'^ Roadmap to Linking

8/11/2019 '^ 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


8/10

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


9/10

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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