The Politics of S&OP
Recently I conducted an interview with an industry analyst who asked about the evolution from Sales and Operations Planning (S&OP) to Integrated Business Planning (IBP) and how the two are distinguished.
Did I hear that correctly?
I had to pause for a moment. Integrated Business Planning is not an evolution of Sales and Operations Planning. The IBP spinmasters talk about how the inclusion of financial plans and measures is its distinguishing characteristic, but how is that really different from S&OP?
Every aspect of the business has a financial impact. Inventory levels, promotions, production, etc. all impact the bottom line and have a direct line into the CFO’s office. Sales and Operations Planning brings together executive teams to help tie strategic corporate goals and initiatives to specific operational activities and tactics. In a previous post, my colleague Ron Burnette highlighted the five critical steps to a successful S&OP meeting. His fourth step, integrate finance, underscores the importance of integrating budgets and financial plans.
S&OP cannot be successful without the cooperation of finance. If you need to call it IBP for internal political reasons go ahead, but let’s call a spade a spade. This is S&OP.