Connect with us

Financial Planning CFO

Bridging the Gap Between Finance and the Supply Chain

Published

on

Finance and supply chain operations are important aspects of any organisation. Finance is mainly concerned with measuring concrete profit and loss by focusing on hard numbers. The two have the responsibility of ensuring that a business has a strong bottom line.

Supply chain operations deal with constant change in demand and supply by driving its decisions mainly on operations planning(S&OP) meetings and monthly sales. Its objective is to have a perfect customer satisfaction. In real life, perfection is rarely attained; thus, the conflict between finance and supply chain operations arises. Discrepancies between the corporate budget, operational forecast, disparate data, and siloed processes are contributing factors to conflict.

Therefore, collaboration needs to take place to bridge this gap. However, for a business to prosper, collaboration has to go beyond traditional sales and operations planning(S&OP). Integrated business planning(IBP) is, therefore, the best possible solution to bridge this gap.

IBP operationalises objectives and corporate strategy. It is a planning process that synchronises internal functions and external trading partners to act as one. This helps in making decisions that balance demand and supply, manage supply chain risks, and prioritise customers and products. Bringing together planning and execution is the best and simple way of doing business.

Organisations need to utilise a new technology that supports IBP by creating one achievable plan against which they can process. With this, organisational agility, the confines of planning systems, tools, and spreadsheet increases. IBP provides the flexibility that is required to achieve the company’s objectives.

The core advantage of IBP is that it allows cross-functional collaboration among sales, product development, supply chain, and finance functions. IBP also enables easy incorporation of multiple systems like ERP, supply chain, and financial planning systems.

Integrated planning business makes planning more straightforward. Although it may not be easy at first when establishing the IBP framework. Coordination with IBP is a great deal. It necessitates delineating communication lines, establishing reporting structures, and breaking down silos. Once it is established, decision-makers gather bi-weekly or monthly cases to review the planning scenario and assess risk.

Continue Reading

Copyright © The C Suite. The C Suite is published by Strategic Investment Ltd, Vale Road Studios, OCC, 105 Eade Road, London, N4 1TJ.