By Tom McDonough, Sr. Director Product Management, Oracle
In our hyperconnected world, disruptive forces are everywhere and accelerating: The pace of innovation is quickening while new digital capabilities are fueling innovative business models and customer-centric services. These technologies are serving as both disruptors and catalysts for industry change.
To survive amid all the disruption – and even harness it for a competitive edge – planners need to adapt and adjust faster. And that requires a better planning process, one that is extremely agile, allowing you to adjust in real time to rapidly changing business conditions. Today, like never before, planning and execution must be tightly integrated.
But a surprising number of companies are lagging. In a recent benchmark study*, only 55% of businesses surveyed had a “modestly integrated planning process across the company,” and a mere 9% said they had a “highly-integrated supply chain planning environment.”
Not that companies aren’t trying to better integrate planning and execution. There’s also no shortage of tools out there to help with different parts of the process, from sales and operations planning to materials planning and more. More often than not, though, you’ll see planners juggling a mountain of spreadsheets and scrambling to pull data from multiple systems.
The result is hardly a model of agility. Companies continue to struggle with lengthy planning cycles, disconnected processes, and inefficient resource management. The result is that company resources, such as working capital and production capacity, might be assigned to the wrong opportunities. Meanwhile, long planning cycles make it hard to quickly adapt to new opportunities and changing business environments.
This where a new approach to business planning can make a huge contribution to business performance. We call it integrated business planning and execution (IBPX), and it’s the natural evolution of a set of best practices that has been around for years, namely integrated business planning(IBP). IBP is a common-sense process for aligning the company’s plans to allocate critical financial and operational resources in a way that maximizes profit and minimizes risk.
Based in the Oracle Cloud, this next iteration of integrated business planning takes advantage of existing and new capabilities embedded in Oracle’s cloud-based Enterprise Performance Management (EPM) and Sales and Operations Planning (S&OP) applications. It also leverages advances in compute power, IoT, and Big Data, enabling planners and decision makers to sift through terabytes of data in seconds.
Using the solution’s unified data model, companies can now seamlessly integrate all of their planning and execution processes in the cloud. They can link financial and materials planning tasks directly – across a common online interface – to business execution activities like procurement, manufacturing, inventory, and logistics.
One result is a faster, more flexible planning process. For example, many companies set their sales and operations plans monthly. Often these plans can be delayed in order to let the corporate planning team review and approve any changes. Oracle’s next-gen IBPX solution removes these bottlenecks by linking the S&OP change requirements directly to the corporate planning workflows.
Closing the loop
The latest evolution of IBP does more than connect planning and execution in the cloud. It also continuously tracks execution performance and communicates that data back to planners in real time so they can make immediate adjustments to the plan. Oracle’s advanced data management technologies help drive this capability. There is now virtually zero latency between planning and execution, so enterprises know things sooner, act faster, and adapt to change in a real-time closed loop.
Companies can configure the Oracle solution to anticipate and respond to critical supply chain events using real-time IoT sensor data and other information sources. For example, if inventory levels spike – or fall – beyond certain levels, the system can alert decision makers in real time to take action. Artificial intelligence and machine learning can also be integrated into the platform to change selected parts of the plan autonomously.
Planning and execution data can directly drive revenue and competitive differentiation, informing decisions such as investing in a new factory, adding a new distribution hub, launching a new product, or changing product mixes. After adopting APX, Oracle customers have reported:
- Revenue increases of 20-30% due to delivery performance enhancements
- Cost reductions of 5-25% due to reduced logistics and transportation costs
- Working capital savings of 25-60% in inventory reductions and 30-35% in asset utilization
One company – a contract manufacturer for top brands such as Newman’s Own – leveraged Oracle’s integrated business planning system to save 5-10 percent from inventory reduction while eliminating 50% of food waste. The company’s planning and execution environment is uniquely complex: Imagine the constant plan adjustments needed to account for the seasonal variations in crop yields.
The practice of integrated business planning is quickly evolving, as cloud technologies empower companies to create a tightly integrated closed loop from planning to execution to performance management. It’s how agile enterprises will thrive in an increasingly disruptive world.
Learn more about the next generation of IBP at Oracle OpenWorld 2019. Our presentation, Oracle’s Integrated Business Planning Evolution: Agile Planning and Execution, will be on Tuesday, September 17, 11:15 AM – 12:00 PM at Moscone West, Room 3010. Look forward to seeing you there!
*Source:Supply Chain Digest, Supply Chain Planning Benchmark Study