integrated business planning retail

Imagine a symphony orchestra where each musician plays their own tune without listening to others. The result would be chaotic and dissonant, right? Similarly, in the business world, when decision-making happens in silos and planning processes are disconnected, it’s like having a group of individuals playing their own instruments without any coordination. The harmony is lost, and the organization becomes inefficient, misses opportunities, and struggles to keep up with the fast-paced market.

Integrated Business Planning (IBP) addresses these challenges by providing a comprehensive framework that integrates strategic, operational and financial planning, analysis, and reporting to drive better business outcomes.    A retail company experiences a sudden surge in online sales due to a viral social media campaign. Integrated planning incorporates supply chain planning, demand planning, and demand forecasts so the company can quickly assess the impact on inventory levels, supply chain logistics, production plans, and customer service capacity. By having real-time data at their fingertips, decision-makers can adjust their strategies, allocate resources accordingly, and capitalize on the unexpected spike in demand, ensuring customer satisfaction while maximizing revenue.   This blog explores the significance of IBP in today’s modern business landscape and highlights its key benefits and implementation considerations.

Integrated business planning framework

Integrated Business Planning (IBP) is a holistic approach that integrates strategic planning, operational planning, and financial planning within an organization. IBP brings together various functions, including sales, marketing, finance, supply chain, human resources, IT and beyond to collaborate across business units and make informed decisions that drive overall business success. The term ‘IBP’ was introduced by the management consulting firm Oliver Wight to describe an evolved version of the sales and operations planning (S&OP process) they originally developed in the early 1980s.

Making up the Integrated Business Planning framework are six key pillars:

1. strategic planning.

Integrated Business Planning starts with strategic planning. The management team defines the organization’s long-term goals and objectives. This includes analyzing market trends, competitive forces, and customer demands to identify opportunities and threats. Strategic planning sets the direction for the entire organization and establishes the foundation for subsequent planning roadmap.

2. Operational planning

Operational planning focuses on translating strategic goals into actionable plans at the operational level. This involves breaking down the strategic objectives into specific targets and initiatives that different departments and functions need to execute.

For example, the sales department might develop a plan to enter new markets or launch new products, while the supply chain department focuses on inventory optimization and ensuring efficient logistics. The key is to align operational plans with the broader strategic objectives to ensure consistency and coherence throughout the organization.

3. Financial planning

Financial planning ensures that the organization’s strategic and operational plans are financially viable. It involves developing detailed financial projections, including revenue forecasts, expense budgets, and cash flow forecasts. By integrating financial planning with strategic and operational planning, organizations can evaluate financial profitability, identify potential gaps or risks, and make necessary adjustments to achieve financial targets.

 4. Cross-functional collaboration

A fundamental aspect of IBP is the collaboration and involvement of various functions and departments within the organization. Rather than working in isolation, departments such as sales, marketing, finance, supply chain, human resources, and IT come together to share information, align objectives, and make coordinated decisions.

5. Data integration and analytics

IBP relies on the integration of data from different sources and systems. This may involve consolidating data from enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, supply chain management systems, and other relevant sources. Advanced analytics and business intelligence tools are utilized to analyze and interpret the data, uncovering insights and trends that drive informed decision-making.

6. Continuous monitoring and performance management

The Integrated Business Planning process requires continuous monitoring of performance against plans and targets. Key performance indicators (KPIs) are established to measure progress and enable proactive management. Regular performance reviews and reporting enable organizations to identify deviations, take corrective actions, and continuously improve their planning processes.

What are the benefits of Integrated Business Planning?

By integrating strategic, operational, and financial planning organizations can unlock the full potential of IBP and drive business success and achieve their goals.

Enhanced decision-making

IBP facilitates data-driven decision-making by providing real-time insights into various aspects of the business. By bringing together data from various departments, organizations can develop a holistic view of their operations, enabling them to make better-informed decisions.

Improved alignment

By aligning strategic objectives with operational plans and financial goals, IBP ensures that every department and employee is working towards a common vision. This alignment fosters synergy and drives cross-functional collaboration.

Agility and responsiveness

In the rapidly changing business landscape, agility is crucial. IBP allows organizations to quickly adapt to market shifts, demand fluctuations, and emerging opportunities. By continuously monitoring and adjusting plans, businesses can remain responsive and seize competitive advantages.

Optimal resource allocation

Integrated Business Planning enables organizations to optimize resource allocation across different functions. It helps identify bottlenecks, allocate resources effectively, and prioritize initiatives that yield the highest returns, leading to improved efficiency and cost savings.

Risk management

IBP facilitates proactive risk management by considering various scenarios and identifying potential risks and opportunities. By analyzing data and conducting what-if analyses, companies can develop contingency plans and mitigate risks before they materialize.

Essential steps for implementing Integrated Business Planning

Implementing an effective IBP process requires careful planning and execution that may require substantial effort and a change of management, but the rewards are well worth it. Here are some essential strategic steps to consider:

1. Executive sponsorship

Establish leadership buy-in; gain support from top-level executives who understand the value of Integrated Business Planning and can drive the necessary organizational changes. Leadership commitment, led by CFO, is crucial for successful implementation.

2. Continuous improvement

Continuously monitor and adjust; implement mechanisms to monitor performance against plans and targets. Regularly review key performance indicators (KPIs), conduct performance analysis, and generate timely reports and dashboards. Identify deviations, take corrective actions, and continuously improve the planning processes based on feedback and insights.

3. Integration of people and technology

To foster cross-functional collaboration, the organization must identify key stakeholders, break down silos, and encourage open communication among departments. Creating a collaborative culture that values information sharing and collective decision-making is essential.

Simultaneously, implementing a robust data integration system, encompassing ERP, CRM, and supply chain management systems, ensures seamless data flow and real-time updates. User-friendly interfaces, data governance, and training provide the necessary technological support. Combining these efforts cultivates an environment of collaboration and data-driven decision-making, boosting operational efficiency and competitiveness.

4. Technology

Implement advanced analytics and business intelligence solutions to streamline and automate the planning process and assist decision-making capabilities.  These solutions provide comprehensive functionality, data integration capabilities, scenario planning and modeling, and real-time reporting.

Integrated Business Planning software

From a tech perspective, organizations need advanced software solutions and systems that facilitate seamless data integration and collaboration to support IBP. Here are some key components that contribute to the success of integrated business planning:

1. Corporate performance management

A platform that serves as the backbone of integrated business planning by integrating data from different departments and functions. It enables a centralized repository of information and provides real-time visibility into the entire business.

2. Business intelligence (BI) tools

Business intelligence tools play a vital role in analyzing and visualizing integrated data from multiple sources. These tools provide comprehensive insights into key metrics and help identify trends, patterns, and opportunities. By leveraging BI tools, decision-makers can quickly evaluate financial performance, make data-driven business decisions and increase forecast accuracy.

3. Collaborative planning and forecasting solutions

Collaborative planning and forecasting solutions enable cross-functional teams to work together in creating and refining plans. These planning solutions facilitate real-time collaboration, allowing stakeholders to contribute their expertise and insights. With end-to-end visibility, organizations can ensure that plans are comprehensive, accurate, and aligned with business strategy.

4. Data integration and automation

To ensure seamless data integration, organizations need to invest in data integration and automation tools. These tools enable the extraction, transformation, and loading (ETL) of data from various sources. Automation streamlines data processes reduces manual effort and minimizes the risk of errors or data discrepancies.

5. Cloud-based solutions

Cloud computing offers scalability, flexibility, and accessibility, making it an ideal choice for integrated business planning. Cloud-based solutions provide a centralized platform where teams can access data, collaborate, and make real-time updates from anywhere, at any time. The cloud also offers data security, disaster recovery, and cost efficiencies compared to on-premises infrastructure.

6. Data governance and security

As organizations integrate data from multiple sources, maintaining data governance and security becomes crucial. Establishing data governance policies and ensuring compliance with data protection regulations are vital steps in maintaining data integrity and safeguarding sensitive information. Implementing robust data security measures, such as encryption and access controls, helps protect against data breaches and unauthorized access.  

