What is Integrated Business Planning?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 28 May 2020
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Integrated business planning (IBP) is an approach to considering all the components of a business operation together, including how those components interact to help the business achieve its goals. By approaching the planning and strategic management of those components in this manner, it is possible to maximize the benefit generated by the operation, minimize waste, and in general allow the business to function as efficiently as possible. The responsible use of company resources often in turn means that the operational planning results in higher profits, which in turn makes the financial planning for upcoming periods all the easier to manage.

One way to perceive integrated business planning is as an overall process of managing available resources by recognizing what the most judicious use of equipment, hardware and software, policies and procedures, and the cultivation of a certain type of corporate environment can accomplish. By understanding how all these elements can enhance or decrease success in each department within the business, it is easier to see the operation as a whole rather than a collection of individual functions. This type of holistic approach can often make it easier to trace each process through different phases of the operation, and determine what is happening in one area that is making the process easier or more difficult in subsequent areas.

With integrated business planning, the function of each component is seen as inter-related to the others. This means that the work of the communications department is connected with the efficiency of the administrative office, which in turn impacts what takes place on the production floor. The sales department is necessarily connected with both administration and the production process, with one component relying on the efficiency of the others to achieve the goal of generating business and meeting customer needs. Rather than viewing each function with the business as autonomous, an integrated business planning approach can often eliminate duplication of efforts at different levels and allow the company to be more productive overall. Higher production and efficiency levels translates into meeting customer in less time, which in turn is likely to make it easier to acquire more customers that place more orders and increase the fortunes of the business.

Even a small business can benefit from the basics of integrated business planning. For example, a store owner can use the approach to determine where certain displays of goods are placed in relation to related goods, where to position associates that can aid customers in finding goods and completing transactions, and even what type of amenities to offer customers that are likely to encourage them to linger long enough to make a purchase. By arranging the operation and the work force to best advantage, the store earns more sales, develops a larger client base, and has a better chance of making a profit.

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