrated
into the platform.
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The Executive/Finance perspective brings
attention to the circularity and lifetime
value of products, underscoring the growing
importance of ESG considerations. While
many companies currently view ESG as an
afterthought, our vision at :o9 is to integrate it
into the decision-making process itself, from
demand planning to supply management
and finance. Leveraging the abundance
of accessible data and extracting insights
from it becomes pivotal for driving informed
decisions. The path to net zero involves
making informed business decisions that
are both good for growth and good for
the envirnoment. :o9’s evolving software
capabilities, coupled with the expanding
knowledge of planners, contribute to an
environment where learning from data and
generating additional insights takes center
stage, representing the next step in IBP.
From Good to Great: Embracing IBP for profitable and sustainable growth
How this will look for our
case-study manufacturer
Commercial
In order to adapt to the changing needs
of tomorrow, this manufacturer must invest
further in increasing transparency and
visibility into the DNA of demand. This
involves gaining a deep understanding of the
product portfolio, the necessary analytics to
understand the relative drivers of demand
at frequent intervals, and the shifts that
need to be made within the portfolio. The
price-pack architecture — which determines
the pricing of different product sizes — will
need to be adjusted more frequently. Relying
solely on historical data is no longer sufficient,
and the planning process must be done
more frequently, which means there is a
smaller baseline to run analytics on, requiring
increased investment in what-if scenarios
and alternative planning approaches as well
as prescriptive forecasting. Additionally,
initiatives in spend management need to
be carefully evaluated to determine their
deployment and return on investment. It is
crucial to understand brand and category
shifts and consider external factors such
as market trends and consumer behavior.
Incorporating these insights into the
demand forecast and product portfolio
planning process is essential to continuing
to thrive as a consumer facing company.
Supply Chain
Supply Chain must also involve global
procurement in the IBP decision-making
cycle. Global procurement can provide
valuable input through supply risk analysis
and assessment of supplier quality. Collab-
orating deeper with logistics partners and
suppliers is crucial for enhancing supply
chain resilience. Once visibility into the
broader supply chain is achieved, mid-
term horizon scenarios should be run for
raw materials and packaging. Instead of
focusing solely on immediate shipment
delays, these scenarios should assess the
impact of potential supplier degradation
and identify the most effective response
strategies. It is important to recognize that
the impact of supply chain decisions may
not be immediately evident. That lead time
must be considered when evaluating the
effectiveness of response strategies.
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Executive/Finance
Finally, this manufacturer must embrace
ESG considerations as a fundamental
part of its design. Beyond ESG, food and
beverage companies should also focus on
reducing sugar, salt, and other ingredients in
its products. Strategies for packaging and
waste management need to be developed to
move towards a zero-landfill approach. Fully
embracing AI/ML is essential for shifting the
analytics perspective from understanding
what happened or what could happen
to determining what should happen and
how demand can be shaped to fulfill ESG
commitments. Rebuilding the IBP process and
the underlying data and analytics to enable
these types of decisions requires alignment
across functions. Prescriptive playbooks
should also be developed, leveraging the
insights gained from accessing more
data, to make more informed decisions and
continuously improve supply chain and IBP
performance in various dimensions.
From Good to Great: Embracing IBP for profitable and sustainable growth 13
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Conclusion
The future of IBP calls for a proactive and prescriptive approach
that aligns commercial, supply chain, and finance functions while
integrating sustainability and ESG considerations. This entails
establishing closer connections with customers, enhancing end-
to-end supply chain visibility, and leveraging advanced analytics
and AI/ML technologies. For our case-study manufacturer,
this means investing in transparency and visibility into demand,
collaborating with global procurement, and incorporating ESG
considerations into decision-making. By embracing these
changes, companies can achieve profitable and sustainable
growth in the dynamic business landscape of tomorrow.
From
14 Good to Great: Embracing IBP for profitable and sustainable growth Sustainable supply chains: Mapping the path 14
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Content and editors Stijn-Pieter van Houten

Global Manufacturing
Knowledge Lead
sp.vanhouten@o9solutions.com
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