IBM Planning Analytics for Integrated Business Planning

IBM Planning Analytics   is a highly scalable and flexible solution for Integrated Business Planning. It supports and strengthens the five pillars discussed above, empowering organizations to achieve their strategic goals and make better data-driven decisions.  With its AI- infused advanced analytics and modeling capabilities, IBM Planning Analytics allows organizations to integrate strategic, operational, and financial planning seamlessly. The solution enables cross-functional collaboration by providing a centralized platform where teams from various departments can collaborate, share insights, and align their plans.  IBM Planning Analytics also offers powerful data integration capabilities, allowing organizations to consolidate data from multiple sources and systems, providing a holistic view of the business. The solutions’s robust embedded AI predictive analytics uses internal and external data and machine learning to provide accurate demand forecasts. IBM Planning Analytics supports continuous monitoring and performance management by providing real-time reporting, dashboards, and key performance indicators (KPIs) that enable organizations to track progress and take proactive actions.  As the business landscape continues to evolve, embracing Integrated Business Planning is no longer an option but a necessity for organizations. To succeed in this dynamic environment, businesses need an integrated approach to planning that brings all the departments and data together, creating a symphony of collaboration and coordination.

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Consumer-goods companies must transform their planning end to end

The consumer-goods industry has been fending off an array of challenges, such as shifts in consumer expectations and purchasing habits, low GDP growth in some large economies, and a global pandemic that created seismic upheaval. In 2020, the most resilient players were the ones that had already begun rethinking their planning practices.

Those successes are cause for optimism, but existing planning capabilities won’t be sufficient for organizations to keep pace over the next decade. The accumulation of challenges will only make things more difficult for managers of global supply chains and the companies that rely on them. In the current context, supply chains will be called to contribute much more to performance—and that will require a complete reimagining of planning operations, capabilities, company performance, and processes.

The answer: an end-to-end transformation of planning. Technologies such as analytics and machine learning will play a major role, but to be effective they must be supported by new processes, talent, and governance. Companies should start their journey by focusing on five discrete priorities that could generate significant value. The benefits will be well worth the effort.

Pinpointing growth and margin opportunities

A high-performing planning function can provide consumer companies with the ability to capture value across both the top and bottom lines.

Top line: Growth and revenue

In recent years, e-commerce has accounted for 65 percent of growth in the consumer industry. The COVID-19 crisis reshaped the e-commerce landscape by forcing customers to change the way they buy. This trend led to the creation of a number of new “microchannels,” several of which look set to endure beyond the pandemic (Exhibit 1). For instance, the adoption of apps such as DoorDash and Instacart and models such as “buy online, pick up in store” has spiked.

Despite the rapid growth of e-commerce, traditional channels still represent the largest share of sales in the consumer market. Consumer companies have made significant investments in technology, but service levels haven’t improved. They face a number of persistent challenges in this space: increasing customization, greater complexity in the product portfolio, stockouts and missed revenues, and excess inventory. These issues all contribute to a negative customer experience.

Recent events have also placed resilience under the magnifying glass. Over the past 20 years, value chains have become more global, prompting leading companies to develop business-continuity plans. In the second quarter of 2020, we surveyed 60 senior supply-chain executives from across industries and geographies and discovered that a staggering 93 percent of respondents want to increase resilience in their supply chains . The COVID-19 pandemic highlighted the need for more transparent supply chains across industries such as retail, pharmaceuticals, and consumer packaged goods. The few players that had the skills, capabilities, and technology to precisely track SKUs across the supply chain have not only weathered the crisis but have also gained an edge on less-advanced competitors.

Bottom line: Margin and cost

Companies are scrambling to hold down costs and protect margins across several fronts. First, they are facing higher production and logistics costs thanks to the proliferation of SKU portfolios; rising demand for sustainable, organic products and locally sourced fresh goods; and the robust growth of smaller brands, which have expanded three to four times faster than large brands. As a result, costs have risen from lower purchase volumes, manufacturing time has increased from longer changeovers, and less-predictable demand has caused more waste and markdowns.

In addition, the increasingly scattered product portfolio is making end-to-end planning even more critical for organizations seeking to maximize growth and profitability across all planning horizons.

Organizations cannot make optimal decisions without cutting-edge algorithms that can process vast amounts of live data and give planners the insights to react quickly to any change in demand. Finally, most consumer organizations have undertaken ambitious IT transformations that have improved data consistency and accessibility but that have failed to significantly increase planning accuracy or agility. Indeed, many are struggling to generate insights that could deliver superior business value or reduce manual planning efforts.

Establishing a ‘North Star’ for end-to-end planning

Many companies have been making investments in their planning tools and capabilities. Some have made progress in one or even a few areas, but only recently have companies started to tackle planning with the end-to-end perspective needed to significantly elevate performance and address the complex suite of issues. The best-in-class end-to-end planning of the future is built on the following principles:

Cross-functional integration. Companies must manage different planning activities (for example, demand, net requirements, production, and scheduling) in a comprehensive, coordinated way to produce the best decisions for the entire value chain.

Short planning cycles. Traditional monthly planning cycles accelerate to weekly cycles or even continuous-planning processes to enable the agility required in consumer industries.

Advanced-analytics enablement. Advanced analytics helps improve planning quality by, for example, enabling better demand forecasts, production planning, scheduling, and workforce planning.

A high degree of automation. Systems and algorithms support the automation of standard tasks and trigger interventions based on “basic” deviations, allowing planners to focus on exception management and decision making. Tools for automated root-cause identification and the fast, efficient evaluation of alternative actions support planners in their core tasks.

Full supply-chain visibility. Real-time data and performance transparency along the entire supply chain (for example, with inventories and orders) help organizations identify risks and exceptions early on and develop potential countermeasures. In addition, automated scenario-planning capabilities help companies understand the financial implications of potential actions and provide the basis for fact-based, profit-maximizing decisions.

This future state represents a “North Star” for consumer companies. While the end-to-end transformation is aspirational, the required technologies already exist, and companies are making progress across these elements.

Charting a path to value

To unleash maximum value from planning operations, many companies will need to embark on a comprehensive transformation. This effort encompasses several main priorities and embeds the right mix of technology, processes, capabilities, and operating-model changes required to make the journey successful (Exhibit 2).

Focus on business metrics instead of supply-chain key performance indicators: Integrated business planning

Integrated business planning (IBP) builds on real-time financial scenarios that increase the quality of planning decisions as well as the agility of the planning process. Key enablers of efficient IBP are supply-chain and financial planning, system capabilities for real-time scenario creation and evaluation, and machine learning supported by exception identification. IBP is increasingly important for all consumer players, but it is crucial for omnichannel businesses that rely on cross-channel decision making (for example, prioritization decisions in case of bottlenecks). By enabling a coordinated category and product range strategy, companies can make complex trade-offs among pricing, promotions, and availability, a task that is extremely hard to achieve with classic planning systems and capabilities.

An international packaged-food company that was already holding less than 30 days of inventory with service levels above 95 percent embraced this challenge. The company started by cleaning its data to improve availability and transparency and introduced new cross-functional processes to enable data-driven decision making. Through these efforts, it decreased finished-goods inventory by 20 percentage points, improved forecast accuracy by six percentage points, and achieved a threefold increase in response time.

Know what your customer will ask for: Creating a better demand signal

Machine-learning forecasting algorithms use internal and external data sources, as well as their ability to “learn” from historic demand patterns, to continually improve forecast accuracy and minimize manual planning. Leaders harness the capabilities of advanced analytics forecasting tools to strengthen their fact base and close the gap between demand forecasts and commercial targets. Machine-learning algorithms can also simulate the expected impact of sales activities (such as promotions) on demand and help optimize activity management. These tools contribute to an improved customer experience by increasing the availability of the newest offerings. A beverage company built the capabilities to simulate the impact of commercial activities on demand and integrate machine-learning forecasting into its demand-planning processes. The result: an improvement of 13 percentage points in forecast accuracy.

