Arkaro Insights
Arkaro Insights is a podcast series produced by Arkaro, where we help B2B executives deliver better results with the latest ideas in change and innovation for your organisation.
About Arkaro
Arkaro is a B2B consultancy specialising in Strategy, Innovation Process, Product Management, Commercial Excellence & Business Development, and Integrated Business Management. With industry expertise across Agriculture, Food, and Chemicals, Arkaro's team combines practical business experience with formal consultancy training to deliver impactful solutions.
You may have the ability to lead these transformations with your team, but time constraints can often be a challenge. Arkaro takes a collaborative 'do it with you' approach, working closely with clients to leave behind sustainable, value-generating solutions—not just a slide deck.
"We don't just coach - we get on the pitch with you"
Connect With Us
💬 We'd love to hear from you! What topics would you like us to explore in future podcast episodes? Drop us a message or connect with us to learn more about Arkaro's approach.
🔗 Visit us at www.arkaro.com
👥 Follow our updates: Arkaro on LinkedIn - https://www.linkedin.com/company/arkaro/
📧 Email us at: mark@arkaro.com
Arkaro Insights
So what is the difference between Sales and Operations Planning (S&OP) and Integrated Business Planning (IBP)? - and does it matter?
Welcome to the Arkaro Insights podcast. This episode is based on original content developed by Arkaro. At Arkaro, we're committed to innovation in everything we do—including how we share our insights. We've utilised advanced AI technology to transform our written expertise into this conversational format, making our content more accessible and convenient for our busy B2B audience. What you'll hear is a two-person discussion generated through AI voice technology, designed to deliver our insights in a more engaging way than traditional reading. As we continue to evolve this approach, we genuinely value your feedback. Thank you for listening to Arkaro Insights, where professional expertise meets innovative delivery.
The gap between strategic vision and operational execution plagues many B2B organisations today. While most leaders recognise the need for effective planning, fewer understand the crucial distinction between traditional Sales and Operations Planning (S&OP) and its more evolved counterpart, Integrated Business Planning (IBP).
Drawing from Mark Blackwell's insightful LinkedIn article, this episode unpacks the transformation from S&OP's origins in the 1980s as a supply-demand balancing act to IBP's comprehensive approach that aligns entire organisations around strategic outcomes. We explore Gartner's five-stage maturity model that maps this evolution—from reactive firefighting to collaborative orchestration—and detail the fundamental differences that separate immature S&OP from mature IBP.
The distinction goes far beyond semantics. While S&OP typically operates with a three-month horizon focused on volume metrics and quarterly targets, IBP extends planning to 24 months with value-based decision-making directly tied to strategic objectives. This shift requires executive leadership involvement, cross-functional integration, and a fundamental change in how resources are allocated across the organisation. For executives trapped in the quarterly earnings cycle or struggling with strategy execution despite well-defined objectives, these differences matter tremendously.
The episode provides clear indicators that your organisation might benefit from evolving toward IBP—from consistently falling short on strategy execution to operating in perpetual firefighting mode. By breaking down departmental silos and creating a single source of truth, IBP offers the framework to transform planning from a time-consuming obligation into a strategic advantage that drives meaningful business outcomes.
Ready to transform your planning approach? Visit www.arkaro.com or contact Mark Blackwell directly at mark@arkaro.com for a free consultation on how IBP can help your organisation bridge the gap between strategic vision and operational reality.
Welcome to Arkaro Insights, the podcast where we're all about helping B2B leaders like you unlock some serious potential in your organizations. We're talking about pushing the boundaries with the latest and greatest in change and innovation. You know the kind of stuff that really moves the needle. And today we're diving deep into a topic that I'm pretty sure has landed on your desk at some point Sales and operations planning, S&OP for short, and its more evolved sibling, integrated business Planning, better known as IBP. Now, I bet you've heard these terms floating around, but what really separates them and, more importantly, how do they actually affect your ability to hit those big goals, those crucial business outcomes you're after?
Speaker 2:That's what we're here to break down today you got it and we've got a fantastic roadmap for this deep dive An insightful article from Arkaro on LinkedIn. The title is so what is the difference between sales and operations planning S&OP and integrated business planning IBP and does it matter? Mark Blackwell from Arcar really lays it all out, tracing the evolution from S&OP to IBP and hitting those key differences.
