Five Keys to Reaching Success with Retail Integrated Business Planning
In an ever-evolving consumer landscape, successful retail integrated business planning is crucial to survival.
In today’s fast-paced world, integrated business planning (IBP) has become a critical capability for retailers and consumer brands aiming to stay competitive and agile. Successful IBP bridges the gap between struggling retailers or brands and agile, thriving industry leaders.
Successful integrated business planning is a comprehensive approach that combines sales forecasting, demand planning, inventory management, and financial analysis to drive decision-making and maximize profitability. By aligning all aspects of the business, from marketing and sales to operations and finance, companies can streamline their operations and optimize their resources to achieve their goals.
But beware: not all IBP strategies are created equal. The wrong approach could leave you treading water while your competitors surge ahead. In a recent webinar hosted by the American Apparel & Footwear Association (AAFA), Parker Avery partnered with CGS/Blue Cherry and First Shift AI to discuss key considerations that can make or break success with retail integrated planning. Proper focus on these factors will improve business value through increased revenue, enhanced margins, and more productive inventory.
Let’s unpack the five keys for retailers and brands to achieve success with integrated business planning.
Focus on enterprise-wide collaboration and breaking down silos
At the heart of successful integrated business planning lies enterprise-wide collaboration. Gone are the days when different departments could operate in silos. Today’s businesses need to function as a cohesive unit, with sales, marketing, operations, and other functions working in harmony. Implementing collaborative processes like sales and operations planning (S&OP) or IBP can help break down traditional barriers and foster a shared understanding of goals and strategies across the organization. At a more tactical level, retail planning facilitates the use of shared data, so all teams are using a single demand signal, a common view of inventory, and a shared view of plans.
To appropriately support collaboration, it’s important to clarify metrics and KPIs, understand the organization’s objectives for the metrics, and ensure a common understanding of the metrics. This ensures that everyone has the same expectations and goals: what are we aiming for, what are our hard objectives for inventory, sales, and margin as well as targets for financial and operational metrics such as on-time in full, labor productivity, and more. Regarding metrics, it is important to define the cadence and frequency for the ability to review, adjust, and impact changes in plans and operations based on KPI changes and alerts.
At the heart of successful integrated business planning lies enterprise-wide collaboration.
Leverage AI and advanced analytics capabilities
In the era of digital transformation, leveraging AI and advanced analytics has become a game-changer for realizing success with retail integrated business planning capabilities. AI can automate repetitive tasks, freeing up planners to focus on more strategic activities. Moreover, capabilities like a unified demand signal, demand sensing, automated forecasting, and scenario planning can provide deeper insights and enable more proactive decision-making. As we heard in the webinar, even generative AI is finding its place in integrated planning, helping to democratize insights across the organization.
Having new solution options with functions and power that didn’t exist 4-5 years ago, are cloud-native, and can process ever-increasing volumes of data, truly makes a difference. The timing couldn’t be better for some of these new technologies and solutions, and the impact they can have on overall merchandise planning capabilities.
Leveraging AI and advanced analytics has become a game-changer for realizing success with integrated business planning capabilities
Prioritize data quality and integration
However, collaboration is only effective when built on a foundation of quality, integrated data. As our experts emphasized, both transactional and master data play crucial roles in enabling effective planning. Beyond basic demand history, trying to get a consistent and meaningful view of key planning data points such as order sizes, lead times, and safety stock quantities is truly challenging. The growth of the magnitude of data, with the data appetite of newer and enhanced solutions and what they can consume versus their predecessors, is incredible. Regardless of the size and level of IT investment, every retailer or brand has some degree of aging legacy systems, various levels of technical debt, and related data and integration challenges. Retailers and brands should consider implementing product information management (PIM) or master data management (MDM) solutions, as well as robust data warehouses. These tools can help integrate data from disparate systems like ERP and CRM, providing a single source of truth for planning activities.
It’s also important to embrace the required data cleansing to achieve success with retail integrated business planning. While challenging and tedious, it is critical to consider data mitigation efforts for both master data and transaction data. Most focus on the transaction data (inventory, orders, etc.), which is important, but retailers also need to look at master data, i.e., items, attributes, and hierarchies. Hierarchies and attributes especially help retailers think about how consumers shop, as well as how the organization needs to analyze and manage its assortment. It’s not the sleek, new tech stuff, but proper data cleansing can make or break the success of the most sophisticated planning processes and systems.
Take a process-first approach with IBP
While technology is important, it’s crucial to remember that successful IBP for retailers and brands starts with well-defined processes. Before rushing to implement new tools, retailers should take a step back and clearly define their desired business capabilities and processes. No retailer can be the leader in every process area, so it helps to think through what capabilities will either help your organization catch up, keep up, or even move ahead of your competition. Essentially, retailers and brands should consider where it makes sense to be ‘good enough’ versus where the company might want to step out a bit.
This process-first approach ensures that technology serves the business needs, not the other way around. It’s also an opportunity to design processes that focus on exceptions rather than routine tasks, enabling more efficient and effective planning. With modern, highly-configurable planning solutions, a process-first focus is critical to ensure the resulting solution design is not overly complex.
Prepare the organization for change
Finally, it’s important to recognize that implementing IBP successfully often involves significant organizational change. Just moving from a spreadsheet-based planning approach to a modern toolset is a big change in itself. Gaining a higher level of alignment across historically disparate functional areas can be challenging. It’s important to keep in mind that while holistic planning processes like S&OP and IBP naturally improve collaboration, it doesn’t always feel natural to some retailers and brands. As such, it takes a deliberate process and change focus to start building new muscles.
Implementing IBP successfully often involves significant organizational change.
New processes and tools may require changes to roles, skills, and even organizational structure. This may take time and doesn’t all need to be done at once. Keep in mind there is never a perfect organizational structure. Providing adequate training and focusing on organizational change are crucial for driving adoption and realizing success with retail integrated business planning.
In conclusion, achieving integrated business planning success is not just about implementing new software or reorganizing departments. It’s about taking a holistic approach that combines people, processes, data, and technology to enable more integrated, data-driven planning across the enterprise. By considering these key factors, organizations can realize successful outcomes with retail IBP and position themselves to thrive in an increasingly complex and fast-paced business landscape.
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