Immediate hands-off order confirmation: No-touch order management

The growth of omnichannel business elevates the importance of automated order-management processes, which give planners the ability to immediately confirm orders—for example, available to promise across planning levels—for optimal stocking based on customer requirements and product availability. Yet side-order management must handle an increased volume of smaller orders. Automation is required to ensure efficient, rapid order processing and allow planners to focus on critical exceptions. As planning becomes more automated and moves toward a touchless operation, it frees up employees to gain new skills so they can focus on more value-adding tasks.

For example, a large consumer-goods distributor developed a stand-alone digital use case to pinpoint inventory position along its supply chain and accurately confirm expected delivery dates and transportation lead times. As a result, client satisfaction rose 30 percentage points.

Break artificial silos between different functions: Automated end-to-end planning

Integrated and highly automated planning processes and systems seamlessly optimize the planning process from demand to production scheduling to deployment. These tools give companies the ability to react in real time to changes in demand or supply exceptions and determine ideal trade-offs among functions. To achieve the greatest impact from advanced demand-sensing solutions, leading consumer-goods players establish automated, end-to-end planning systems to support supply- and inventory-planning agility. That capability allows companies to react to changes in short-term forecasts, manage costs and inventories more effectively, and improve service levels. One leading food company invested in advanced planning capabilities and reduced its inventory by 30 percent while raising customer service levels by three percentage points.

Fix problems before they occur: End-to-end visibility and control

Key elements of a resilient, responsive supply chain include real-time visibility and the early identification and rapid resolution of exceptions (ideally before they have an impact on customers or finances). Service and inventory control towers can help to create transparency, enable fast reactions, and continually address root causes. This visibility is essential to get the right product to the right place at the right time and through the right channel to fulfill customer demand and maximize growth. The COVID-19 pandemic clearly demonstrated the need for transparency across the supply chain, including customers and suppliers. Companies with real-time visibility have been able to react to the disruption much more quickly, make fact-based decisions, and minimize the negative impact on their supply chains—or even gain a competitive advantage.

One home and personal-care company improved customer-service levels by 25 percent through a rapid turnaround of its supply-chain performance. It achieved greater supply-chain visibility by implementing a governance structure (a control tower) that enabled faster response times when identifying exceptions in the supply chain.

Companies with real-time visibility have been able to react to the disruption much more quickly, make fact-based decisions, and minimize the negative impact on their supply chains—or even gain a competitive advantage.

Key success factors in advanced planning transformations

In our experience, a planning transformation is particularly complex. Successful companies must simultaneously manage a large stakeholder base and technological enablement while implementing new ways of working throughout the organization. Executive leadership is a vital component; without the engagement of the top team, any transformation is destined to fail. Business leaders should focus on five actions to accelerate their planning transformation:

• Engage stakeholders beyond the supply chain and the organization. Since the supply chain touches so many different parts of the organization, a successful transformation requires engagement from the CEO and COO. Their presence will lend credence to the transformation and ensure decisions are made in a cross-functional way. A transformation also presents companies with the opportunity to use external data (for example, from retailers, contract manufacturing organizations, copackers, trade partners, and proprietary databases) to generate value for itself and its ecosystem—such as through better visibility on capacity or supply. One company that had a digitally mature procurement function developed an algorithm to predict supply safety, thus improving supply-chain efficiency.
• Develop a plan starting with high-value areas. End-to-end planning transformations run the risk of remaining too conceptual—and therefore difficult to implement. To make efforts more tangible, organizations should select one of the top five use cases and identify its relevance at the granularities of product family, geography, and customer segment (called cells). This exercise enables the development of a portfolio of applications that can be deployed over 12 to 24 months, focusing first on high-impact cells and those with sufficient data. In addition to starting small, organizations should be sure to scale up. One solution is to start with a cell that holds significant business value. Once a sizable flagship has been established and is generating results, the case for scaling can be much easier to make.
• Select the right ecosystem of tech partners. Several tech partners offer advanced integrated solutions, and many start-ups have developed specialized supply-chain offerings—for example, for a specific planning process or industry. While some organizations have specific planning challenges that require customized solutions, executives should start by considering more than one major tech partner. A wider set of candidates can help companies concentrate first on the expected business outcome and then on the technology required to address it.

Reinvent the organization to ensure end-to-end optimization and more agile decision making at interfaces. While advanced planning transformations focus mostly on digital and technology enablement, organizations achieve the greatest planning improvements and efficiency gains through an organization and process redesign. This approach ensures end-to-end decision making in a fit-for-purpose way depending on geography, product segment, channel, and customer type. Indeed, advanced algorithms can solve the most complex issues and identify an optimal solution for the company as a whole. However, this solution can include implications that aren’t beneficial to some individual functions, so organizational setup has to ensure that the resulting actions are executed by all functions to achieve the best outcome.

Organizational changes can take different forms. Radical changes include the creation of a central product organization representing all functions to make optimized trade-offs for a given brand and geography. A less-radical approach is to develop an official network of colleagues in charge of a product or brand while maintaining functional structure. A good way to start is to establish a cross-functional board and ensure it makes decisions based on the recommendations of advanced algorithms. Still, additional elements are required for planning to unlock optimized trade-offs, such as implementing properly aligned incentives for objectives and target functions (for example, by product and channel). In starting such a journey, it is critical to involve key stakeholders in addition to operations, such as sales, marketing, and finance.

• Engage in a massive reskilling program with HR. Planning teams typically still handle a lot of work manually, including consolidating, checking, and reviewing data. As the transformation proceeds, the role of a planning team must evolve to focus more on strategic decision making, trade-offs, and stakeholder engagement. Given the size of the team and the scarcity of those resources in the job market, companies must invest in upskilling as a critical pillar of the planning transformation. In our experience, successful efforts harness techniques such as learning by doing. For example, each individual planner should contribute to the solution design—from business-case creation to delivery—and understand the potential of algorithms to support planning.

How to get started

Companies that want to explore the potential of advanced planning should start by identifying and aligning on a core list of strategic business priorities across their operations and set clear improvement targets for each one. They should then understand how true end-to-end planning across the five priority areas discussed can achieve each of those targets and set a path for the transformation. Finally, they need to devise a clear deployment plan that embeds key success factors across organizational structures, skills, processes, and technologies to make sure that all typical pitfalls are addressed from the start.

Planning activities have traditionally been a supply-chain topic. However, digital and advanced analytics are now unlocking the ability to make complex trade-offs among functions such as sales, production, and the supply chain that will become more critical in the coming years. This dynamic challenges the way companies think about their planning operations and organization. Given the value at stake and the threat posed by digital natives, an advanced planning transformation should be at the top of the agenda for consumer-goods CEOs, and it should focus on five main priorities: integrated business planning, creating a better demand signal, no-touch order management, automated end-to-end planning, and end-to-end visibility and control.

Jérémie Ghandour is an associate partner in McKinsey’s Paris office, Tim Lange is a partner in the Cologne office, Andreas Seyfert is a senior expert in the Berlin office, and Alessandro Turco is an associate partner in the Milan office.

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Integrated Business Planning: A Complete Guide

Do your sales teams push for continuous promotions? Meanwhile, does your supply chain struggle with stock levels as finance grapples with margins? This familiar scenario often arises from operational silos within an organization. It leads to missed opportunities, operational inefficiencies, and uninformed decision-making.

How do you achieve seamless coordination across all departments? The answer lies in Integrated Business Planning. IBP is not merely a strategy; it transforms processes. It aligns your teams, enhances collaboration, and ensures every department works towards the same goals.

Are you ready to streamline your operations and improve decision-making across your organization? Dive into our comprehensive guide to discover how IBP turns your business challenges into opportunities for growth. Keep reading!

What is Integrated Business Planning?

IBP is a strategic approach that transcends traditional planning methods. It integrates diverse business processes to enhance overall corporate performance. IBP aligns departments such as sales, operations, finance, and marketing. This ensures every unit works towards unified goals. Such harmony is crucial for retailers facing rapid market changes and evolving consumer demands.