Speaker 1:Okay, so let's rewind a bit and set the scene. The article takes us back to the 1980s, where S&OP first emerged, thanks to Oliver Wright Seems like back then it was a pretty big deal trying to get a grip on that fundamental challenge aligning what you could sell with what your operations could actually produce.
Speaker 2:Absolutely. The initial focus of S&OP was all about that balancing act, making sure supply and demand were playing nice. But things change right. Businesses got more complex, the need for flexibility went through the roof and Oliver White being the visionary, he was recognized. The need for something bigger, something more comprehensive, and that's how we got integrated business planning.
Speaker 1:And the article nails down a clear definition of IBP straight from Wright himself. He calls it a process that drives the alignment of all functions across an organization, models and creates readiness for alternate outcomes, drives deployment of strategy and enhances collaboration across supply chains. Now that sounds way more ambitious than just making sure your production matches your sales projections.
Speaker 2:You're right. It expands on that foundation significantly. Ibp takes the core of S&OP, that's supply-demand balancing, and goes way beyond. It's not just about having enough product to sell. It's about harmonizing every part of the business, from financials to marketing campaigns to product development. It's about making sure everything's rowing in the same direction towards a single integrated plan. Plus. It encourages businesses to think about different possibilities, different scenarios, and ensures planning is directly supporting the overall business strategy.
Speaker 1:Makes a ton of sense. The article brings in Gartner's S&P maturity model to help us see this progression and it's really helpful. It maps S&OP onto the first three stages react, anticipate and integrate. Can you give us a quick rundown of what each stage is all about?
Speaker 2:Sure, let's start with stage one, react. This is the ground floor, the basics. It's primarily about dealing with those immediate fires, preventing those major supply chain hiccups and trying to squeeze out as much revenue as possible in a well, pretty reactive way.
Speaker 1:Right, like putting out fires left and right.
Speaker 2:Exactly Now. Stage two anticipate is where things start to look a bit more forward-thinking Organizations start creating an operational plan, one that's based on sales forecasts, and they begin to factor in the limitations of their supply capabilities. So there's a definite shift towards looking ahead, planning proactively, at least when it comes to volume.
Speaker 1:So it's about transitioning from firefighting to actually trying to see what's coming and plan accordingly. And then we hit stage three integrate.
Speaker 2:Precisely this stage is where it all starts coming together a more connected approach. It's all about achieving that balance between supply and demand across the entire supply chain, end to end, that balance between supply and demand across the entire supply chain, end to end. And, crucially, this stage is where we start seeing cost-based financial and supply chain alignment. So the focus expands. It's not just about physical volume anymore, but also about the financial impact of those plans.
Speaker 1:Got it, and the article positions this as the sweet spot for S&OP right. Then we move into the stages that are more aligned with IDP. Stages four and five collaborate and orchestrate. What defines these more advanced stages?
Speaker 2:Okay so stage four collaborate. This one's all about building a demand-driven and this is important a profitable supply response, and it's not just about what happens within your own four walls, it extends to those vital partners across your supply chain. So picture much tighter integration, much more information sharing with those external folks, more teamwork.
Speaker 2:Exactly, and stage five orchestrate. This is the peak, the top of the mountain. This is where you see decisions being made in a coordinated way, not just within your company but across your entire network, and it's all geared towards creating value across that entire planning horizon. A really holistic, strategically aligned viewpoint.
Speaker 1:Sounds like quite a journey, going from an internal volume-centric process to something that's external, focused on value and deeply connected to that overarching business strategy. The article then digs into the nitty-gritty, comparing what it calls immature S&OP and mature IBP across several key dimensions. Let's start with planning horizon Immature S&OP tends to look at three plus months, while mature IBP works with a rolling 24-month view. For someone like you, a B2B executive, why is that extended perspective so important?
