From S&OP to IBP: The journey toward sustainable Business Planning

The market is evolving at an incredible pace. Competition is intensifying, customer expectations are rising, and strategic decisions are becoming more critical. How can your organization not only keep up but also gain a smarter edge? The answer lies in transitioning from Sales & Operations Planning (S&OP) to Integrated Business Planning (IBP). In this blog, we’ll show you how IBP can make your organization more agile, profitable, and future-proof.

What is S&OP?

“A series of decision-making processes aimed at balancing supply and demand, integrating financial and operational planning, and aligning strategic plans with day-to-day operations.” – Oliver Wight

S&OP emerged in the 1980s as a way to align sales forecasts and production capacity. Its key characteristics include:

• Balancing supply and demand: Coordination of sales, production, and inventory plans.

• Cross-functional collaboration: Focused on operational departments like supply chain, sales, and production.

• Monthly cycle: Fixed meetings and outcomes starting with a Product or Demand Review and concluding with the Executive S&OP meeting for plan approval.

• Tactical planning: Targeting the mid-term (12-24 months), with short-term execution covered by the newer Sales and Operations Execution (S&OE) process.

• Limited financial integration: Financial input plays a secondary role as the primary focus is on meeting demand in units.

S&OP provides a solid foundation for tactical decision-making but often lacks the strategic and financial depth of modern planning methods.

What is IBP?

“An advanced form of S&OP that integrates strategic, financial, and operational planning across all business functions.” – Oliver Wight

As businesses faced the limitations of S&OP, the need for a more integrated approach became clear. Enter Integrated Business Planning (IBP), introduced in the 2000s.

IBP stands out due to its:

• Full departmental integration: Finance, marketing, procurement, and R&D work together towards enterprise-wide goals.

• Linking long-term goals to plans: Strategic objectives are directly translated into operational actions and financial plans.

• Central focus on financials: Beyond volume planning, companies actively manage revenue and profitability.

• Real-time scenario analysis: Dynamic data and scenarios enable quicker responses to unexpected market changes or risks.

Key differences between S&OP and IBP

IBP enables organizations to look beyond just volumes, focusing instead on profitable growth, adaptability, and long-term success.

The added value of IBP over S&OP

IBP is the next step in professionalizing your business planning. While it builds on S&OP, it goes much further by delivering:

• Enhanced strategic alignment: Cross-departmental collaboration towards common goals, enabling better-informed decisions.

• Financial integration: Revenue, cost, and profitability become integral to the planning process.

• Flexibility and resilience: Advanced technology enables real-time data integration and scenario analysis, allowing proactive market responses.

Ready to transform your business with IBP?

Our experts are here to help you implement an approach perfectly tailored to your strategy. Contact Anne van Dam (anne.van.dam@mccoy-partners.com) or Don Lardee (don.lardee@mccoy-partners.com).