IBP operates on a rolling horizon, typically spanning 24 to 36 months. This enables retail leaders to make proactive decisions based on long-term forecasts and analyses. This forward-thinking approach aligns strategic and operational plans. It ensures that tactical decisions support the business’s overarching goals.

Consider a national retail chain planning to expand its product line. IBP coordinates new product development with sales forecasts . It aligns with supply chain capabilities and financial budgets. This strategic alignment prepares all departments to support the launch effectively.

Why is Integrated Business Planning Essential?

Before diving into Integrated Business Planning, we acknowledge its core, Sales and Operations Planning. S&OP traditionally focuses on balancing demand and supply within a shorter-term horizon. It establishes the operational groundwork necessary for effective integration. In retail, adapting quickly to market trends is crucial. S&OP ensures your operational capabilities align with immediate market demands. IBP builds on this foundation. It incorporates strategic elements like financial forecasting and long-term market analysis. This broadens the scope from merely operational to strategic.

IBP offers a cohesive approach to decision-making. It ensures that all business facets, from inventory to finance, are in harmony. Here’s why embracing IBP is crucial for your retail operations:

• Enhanced Visibility Across Departments: IBP integrates data and goals across various departments. This provides a clear overview of business operations. Such transparency lets you see how decisions in one area impact others. It leads to more informed decision-making. For instance, a decision to launch a new product line will involve input from the supply chain, sales, marketing, and finance. This ensures that all aspects are aligned and supported.
• Improved Forecast Accuracy: With IBP, you use advanced analytics and collaborative insights to refine forecasting. Insights come from various departments. This accuracy is vital in retail. It predicts market trends, consumer behavior, and potential disruptions. Accurate predictions directly influence stocking and marketing strategies. Better forecasting lets you adjust inventory levels more precisely. This avoids both overstock and understock situations, which erode profits.
• Strategic Resource Allocation: IBP links strategic goals with operational planning, ensuring efficient resource allocation. This strategic alignment drives investments in personnel, technology, and inventory. Investments are based on a deep understanding of business goals, market demands, and financial constraints.
• Faster Response to Market Changes: Market conditions shift rapidly due to factors like consumer trends, economic changes, and technological advancements. IBP allows swift responses to these changes. You adjust plans in real time, ensuring agility and resilience. For example, if a sudden fashion trend emerges, IBP lets you quickly increase production or distribution in targeted areas. This quick action enables you to capitalize on the trend.
• Increased Operational Efficiency: IBP breaks down silos within the organization, fostering collaboration and coordination. This approach boosts efficiency by getting departments to work together. They optimize workflows and reduce redundancies. Whether streamlining the supply chain or synchronizing marketing and sales, IBP ensures smoother, more cost-effective operations.
• Risk Mitigation: IBP incorporates proactive risk management, anticipating disruptions, and formulating strategic responses. This preparedness is crucial in retail, where supply chain issues significantly affect availability and sales. With IBP, you identify risks and weave risk management into your planning. This ensures your business stays strong against unexpected challenges.
• Sustained Competitive Advantage: IBP’s comprehensive nature provides a competitive edge. You stay ahead of the market and even shape future trends. This forward-thinking lets you innovate continuously. It also enables you to meet customer expectations effectively. Thus, you distinguish your business from competitors.

Integrated Business Planning Process

IBP is a strategic process that aligns demand, supply, new product development, and financial strategy into a cohesive plan. Here’s how you implement IBP effectively in your retail business, ensuring each step contributes to your overarching strategic goals:

• Strategic Review: Start by assessing your long-term business goals and market strategies. This foundation ensures that all IBP efforts align with where you want your retail business to be in the next three to five years. You examine trends, consumer behaviors, and potential disruptions that might affect your market.
• Demand Planning: This step involves forecasting customer demand for your products. You analyze historical sales data, market trends, promotional activities, and seasonality. This forecast forms the basis for all other planning activities. It ensures that you match your inventory and resources to anticipated demand.
• Supply Planning: Once you have a clear forecast of customer demand, you plan your inventory and procurement . This step involves scheduling deliveries from suppliers. You manage inventory levels and ensure logistics handle incoming and outgoing products efficiently.
• Product Portfolio Management: Manage your product portfolio by analyzing existing product performance. Plan the introduction of new products to keep your offerings competitive. Ensure your products stay relevant in the market. Base your decisions on lifecycle management, customer preferences, and profitability analysis.
• Financial Integration: Align your financial plans with operational strategies. This step involves budgeting, profitability analysis, and setting financial targets. Ensure these targets match your operational capabilities and constraints. Optimize all financial resources to support business growth and sustainability.
• Collaborative Reconciliation: In this crucial step, you reconcile all plans across different functions. These include demand, supply, product, and financial plans. Collaboration involves regular meetings with all stakeholders. This ensures every department understands and supports the integrated plan. Resolving conflicts between different areas is vital. Ensure the strategy is achievable and aligned across the organization.
• Execution and Monitoring: Implement the integrated plan across your retail operations. This step demands effective communication and the planned deployment of resources. Continuously monitor performance against the plan. Use key performance indicators and real-time data to ensure execution stays on track and meets expected outcomes.
• Continuous Improvement: The final step in the IBP process involves regular reviews of the outcomes. You analyze what succeeded, what failed, and the reasons. Continuous feedback loops adapt the planning process. This adaptation enhances accuracy and efficiency over time. Ongoing evaluation and adjustment maintain agility and responsiveness to market changes. These actions drive continuous improvement in business performance.

💡Fact McKinsey reports that companies with mature IBP processes reduce delivery penalties and missed sales by 40-50 percent.

S&OP primarily balances supply and demand. IBP extends beyond this. It integrates financial planning and product development into its framework. This makes it a broader, more strategic approach. It encompasses long-term goals and focuses on profitability.

Challenges of Integrated Business Planning

• Complex Data Integration: IBP synthesizes large volumes of data from sales, operations, finance, and marketing. Integrating and harmonizing this data presents significant challenges. If you rely on disparate systems that do not communicate seamlessly, the task becomes more complex. Ensuring data accuracy and consistency requires robust IT support. You also need sophisticated software solutions.
• Cross-Functional Collaboration: IBP requires ongoing collaboration across your company’s departments. Siloed operations and misaligned departmental objectives hinder effective IBP execution. Encouraging a culture of teamwork and aligned goals is crucial. Achieving this culture is challenging. It involves changing organizational behaviors and mindsets.
• Change Management: Shifting to integrated planning demands significant changes in your business processes and systems. These changes affect every organizational level, from top executives to operational staff. You must manage these changes effectively. Securing buy-in from all stakeholders often proves challenging. Overcoming resistance to change is crucial. Everyone must understand the benefits and their roles in IBP clearly.
• Skill Gaps: IBP demands advanced analytical capabilities, strategic thinking, and operational expertise. Combining these skills poses a significant challenge. You must find and develop talent with these cross-functional skills. Training and hiring new talent are necessary but require time and resources.
• Consistent Execution and Monitoring: Once implemented, applying IBP principles consistently across all business units is challenging. You must continuously monitor its performance. Ensuring the IBP process is dynamic and adaptable to market changes is crucial. This requires ongoing attention and refinement.
• Technology Adoption: Implementing the right technology to support IBP is crucial. Selecting, customizing, and deploying enterprise planning software to fit your specific needs is daunting. Additionally, technology alone is not a solution. You must align it with your business processes and train your team to use it effectively.
• Balancing Strategic and Operational Focus: Maintaining a balance between strategic objectives and operational realities is key. You ensure that long-term strategic goals do not overshadow immediate operational needs. This balancing act requires sophisticated forecasting. It also demands effective scenario-planning capabilities.

Embracing Integrated Business Planning positions you to manage your resources smartly. It keeps your business agile and aligned with market demands and growth objectives. It promotes sustained business success and differentiates your company in a competitive market.

Take the Next Step

Embrace Integrated Business Planning today with the right means and unlock the full potential of your business.

Elevate your forecasting strategies with integrated business planning that seamlessly integrates with your operations for synchronized decision-making, enhanced collaboration, and optimized resource allocation. Ensure success across every facet of your organization.