Speaker 2:Well, that extended horizon is critical for strategic foresight. Think about it If you're only planning a few months out, your decisions are going to be very tactical, very short-sighted. But with a rolling 24-month view, you're forced to consider longer-term market trends, those potential disruptions in your supply chain and the impact of your strategic initiatives. Let's say you're considering a major capital investment, something like new manufacturing capacity. With a limited three-month S&OP view, you might only see the immediate customer demand, which could lead you to underestimate future needs. You could miss a big opportunity. But a 24-month IBP perspective, one that incorporates those broader market projections in your strategic growth plans, would give you the foresight to make a smarter, more impactful investment decision, one that's really in line with your long-term goals.
Speaker 1:That's a great example. It's hard to think strategically when you're only looking a short distance ahead. The next difference the article points out is focus, specifically in terms of time. Immature S&OP often gets stuck in the next few months rut, heavily influenced by those ever-present quarterly targets, but mature IBP shifts the focus to four plus months. Even that seemingly small extension, I feel like it could have a big impact.
Speaker 2:Oh, it absolutely does that. Short-term focus in immature S&OP can easily create a reactive environment, always putting out fires. As the article mentions, decisions end up being driven by the need to hit those quarterly numbers, sometimes at the expense of long-term efficiency, profitability or even keeping your customers happy. A slightly longer focus in IBP it gives you some breathing room allows for a more thoughtful look at the bigger picture, considering the consequences that go beyond the immediate quarter.
Speaker 1:And then we get to focus in terms of scope. Immature S&OP is mostly concerned with balancing supply and demand volumes and making sure those quarterly revenue targets are met. But mature IBP moves to a value-based approach where plans are directly tied to the overarching business objectives and it brings in scenario planning to anticipate different potential futures and develops those gap-closing action plans to get ahead of any deviations. That feels like a pretty fundamental shift in how you think about planning.
Speaker 2:It's a complete change in mindset, moving from a purely volume-based approach to one centered on value. That's a critical shift for B2B executives. Mature IBP it's not just about making and selling a bunch of stuff. It's about understanding the value those activities create, the profitability of different customer segments, the margins on various product lines and making sure your planning efforts directly contribute to the strategic and financial goals of the business. And don't forget scenario planning. It's incredibly valuable. It allows you to stress test your plans against different market conditions.
Speaker 2:What if this happens? What if that happens? You can develop proactive strategies to minimize risks and grab those opportunities. Plus, the discipline of creating gap-closing action plans means you spot any potential shortfalls early on and you address them head-on rather than waiting for them to become a problem. For instance, let's say under S&OP, a product line isn't hitting its revenue target. The knee-jerk reaction might be to just crank up production or push for more sales. But with IBP you dig deeper. Is this product line inherently less profitable? Is the market changing? Scenario planning might have already flagged this downturn and your gap-closing action plan could involve shifting resources to a more profitable area or maybe rethinking the product strategy altogether.
Speaker 1:It's like moving from a reactive approach to a much more proactive and strategic one.
Speaker 2:Exactly.
Speaker 1:Now let's talk about the players involved. With immature S&OP, it's usually middle management from supply chain and sales. But with mature IDP, you need the executive leadership team at the table and not just any executives key players from finance, marketing and product management, at the very least, and sometimes it even extends to those external partners at the very least, and sometimes it even extends to those external partners. Why is this executive buy-in and this deep cross-functional integration so vital for IBP to succeed?
Speaker 2:Executive buy-in is non-negotiable because, at its heart, ibp is about strategic management. You need the full support, the authority and the accountability of those at the top to make sure everyone in the organization is aligned and that those decisions made within the IBP framework are not only understood but actually acted upon. And cross-functional integration it's just as important. It breaks down those traditional silos, the ones that often get in the way of effective planning and execution. By bringing together different perspectives from finance, marketing, product development, all those key areas you create a shared understanding of the business, its challenges, its opportunities and its priorities. Everyone's on the same page, which leads to smarter and more aligned decisions. And when you bring external partners into the mix, where it makes sense, you increase visibility and collaboration across the entire value chain. You can better anticipate those market shifts and respond more effectively.
