10. Integrated Business Planning

[SOUND] Welcome back to our lesson on integrated business planning. At the conclusion of this lesson, learners should be able to describe integrated business planning. And provide examples of supply chain decisions that are made at different levels of planning. Let’s begin by examining different levels of planning decision making.
Strategic planning is the process of defining the broad overall corporate strategy or the highest level functional strategies. Strategic choices typically involve determining the best fit of infrastructure, and operating models for the corporation and functional components looking out 3 or more years in the future. In supply chain, here are some examples of strategic decisions that are made.
Tactical planning addresses a shorter time range than strategic planning, and is generally focused on a period of time extending about one year or less in the future. Tactical plans deal with making the best use of existing infrastructure to meet operational requirements while supporting strategic goals.
From these examples in supply chain, you can see that tactical planning often deals with making trade off decisions that will guide the supply chain over the next several months.
Operational planning, in the supply chain addresses the challenges of meeting customer demand projections over the next month or so. Hence, it is typically focused on decisions regarding short term scheduling of resources and engagement with supply chain partners. Execution is the process of taking action throughout the supply chain to meet customer demand. Examples include the procurement department, providing suppliers with purchase orders for materials, manufacturing, producing goods. And transportation and warehousing, handling the movement of materials between suppliers manufacturing and customers. In making strategic decisions, companies are continually looking at tradeoffs. In supply chain, the tradeoffs are often between varying service capabilities, investment in infrastructure. And varying operating models and relationships between business partners.
Using Amazon as an example, Amazon has clearly set providing leading edge service as a strategic goal. In support of this goal, Amazon invests extensively in new warehousing and transportation infrastructure.
To understand Integrated Business Planning, we first need to recall that the main reason that business is exist is to create shareholder value. To create share holder value, a business generally should be profitable. Profits require revenues which are derived by a business developing a share of product or service market. The specific level of profits may vary over the life of a company, and vary with a company’s specific strategy. For example, a high growth company like Amazon, may drive tremendous revenues. And then use the revenues to support aggressive investment and building new infrastructure such as DCs transportation assets etc. So in Amazon strategy they’re maybe little profit in a short term. But aggressive investment may hold the promise for an even the brighter future, that’s driving stock price appreciation. Clearly a company needs to have a coherent top line plan.
This top line business plan provides guidance to a businesses functional executives regarding revenue and profit expectations in the short and long term. This in turn drives decisions regarding investments and infrastructure, personnel and other assets as well as specific product and customer channeled decisions. Revenue is driven by sales and marketing activities, which position products and services to the targeted portfolio of customers. One important element of integrated business planning is providing a linkage between a company’s top line expectations for revenue and profits, and specific demand generation plans overtime.
Demand cannot be satisfied without supply, hence, another important component of integrated business planning is the high level alignment of supply plans with demand plans. Which in turn, drives various supply chain functional plans, such as high level sourcing, production, and order fulfillment infrastructure decisions. In this lesson, we’ve learned that Integrated Business Planning aligns an organization’s functional plans with the strategic business plan to maximize organizational effectiveness. Strategic, tactical, and operational decisions are made across the supply chain components and must support the overall business and demand plans. And industry-specific nuances and customer service strategy are key influencers on supply chain decision-making. Thank you, and we’ll see you on the next lesson. [SOUND]

Jim Rohn Sứ mệnh khởi nghiệp