Frequently Asked Questions

What are the key differences between s&op and integrated business planning.

S&OP primarily focuses on balancing supply and demand and aligning production and inventory levels with sales forecasts. In contrast, IBP integrates these operational planning activities with strategic and financial planning, providing a more holistic view and a longer-term focus.

Is Integrated Business Planning adaptable to various industries or business models?

Yes, Integrated Business Planning is highly adaptable and can be tailored to meet the specific needs of different industries and business models. By adjusting the focus on key metrics, processes, and strategic priorities, IBP can effectively support unique operational and strategic requirements across sectors.

What metrics do companies use to evaluate the effectiveness of their Integrated Business Planning initiatives?

Companies assess the effectiveness of their Integrated Business Planning initiatives through various metrics: improved forecast accuracy, increased revenue, enhanced customer satisfaction, and reduced inventory costs.

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Predict, plan, and pivot with ibp for retail and consumer goods.

To be successful in today’s dynamic, disruptive retail and consumer goods market, retailers must be able to anticipate the complexities of sales channels, consumer preferences, supply chains, seasonal demand and promotions, compressed project life cycles, and more.

Essential to this anticipation is agility : a tight integration of forecasting systems, processes, and data across all relevant teams and functions.

That’s where an Integrated Business Planning (IBP) strategy comes in. IBP unifies people, processes, and technologies across corporate functions. It aligns financial and nonfinancial data, encourages collaboration, links planning processes, drives communication, and helps ensure accurate reporting.

To find out how IBP can help your business address connectivity challenges and thrive in a volatile market, read on.

This article is an excerpt from our report on 10 operational challenges that retailers can address with IBP . Register below to access the full ebook.   

Navigating peaks and valleys in the supply chain

Q:  My business has a solution and processes that are supposed to help us better plan for peaks and valleys in the supply chain. It’s not very effective, though, because systems, processes, and information are unconnected, and forecasting staff works in silos across locations. What can we do to improve our supply-chain planning agility and collaboration?

A:  IBP allows financial planners to create and share supply chain plans across divisions and locations. It incorporates dynamic analytics that enable forecasters to create forward-looking plans and track and analyze actual supply-chain performance against forecasts. IBP tools’ predictive capabilities also give businesses the leeway they need to quickly pivot when supply-chain conditions shift.

Long-term impact : IBP and connected analytics enable businesses to create forecasts that anticipate the future of supply-chain performance. That will help businesses avoid unnecessary labor and operational costs associated with expedited shipping and stock-outs, as well as better manage overtime spending.

Managing promotional periods and markdowns

Q:  Every Black Friday, we launch seasonal promotions that are followed by markdowns in unsold inventory in January. Inevitably, the planning team miscalculates sales for both periods, and that erodes our profits. How do we gain actionable insights into our promotions and markdowns to improve our margins and profitability?

A:  Retailers often display merchandise on shelves until it is sold at discount, with no strategy to improve margins throughout the shelf life. IBP helps businesses better track and consolidate inventory by creating a data-centric view of each SKU, from order to liquidation. Analytic models enable retailers to drill down into this SKU-level data to understand the cadences of promotions and markdowns, and use this information to develop data-driven sales strategies.

Long-term impact:  An IBP strategy harnesses data analytics to improve margins on future promotional SKUs and lessens the impact of inventory sold at profit-busting markdowns. It can also help retailers more effectively negotiate upcoming pricing with suppliers and distributors.

Ineffective bottom-up and top-down forecasting

Q:  My company’s planning stakeholders perform bottom-up and top-down forecasting, but these models don’t seem to improve our planning outcomes. We think that’s because we are not striking the right balance between the two. What should we do?

A:  A bottom-up forecast is built on granular components, such as projected sales of a specific SKU and the average cost to produce that item. A top-down forecast, on the other hand, identifies the total size of the market for a specific product and how much of that market a retailer expects to capture. IBP allows retailers to combine high-level, top-down growth and margin-based models with a detailed bottom-up roster of sales representatives and revenue forecasts by location.

Long-term impact:  A hybrid bottom-up top-down analysis delivers a broad view of long-term revenue and profit potential, identifies patterns, and allocates resources for future growth. It also helps retailers understand what specific products will sell, and therefore what to purchase and stock. Hybrid analysis will help reconcile differences and identify gaps in inventory and supplychain processes.

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What is IBP? (Integrated Business Planning)

Video: What is IBP?

Why is IBP important?

IBP Framework

IBP best practices by o9 solutions

Summary: ibp software by o9 solutions.

Integrated Business Planning is a best-practice process that aligns Commercial, Financial and Supply Chain activities. In doing so, they are performed as coordinated business decisions with the intent to deliver increased revenue, improved service levels, reduced supply chain costs, greater productivity, better cash flow and higher profits. In short: your integrated business planning process (IBP process) will never be the same.

Integrated business planning (IBP) is important because functional and technical silos across organizations result in flawed decision-making. Within every enterprise there are many thousands of decisions being made and business processes to be aligned, resulting in a final business strategy.

Among those decisions are: commercial decisions related to new products, marketing and sales decisions, supply chain decisions (across the full supply chain and supply chain management, related to positioning of material and capacity and then fulfilling customer demand). Last but not least, financial decisions (related to setting budgets and targets, allocating resources and the forecast that you hold to external stakeholders).

Making the right decisions is not easy and many decisions counteract each other, which may lead to poor business outcomes. Let’s look at some of the fundamental challenges that enterprises face.

1. Isolated decisions are being made

Planning decisions need to be made in a synchronized fashion, but for practical purposes organizations sometimes have to create functional planning departments.  For example, the demand planning and supply and operations planning processes are used to manage the supply chain. Then, you have commercial & sales and operations planning processes driving commercial decisions and finally, financial planning processes to set the budgets and targets.

These plannings and processes are the core of functional planning processes, but they are largely operating in silos today.

2. Cycles are not properly synchronized

Not only do organizations have departmental silos, a second challenging factor is that the siloed teams perform their planning processes in what are called ‘planning cycles’.  A business planning process can involve daily planning cycles for operational planning, weekly and monthly planning cycles for tactical planning and annual cycles for strategic planning.

If these planning cycles are disconnected then the execution of each can be flawed and will almost certainly end up deviating from the intended strategy. In short: an integrated business planning process is very important to connect the planning teams, their processes and their schedules.

3. Technology stacks don’t communicate

The third major challenge to successful Integrated Business Planning (IBP) is the decision-making technology stacks. Historically, many technologies have been used to aid enterprise decision-making and performance management. There are data stacks, planning stacks and reporting stacks. Plus, there’s technology for importing data and then technology used for insights, learning and algorithm development.

All of these types of technology aid decision-making and may lead to integrated business planning (IBP). Still, they can also make the lives of business users much more complex and the adoption of integrated business planning (IBP) more difficult to achieve.

Integrated Business Planning

Functional silos, disconnected cycles and separated technology stacks mean that commercial, financial and supply chain decisions are not easily synchronized. As a result, enterprises will typically suffer from service level issues, inventory issues, excess costs in the supply chain and lower returns on investment from marketing and sales spend.

What this translates to is a significant amount of value leakage. Integrated Business Planning is the strategy and methodology of bringing all these planning processes together and connecting them to respond effectively to market risks and opportunities. IBP can help with your business performance – for example supply chain optimization – and help to develop an effective business planning process, enabling the right decisions to be made to reach your company’s business goals.

Want to learn more about Demand Planning?

View our collection of white papers regarding Demand Planning, tailored to your industry.

Integrated business planning framework

Integrated business planning (IBP) is a journey with many steps requiring a roadmap of prioritized actions that drive quick wins and sustainable benefits. But, before you can plan that roadmap and the business planning process, you need to understand the basic elements of an IBP framework (which we detail below) alongside the benefits each element brings to the table.

Establishment of accountability

The first element to consider is defining the correct roles and responsibilities as well as setting effective governance to ensure the establishment of accountability.  Clear roles, decision rights, policies, and incentives create an atmosphere that enables everyone to work together as an organized unit to achieve the company’s mission.