Speaker 1:It makes sense entire value chain, you can better anticipate those market shifts and respond more effectively. It makes sense. If IBP is really about driving the strategic direction of the business, then those responsible for setting and implementing that strategy well, they need to be deeply involved and the owner of the process also changes right. With immature S&OP, it often falls on the supply chain function, but in mature IBP the senior leadership team takes ownership because they're ultimately accountable for delivering on those business objectives. Seems like a natural progression, given the expanded scope and increased involvement.
Speaker 2:You nailed it when S&OP is primarily driven by the supply chain, it tends to lean more towards operations making sure everything runs smoothly day to day. But by giving ownership to the senior leadership team, IBP becomes a key part of how the entire business is managed, how those strategic objectives are translated into actual, tangible results. This shift in ownership highlights how important IBP is strategically and ensures it gets the attention and resources it deserves to be successful.
Speaker 1:And the types of decisions being made also evolve, don't they? Immature? S&op tends to focus on the here and now, on immediate execution. You know what needs to happen in the coming weeks or months. Mature IBP, on the other hand, is all about the strategic deployment of resources thinking about financial capital, human capital, time and how to allocate them across that longer planning horizon. That's a much more strategic way to use the organization's valuable assets.
Speaker 2:You bet, while short-term execution is important, if that's all you focus on, you might end up missing out on those big-picture opportunities. You could be prioritizing immediate gains at the expense of future growth or efficiency. Ibp helps you strike a better balance, ensuring that those resource allocation decisions are made with the overall business objectives and the long-term health of the organization in mind. For example, instead of just allocating budget based on what screams the loudest, an IBP process might identify a strategic growth area and proactively allocate resources to it over the next 12 to 24 months, even if the immediate returns aren't that impressive.
Speaker 1:It's about playing the long game.
Speaker 2:Exactly.
Speaker 1:The process itself goes through a major transformation too, doesn't it? The article describes immature S&OP as often feeling like just reviewing numbers which, let's face it, doesn't sound very exciting. But mature IBP, it becomes a structured process, one designed to bring all the key business functions together around a single, consistent set of numbers. This is how you get effective execution of your overall business strategy and, importantly, it helps eliminate those redundant planning processes that can really bog down an organization.
Speaker 2:Having that single source of truth, that one set of data everyone agrees on, is a game changer. When you have different departments working with their own data and assumptions, it leads to inconsistencies, conflicting priorities and a lot of wasted effort. Idp is specifically designed to create that unified view of the business, allowing for better, more aligned and, ultimately, more effective decisions. And by ditching those redundant planning processes, organizations can streamline their operations and free up valuable resources to focus on strategic initiatives.
Speaker 1:And finally there's the level of detail, what the article calls granularity. Immature S&OP often gets really granular, focusing on forecasts for individual SKUs, for example. Mature IBP takes a step back, shifting to assumption-based planning at a more aggregate level, concentrating on the key drivers that are going to influence those desired business outcomes. Why is the shift to a higher level view so important when you're talking about strategic business planning?
Speaker 2:When you're operating at the strategic level, the kind of level IBP demands. Getting lost in the details of each individual SKU can be counterproductive. You need to focus on the big picture, the key assumptions that are going to drive overall business performance, the levers that management can pull to influence those outcomes. Planning at a more aggregate level it allows for more strategic discussions at the executive level right. It fosters a deeper understanding of the overall risks and opportunities that business faces, without getting bogged down in the day-to-day operational minutiae. For example, instead of debating the forecast for every single product variation, an IVP discussion might focus on the overall market trends for a specific product category and the assumptions driving that projected growth. This higher-level perspective allows for more strategic conversations about capacity planning, resource allocation and overall market strategy.
Speaker 1:So we've covered the key differences. Now the article poses a really important question for our listeners. Covered the key differences. Now the article poses a really important question for our listeners Do you need integrated business planning, ibp? And it provides some insightful indicators that might suggest your organization would benefit from taking this step. Let's go through some of those key indicators. One of them is having clearly defined objectives and strategies, but the actual execution of those strategies consistently fall short. I think a lot of B2B executives out there know that feeling all too well.
Speaker 2:It's a common problem. You could have the best strategy in the world, but if you don't have a solid process to turn that strategy into action, to ensure everyone's on the same page, execution becomes a real up-to-battle. Ibp provides that framework. It bridges the gap between the plan and the reality.
