Integrated Business Planning A 10% – 20% improvement in IBP operational performance areas could result in a 2% – 5%2 improvement in profitability, 1 “Transforming planning into a decisive competitive advantage” Today’s global business environment is made up of a constantly evolving customer base that is becoming more complex with globalization and the new economic order. Firms are seeking greater margins through sophisticated products and operational excellence that is well aligned with strategic goals. These challenges are straining already stretched operational environments, which need to transform to be able to support the rapidly changing market place. While tactics for meeting these challenging market conditions are often focused on cost reduction initiatives, these measures are short-term fixes for long-term issues. In order to be successful, companies must focus on the strategic steps that can deliver sustainable operational improvement. Propelling the traditional sales & operations planning process from short-term demand and supply balancing to planning that actively includes finance and product development that aligns with strategic goals. Integrated Business Planning An Integrated Business Planning (IBP) approach enables companies to align its business with a holistic lens toward accurate and reliable long-term strategic planning. IBP provides a structure to integrate Finance, Operations Product Lifecycle Management (PLM), Sales and Process Marketing, and translate Integration & Collaboration business drivers into desired outcomes End-to-End through a Plan – Execute Governance Supply Chain – Compare – Visibility Adjust framework (PECA) that aligns IBP strategy, design, and execution. Further, IBP helps strengthen Reference Reporting and Architecture customer relationships Analytics by providing better visibility to customer Change needs and improving Management customer service with on-time delivery and lower cost of service. Key services KPMG offers a variety of services for IBP that help businesses establish leading capabilities in supply chain visibility, process integration, and collaboration to meet today’s business planning needs. These include: • Enabling Supply Chain Visibility – providing real-time data availability across transactional and planning platforms for greater decision-making • Enabling Process Integration & Collaboration –integrating multi-function planning processes and providing a collaboration platform for both internal teams and external partners • Reporting and Analytics – optimizing the supply chain through advanced analytics and risk management • Governance – managing and controlling a wide range of operating models, coordinating and balancing decision-making globally vs. locally • Reference Architecture – shifting from a siloed function, data and systems to managing business with analytics • Change Management – enabling change management of people, process, and technology as you progress through the IBP maturity model 1, 2 Integrated Business Planning Figures are based on client experiences © 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 203548 End-to-End, Cross-Enterprise Supply Chain Visibility IBP is capable of providing visibility across the entire supply chain network. A complete view of current activity and future plans from inbound supply and outbound fulfillment activity across supply chain network. Supply & Inventory Visibility Financial Visibility Demand Visibility • • • • • • Profits and margins •Pricing • Working capital • Cash flow • Asset management •Customers • Sales & Marketing • Point of sales, Promotion plans • Product lifecycle; New Product Introduction (NPI): End of Lifecycle (EOL) Real-time inventory across the globe Supply-demand disconnects Collaborative planning (multitiers) Production capability Transportation and logistics IBP Principles IBP principle #2: IBP principle #1: An IBP strategy must harmonize financial and operational processes to customer demand. • Maximize revenue while minimizing operating expense. • Improve customer service. Demand $ Recovery Supply Lost Opportunity & Shareholder $ Value An IBP strategy must enable an organization to optimally collaborate and address critical, cross-functional business decisions across a product’s lifecycle. • Collaborate with global and local operation to address market needs demand shifts. PLM Recession 2007 2008 2009 Time 2010 2011 IBP principle #3: IBP principle #4: An IBP strategy must create cross-functional alignment and integration of planning and execution processes to ensure optimal business performance. Continuously strive for holistic performance improvement through effective change management strategies utilizing IBP processes, governance, and roles & responsibilities. • Align operational planning and execution to strategic corporate objectives. • Use IBP model as a tool, process, and governance to move toward supply chain and operations excellence. • Leverage greater utilization of information for scenario management analytics, and reporting. 5 Questions to ask Level4 Level3 Driving Accountability Decision Planning Level2 Organizational Planning Level1 Global Planning The KPMG difference How can I avoid being constantly surprised for not meeting 1 customer demand? How do I increase revenue of my business while cutting supply 2 chain costs? 3 How do I reduce my inventory cost while improving customer service? 4 How do I make my operations more transparent and efficient? How do I plan for risks in the face of opportunities while meeting 5 my organization’s financial goals and increase shareholder’s value? Our competencies bridge the disciplines of finance, technology, and operations to offer broad business perspective with deep functional and process skills to understand and address your challenges. As a Big Four accounting and auditing firm, we have a century of experience in accounting, tax, regulatory issues, transaction services, forensics, compliance, and financial risk. With KPMG member firms in 144 countries, we have global breadth and local-market knowledge of business conditions, and legal and regulatory requirements to help you work toward your organization’s long term goals. Contact Kevin O’Laughlin Principal Boston T: 617-988-1124 E: kolaughlin@kpmg.com kpmg.com Frank Kang Managing Director McLean, VA. T: 703-286-8668 E: fkang@kpmg.com Peter Yu Director Chicago T: 312-665-1397 E: pjyu@kpmg.com © 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 203548