Alignment with Leadership

The next element is to detail the objectives with a high-level action plan and seek leadership alignment.  Having a clearly defined aim sets the path for integrated business planning (IBP) and defines what IBP will deliver.  Strategic plans, strategic goals, a business strategy as a whole and scenario planning will help with defining a clear mission.

Alignment among the leadership team is vital if integrated business planning is to achieve its goals.  A clear mission provides the pathway people can follow and ensures that the actions and goals are correct, rather than simply the integrated planning process itself.

Achieve Organizational alignment

When processes are cross-functional and designed to align the organization in one desired outcome, you can focus on meeting the goal instead of maintaining the process. This is why both scenario planning and business strategy are important.

You can write down different processes and define operations planning next to financial planning. Still, if the overall strategy is not clear enough, it’s impossible to reach an organized cross-functional process.

Build Talent base

Build a talent base with the skills and core competencies essential to IBP, such as strategic planning, financial planning, and supply chain planning. With skilled and experienced employees on board, you’ll be able to implement IBP across the enterprise more effectively.

Not only that, but new possibilities will equate to new opportunities and the imagined future state will garner enthusiasm and bring new energy to the business.  Successful Integrated business planning will transform process efficiency and motivate the workforce to achieve even greater improvements.

Real-time analytics

With access to real-time analytics, you can run “what-if” scenarios, quickly respond to disruptions and market adjustments, and make insight-driven decisions the core of your business planning. This helps you to be proactive and stay ahead of your market instead of relying on reactive decisions. This way, tasks like financial forecasting and predicting business performance become simpler and easier.  Scenario planning encourages thinking about ranges of possibilities.  Allowing planning teams to have a recognised and structured approach to future states reduces the likelihood of being blindsided by events and being unable to react to risks or leverage opportunities.

Usage of technology

Since IBP is a cross-functional initiative, you need an agile, flexible, cloud-based technology to provide a central platform for IBP collaboration and execution.  Next-generation planning solutions will provide advanced AI/ML capabilities, but equally important for integrated business planning should be the collaborative functionality, dashboards, volume-to-value conversions, metrics and exception handling, automation, performance and security.

The technology you use for implementing integrated business planning throughout your entire business should not only help supply chain management, but also the integrated processes used by the highest management team.

o9 solutions came up with a single integrated plan for all planning processes across the horizon. o9’s Graph Cube Data Model allows for aggregation and disaggregation to the right level of detail for each planning horizon to support end-to-end synchronization.

09 solutions offers  IBP software  that can be used throughout the entire organization and will solve the future demand of business-wide business planning. A few reasons why this software works:

Complete P&L and KPI visibility

The software summarizes scenarios with connected financial KPIs and strategic plans. It understands financial metrics, such as margins, revenues, and working capital and molds this into operational data.

With the help of the Graph Cube Data Model, most companies can use financial performance, financial reasoning and reconciliation within the integrated planning process of your business.

Cross-functional and interactive plan review & publication

o9’s integrated business planning uses Natural Language Processing (NLP) based search & discovery. With this IBP process platform, you can create interactive views instead of static dashboards and turn cross-functional processes, review and alignment into a fluid process.

Live on platform meeting capability

Your management or business leaders can create live presentations step by step with live data for S&OP meetings, removing hundreds of hours of manual work. The business planning process will take up less time, and the complex supply chains and their ways of working will be easier to understand.

Big data enabled

With the help of the IBP software, you can leverage real-time structured and unstructured data from the market, customers, and operations to drive insights into trends and potential disruptions and thus set up a strategic plan for the future.

o9 Solutions’ Integrated Business Planning provides an intelligent, automated planning solution that bridges all the functional silos across the planning cycles in a unified technology stack that can drive up user adoption and enable better decision-making.

o9’s Integrated Business Planning solution uses automation to bring together finance, marketing, sales, and supply chain to address risk and opportunities in an online live platform.

It provides full visibility and complete transparency on the gap vs. the annual strategic plan in revenues, cost, margin and volumes, and therefore enables management to quickly come up with a strategic plan and informed decisions. This results in predictive analytics, profitable growth that balances strategic, financial and operational objectives and many more benefits for your business.

Want to learn more about Integrated Business Planning (IBP)?

View our collection of white papers regarding IBP, tailored to your industry.

About the author

O9 solutions.

o9 Solutions is a leading AI-powered platform for integrated business planning and decision-making for the enterprise. Whether it is driving demand, aligning demand and supply, or optimizing commercial initiatives, any planning process can be made faster and smarter with o9’s AI-powered digital solutions. o9 brings together technology innovations—such as graph-based enterprise modeling, big data analytics, advanced algorithms for scenario planning, collaborative portals, easy-to-use interfaces and cloud-based delivery—into one platform.

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Integrated Business Planning Best Practices: A BTG Expert Q&A

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Integrated business planning (IBP) initiatives have accelerated in the wake of COVID-19 as senior executives cross-sector come to recognize that heightened economic and geopolitical volatility is here to stay. While not a new concept or trend, IBP is quickly becoming mission critical among savvy leaders who see it as the compass in the storm.

IBP at its core is a choreographing engine—tying together the right people, information, and insights at precisely the right time, in service of a more adaptive, intelligent response to cross-functional risk and opportunity.

To get the latest insights on IBP—with a particular focus on the consumer and retail industries—we’ve turned to Steve Hochman, a former Bain & Company and Abt Associates consultant who also held senior leadership roles including CEO, COO, and VP at several highly successful startups and the Nike Corporation, where he led global supply chain strategy and oversaw two major global planning transformations. Hochman advises clients cross-sector in supply chain strategy, end-to-end planning, and supply chain transformation.

Meet The Expert

Steve Hochman

Steve hochman is the vp of research & advisory at zero100, inc. a boutique supply chain think tank that helps fortune 500 c-level executives accelerate operations innovation and transformation at scale..

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What is the main goal of an integrated business plan? How does a successful IBP strategy help align high-level goals with day-to-day operations?

Integrated business planning is a process that continuously aligns targets, assumptions, and plans across all key players in a company to assure more reliable achievement of business plans and brand objectives. In plain English, it’s a way to get everyone on the same page, fast, and execute.

IBP emerged in the early 2000s because of a very practical problem: The more they grow, the more companies become functionally specialized. Particularly when the competition for talent heats up, specialization is necessary to achieve high degrees of competence and pool scarce skills. The problem is that specialization leads to silos. Over time, processes, information systems, incentives, and even team subcultures grow apart, as do their operating plans. Supply chain may see a factory constraint or an inventory risk, but sales teams are told to just keep on selling. Or, operations and sales are aligned, but neither is aligned to the budgets created by finance. And so on.

Fast forward to 2020, and you now have the added challenge of what statisticians called “randomness:” The idea that all plans to some extent are wrong because unforeseeable game-changing world events are now part of the fabric of everyone’s global operating environment. Anyone experiencing the effects of a pandemic, a post-pandemic business rebound, 50% fuel price hikes due to a war in Ukraine, an escalating US-China cold war, intensifying consumer expectations around greenhouse gas transparency, inflation that outlived every economist’s forecast, persistent labor shortages, and now revolutions in artificial intelligence that may change the nature of work itself, will know what I’m talking about.

So, having every executive on the same page is no longer a nice-to-have, it’s survival. Enter IBP.

How does IBP differ from traditional planning processes, such as Sales and Operations Planning (S&OP) or Demand Planning? What does the timeline look like for a company who decides to move from S&OP to IBP?

IBP is a natural evolution from earlier versions of planning. Way back in the 1990s, “planning” often just meant getting the orders entered properly ahead of a factory production run. All you needed was a smart analyst to key in the forecast, plus or minus maybe 20% to allow for an order cancellation or two.

S&OP emerged because, as companies grew in scale and complexity, increasingly specialized Operations and Sales functions started to feed factories different demand signals, and chaos ensued. Conversely, S&OP pioneers like Honeywell, Procter & Gamble, and Intel realized that bringing teams together with a more choreographed plan alignment process could be a source of competitive advantage. And it was. Tens of billions of dollars in shareholder value accrued to companies who brought in the top-down, cross-functional plan choreography that we now call S&OP.