Speaker 1:Another indicator is that feeling of the annual budgeting process being a huge time suck, a resource drain and despite all that effort, it quickly becomes outdated, disconnected from the reality of the business environment. I think we've all been there.
Speaker 2:Absolutely. The traditional way of budgeting can be a real burden. It often relies on static assumptions which can become irrelevant very quickly in today's fast-paced world. Ibp, with its emphasis on rolling forecasts and agile scenario planning, offers a much more flexible and responsive approach to financial planning. It helps you adapt to those changing market conditions and internal dynamics.
Speaker 1:The article also mentions situations where big finance projects, like major capital expenditure planning, lack solid inputs and a consistent set of data. This could also be a sign that IBP would be helpful.
Speaker 2:This goes back to the importance of having that single source of truth for your business data. If different parts of the organization are working with different data and assumptions, it's incredibly difficult to make smart investment decisions, especially when you're talking about large-scale projects. Ibp's focus on integration and data consistency ensures those big financial decisions are based on a solid and unified foundation.
Speaker 1:Another potential red flag is that feeling of being stuck in the quarterly earnings trap, where you're constantly making short-sighted decisions that end up hurting your supply chain performance and long-term profitability.
Speaker 2:The pressure to hit those short-term targets can definitely lead to decisions that sacrifice long-term value. Ibp's longer planning horizon and its focus on value-based decision-making encourage a more balanced, sustainable approach. You can make choices that benefit the business not just for the next quarter but for the long haul.
Speaker 1:And then there's that overall feeling within the organization that it's constantly reacting, putting out fires rather than proactively getting ahead of potential challenges and grabbing opportunities. That just sounds exhausting and inefficient.
Speaker 2:It is that reactive culture often comes from a lack of visibility into the future and a lack of integrated planning. Ibps focus on forecasting, scenario planning and cross-functional collaboration helps organizations become much more proactive. They can anticipate potential disruptions and jump on those emerging opportunities more effectively.
Speaker 1:The article lists a few other indicators too, things like an expanding product portfolio but with declining profitability, a situation where customer or product segmentation is more of a nice idea than a reality in your planning and execution, and a lack of clarity across departments on how to grab market opportunities and mitigate risks. All of these seem to point to a need for better integration and strategic alignment, wouldn't you say?
Speaker 2:Absolutely. These are all common signs that a business could really benefit from that more holistic, integrated approach that IBP offers. It provides the structure to bring clarity, focus and alignment across these crucial areas, ultimately leading to improved performance and better business outcomes.
Speaker 1:So, to wrap things up for B2B executives out there who have been with us for this deep dive, what's the takeaway? We started by talking about ArcCars' commitment to helping you achieve better results through effective change and innovation. How does this shift from traditional S&OP to a more mature IDP process tie into that mission?
Speaker 2:Well, as we've discussed, a well-implemented IDP process tackles many of the challenges that hold businesses back from reaching their goals. It creates better alignment across all those crucial business functions, allows for more informed and strategic decisions through a unified set of data and a longer-term perspective and, most importantly, it helps you effectively execute your overall business strategy. Ibp can lead to big improvements in operational efficiency, profitability and, ultimately, better business outcomes, and that, as you said, is at the heart of what ARCRO is all about.
Speaker 1:We hope this deep dive into SNOP and IDP has given you a clearer understanding of the differences between them and the benefits of moving towards a more integrated approach to business planning. As you think about your own organization's planning processes, ask yourself if any of the indicators we talked about today resonate with the challenges you're facing.
Speaker 2:If you're interested in learning more about how RCURO works with B2B executives like you to implement change and drive innovation, especially when it comes to your planning processes, head over to our website at wwwrcurocom. You can also stay updated on our latest insights by following Arkero on LinkedIn.
Speaker 1:And if you want to dive deeper into your specific needs and see how IBP could benefit your organization, reach out to Mark Blackwell directly at mark at arkerocom. He's happy to set up a free consultation.
Speaker 2:Thank you for joining us on the Arkero Insights podcast today. We hope you found this discussion valuable. If you did, please share it with your colleagues who might also find it helpful.