The gap that remained was Finance. Particularly amongst larger companies with high degrees of business complexity, it made no sense to align sales and operations plans (often stated in units) if those plans didn’t also connect back to budgets (i.e. dollars). CFOs and divisional GMs at companies like Samsung and Nike recognized that so-called “unit-dollar translation,” while hard, was mission critical. And in many cases, those same companies invested millions of dollars in multi-year integrated planning transformations to ensure it. And thus IBP was born. No longer a supply chain process, among leaders IBP had become part of the business and systems core.

Learn more: Supply Chain Planning Gets a Post-Pandemic Makeover  – Zero Percent Carbon, 100% Digital (zero100.com)

What are the key components of integrated business planning? What are the benefits of having a separate IBP division?

Integrated business planning takes existing supply, demand, commercial, product, and financial planning processes within a company and connects them. When done well, IBP is connective tissue rather than its own separate thing.

The only add-on is 1) the executive meeting that assures cross-functional alignment, and 2) the “pre-IBP” coordination that assure C-level executives are equipped to act on the hard tradeoffs of the hour.

When done right, IBP meetings are exception-based, meaning they are proactive escalations of the vital few risks and opportunities facing the business at that moment in time. And they are, crucially, decision-based. They are not about reporting the news. They are about confronting risk and opportunity, surfacing real bets and options, and making decisions that stick.

I was advising one global fashion brand recently who said culture change is actually what’s most challenging: In many companies, executive reviews are performative – focused on showcasing excellence. IBP is different. While certainly making room for celebration, the express goal is to put the ugly (or sometimes beautiful) truth on the table and confront it so that the company can move with more agility and confidence through the inevitable turbulence ahead.

The masters of IBP understand the value of this pre-IBP meta-capability and do a ton of legwork prior to the meeting itself to assure that one hour spent with all C-suite executives is set up for action.

What IBP practices are easiest for a supply chain leader to implement when beginning to take steps towards IBP excellence?

We often say the best thing to do when taking on an IBP transformation is to just get started. Bring C-level executives into the process and make them part of it. Put executive review meeting #1 on the calendar 60 days out and work towards it. Don’t overanalyze your plan alignment process. Identify the gaps by doing. Then improve.

For that first meeting: What are the big risks you face next quarter? What questions are crucial to answer to align plans against those risks? Is it a demand-side risk? A question on product assortment or pricing strategy? An emerging inventory bubble? Chances are, you know what the big issues are facing the business. The only thing missing is putting it on the table.

Behind the scenes, you can define the longer timeframe, more architectural work of systems, process, and cultural transformation. But get started. Add value now with the information and processes you have. Most IBP leaders get immense value from the associated momentum.

How can IBP help identify opportunities and risk amid uncertainty? How can supply chain leaders properly assess their processes and determine pain points?

IBP is tailor-made to identify risk and opportunity. By establishing a cadence by which we proactively bring plans together and see where assumptions are misaligned, IBP leaders develop a magical capability to surface business gaps sooner. Sometimes those gaps represent upside—untapped revenue, margin, or brand goodwill. Other times gaps really do equal risk. Either way, the continuous nature of plan alignment itself allows companies to move months faster.

The IBP lead at a $50B global diversified technology brand told me her company saves at least 6-12 months on key plan tradeoffs vs. conventional serial planning processes. And that time savings in turn is worth billions of dollars in recaptured growth and margin each year.

Knowing that IBP is not simply a supply chain planning process upgrade, how can leaders get stakeholders across the org aligned and involved?

Great question. It’s a bit of cliché to say large scale transformations require active executive sponsorship. But they really do. The more cross-functional the nature of the initiative, the greater that maxim holds true.

The first step in many IBP transformation initiatives is a Board of Directors’ presentation to educate on the “what and why” of IBP, with specific asks for help. Those presentations are often followed with carefully scripted roadshows to assure all C-level executives and their teams are clear.

IBP leaders will even go so far as to script out role descriptions for C-level executives ahead of that first experimental IBP meeting, training “upwards” to help each executive understand what they need to do to be successful. Beyond explaining “what’s in it for the boss,” IBP leaders need to explain what behaviors are required to deliver IBP value.

Another maxim is to say, “we’re all in sales.” With IBP, that’s absolutely the case. Supply chain or finance leaders who take on the IBP mantle need to develop a core competency not just in operational excellence, but in storytelling. At Zero100, we spend a lot of our energy helping executives with the latter. And it is always time well spent.

And of course, it helps if the storyteller themselves already has trust with the C-level stakeholders involved. Pick leadership talent wisely in this regard. Whether through finance, operations, or other prior experience, having a track record of adding business value is essential to opening the door to any uncertain change.

How can leaders ensure successful and effective integrated business plans? What are the best ways to measure and track related metrics, and how can they best be integrated into existing business processes?

The best way to know an IBP process is successful is if it delivers better decisions faster. Per the IBP leader at the technology company mentioned earlier, “time to decision” is the ultimate metric. The meta-metric flows from that initial indicator. For example, if I decided to liquidate excess inventory 6 months faster, how did that benefit the firm? Chances are, it led to a cleaner marketplace, more cash, and higher margins.

Companies that implement IBP wisely will often instrument their process with a logging mechanism, asking simply: “What would have happened if I had waited 6 months on this decision? How would the financials or the health of the brand have been different? What was the opportunity cost that we avoided by bringing the gap and the debate to a head sooner?” Usually that rough cut analysis is enough to prove to ourselves the huge IBP-led value accrued to the bottom line.

How can leaders ensure these plans and processes are sustainable and able to be maintained?

There are different ways to sustain momentum and operate IBP at progressively greater scale. The most important is generally organizational: IBP leaders will often create a planning “Center of Excellence (CoE)” or equivalent hub to drive continuous improvement and scale-up. Applying dedicated resources ensures organizational focus and signals to the organization that you are putting your money where your mouth is. In short, you want the horsepower in place to drive focus and trust.

Per above, the other signaling device is picking your strongest leaders to drive the change. If IBP is genuinely important to you, you’ll put your A-team on the case. Not only will that A-team have the necessary street cred at the top of the org chart, they’ll also be talent magnets for any long term change you want to drive at scale.

The other scale-driver of course is information systems. While quick process experiments are a great way to generate quick early wins, it’s pivotal to embed a technology swim lane in your transformation roadmap. Much can be achieved with spreadsheets in the first 90 days. After six months, you’ll want to have a robust plan for how you’ll integrate data to automate your IBP plan alignment processes. And you’ll want to have a forward-looking view of the technology landscape to harness fast-evolving capabilities like artificial intelligence, machine learning, and simulation through digital twins. Having a strong digital visionary embedded in your IBP initiative will be paramount.

How can consumer goods companies create sustainable success and properly create a roadmap of actionable items?

Whether consumer goods or otherwise, the principles are the same.

The only additional item to consider is non-competitive peer conversations to learn from the wins and mistakes of others. A great way to accelerate learning is to plug into communities of practice that are cross-sector, e.g. a consumer goods company may learn more from a consumer electronics company than one of its direct competitors.

It’s partly why we complement our research with a lot of peer events for C-level supply chain practitioners. It’s about advancing the collective.

Where should IBP leaders be focusing for 2023? What advice do you have for them?

If I could give just one piece of advice, it would be to work back from 5 years out. Deliver rapid value because you need it for momentum. But technology is advancing too fast to leave your long-term technology and associated talent roadmap to chance. And it’s not just the fancy stuff like artificial intelligence you should track. It’s also newer cloud-based data architectures and master data management services that will fundamentally streamline and accelerate the way an IBP process will function. If you limit yourself to a 1- to 3-year vision, you may lock yourself into legacy architectures that block you from real step-function IBP advantage. You want to be the nimble one. That means careful tracking of digital trends. You may not implement all the cutting-edge tools all at once, but you want an architecture that allows you to pivot as new tools emerge. And equally important, you want to build internal skillsets to be able to digest and capitalize on the exceptional technical capabilities that are just around the corner. Deliver value now but be ready for what’s to come.

Learn more:  Digital Twins Break Into the Boardroom – Zero Percent Carbon, 100% Digital (zero100.com)

Get the IBP expertise you need to succeed.

There are a lot of ways IBP experts can support your goals this year. Among them, identifying and building upon existing processes, identifying opportunities for improvement and growth, creating roadmaps for success, and providing insight on relevant current events and models. Independent talent are essential assets for companies looking to optimize and standardize supply chain and business processes in all industries thanks to their in-demand skills and niche expertise.

Reach out today to secure insights from Steve Hochman or start a project with another highly skilled independent consultant from Business Talent Group.

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3 Reasons Integrated Retail Planning Is the Future of Retail Tech

Retail technology delivered agility to retailers in 2020, saving them from the COVID-19 pandemic. But is the future of retail tech improving order management, inventory control, supply chain optimization, or enhancing the customer experience?

The right retail tech will integrate data across those functional silos, transforming your business through integrated planning, modeling, and predictive analytics.

Let’s look at why this means integrated retail planning is the future of retail tech:

• Resilience through digital transformation and digital maturity
• Breaking data silos to power predictive modeling & planning for decision-making
• Achieving a 360-degree view of the customer

Resilience through digital transformation

Twenty-twenty was all about agility. At this year’s National Retail Federation Virtual Big Show in January, Janey Whiteside, Walmart’s Chief Customer Officer said they experienced 5 years of digital acceleration in 5 weeks! In 2021, that’s not enough.

IDC defines three levels of digital maturity for digital transformation: Not Strategic, Determined, and Mature. Of 150 retailers surveyed, only 10 percent achieved the Mature level, while 63 percent were Not Strategic. 

Why? They didn’t have an integrated retail planning system that takes in all the data you have, both internal and external, creating a decision loop where data and results are considered in building business models using predictive analytics. 

Are AI and machine learning the answer? Yes, but they are only tools in the overall solution. 

A technology platform that takes in data from all critical organizational areas — finance, strategy, operations — to build predictive models, based on analytics from those functional areas’ data, is required to achieve digital maturity. 

Building predictive modeling

“Integrated” means breaking down retail data silos — marketing, finance, HR, merchandising, supply chain, and operations all working together in a coordinated fashion from one master plan, not a collection of spreadsheets.

So, if you need to review your merchandise assortment, you don’t want to filter through a series of spreadsheets to know your inventory, buying plan, and fulfillment rates to adjust your replenishment. You need an automated system that allows you to model different scenarios and adjust your operation, supply chain, and financials automatically and predictably.

That’s how integrated planning and predictive scenario modeling make your business resilient.

A 360-degree view

Since an integrated retail planning solution considers all the data you have, both internal and external, to create business models and predictive scenarios, you essentially have a complete view of your lifetime customer value. 

Now you can model how customers react to new experiences while operational processes and financial metrics are adapted.

What If an apparel retailer considers building an AI-based wardrobe assistant in its mobile app? This assistant acts as a personal stylist and recommends new merchandise based on what is in the customer’s closet. 

A 360-degree model will allow you to answer the following questions:

• Based on customer demographics, will certain merchandise be recommended more often by the AI? 
• What impact will that have on forecasting, assortments, and operating margin? 
• Will the supply chain support the variation in products ordered based on app adoption? 
• Will suppliers be able to meet the demand based on the seasonality of the merchandise and shopper buying habits? 

All these questions can be simulated and predicted according to models that an integrated retail planning solution can deliver. You will connect the dots between customer experience and your business operations, allowing you to determine if the new experience or innovation is worth pursuing based on financial performance.

The future of retail tech

It’s clear why integrated retail planning is the future of retail tech. After a year of developing the agility to quickly deploy technology, retailers need resilience in 2021 to grow revenue and profitability predictably.

Whether deploying same-day delivery services, modeling new supply chain forecasts, or enabling digital customer experiences in-store, retailers can become resilient with integrated retail planning technology.

If you want to learn more, visit board.com/retail .

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Whitepaper - Why the Time is Now for Integrated Business Planning in Retail

Retail Planning & Analytics have arrived for companies in the midst of digital transformation

Retail Planning and Analytics have become essential for companies in the midst of their digital transformation process.

With today’s ongoing supply chain disruptions, rising inflation, labor pressures and omnichannel competition, Integrated Business Planning (IBP) is now critical to empowering retail decision makers by enabling data-informed decision-making accessible throughout the organization.

Download your copy of this new white paper from by RetailWire to learn about:

• The challenges to retail from pandemic-related changes in consumer habits, supply chain disruptions and beyond
• Where retail organizations are struggling to digitally mature their planning processes
• How a unified planning platform has helped organizations like Puma successfully transform their planning processes

To get the file, fill out the form below:

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Three fundamentals to realize integrated supply chain planning

EY Americas SAP Supply Chain Planning Leader; Managing Director, Consulting, Ernst & Young LLP

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When optimizing your supply chain, leaders must first address three priorities to realize integration and elasticity.

• People – are they planning by collaborating across functions?
• Processes – can you initiate improvements in them without a major overhaul?
• Data and metrics – what are the inputs, and how exactly are you measuring progress?

S upply chain practitioners are dealing with significant disruptions: inflation and price increases from an uncertain economy, labor shortages and delays – plus the never-ending demand from consumers for faster, more reliable deliveries. The desire for better, more aligned planning to manage all of this may well be on the minds of many practitioners, but, it’s hard to realize that successfully when you’re in the trenches dealing with the pressures and daily challenges of what’s happening in the real world. 

How EY can help

Supply chain

Addressing an organization’s overarching end-to-end supply chain and operations strategy to grow, optimize and protect their operations.

As those pressures mount and we all look to optimize supply chains with new tools and technologies, one thing is becoming abundantly clear: it’s no longer practical or advisable to put off integrated supply chain planning. As you consider integration in your planning cycles, it’s essential to do two things. First, truly embrace the balance and handoff between Sales & Operations Planning (S&OP) and Sales & Operations Execution (S&OE) as a key principle of integrated planning. Second, understand it’s time for a more seamless planning approach that leaps beyond short-term firefighting to put your business on a path for improved stability and long-term growth. Here are the priorities to tackle first:

1. People – are they planning by collaborating across functions? 

People are the secret, if not undervalued, key to integrated planning. As you plot a more unified planning approach, look at two things. First, how do you begin bringing together the teams of people (and skill sets across your organization) who will ultimately execute your plan? And second, what can you do to help upskill individuals to understand neighboring business functions so they can execute more collaboratively on an integrated business plan? Start by initiating planner assessments to identify skills gaps and training needs to help them better prepare for the rapid pace of modern supply chain operations.

And ask yourself this: is a plan even truly a plan if it’s done in a silo – or numerous siloes? Plans developed in departmental isolation are like standing in a dark room but proclaiming you have a clear vision of the path ahead. But plans built by aligning procurement, operations, supply chain, commercial and finance functions can help optimize inventory, focus on resource planning when supply challenges spike, and optimize routes and carriers to cut costs. And by bringing together customer service and fulfillment functions, it’s far easier to identify and plan strategies to meet those escalating consumer demands and protect business reputation.

2. Processes – can you initiate improvements without a major overhaul? 

Processes run on technology but in many supply chain operations that can mean legacy platforms and a patchwork of uncoordinated applications that may not speak well to each other. A full platform reset may not be in the immediate budget, but it’s possible to improve process outputs with intelligent tools. Advanced planning and utilizing an integrated business planning (IBP) tool should be a consideration. Advanced planning tools exploit the endless memory processing power of the cloud and can drive radical planning progress in key areas. The tool can effectively integrate enterprise resource planning (ERP) with customer relationship management (CRM) and financial planning platforms to help provide a more holistic business view and your progress against plan. IBP also offers essential scenario planning for a changing landscape, as well as tactical planning that uses historical data, market data, predictive analytics and machine learning algorithms to generate demand forecasts that will help your business plan and operate more effectively.

3. Data and metrics – what are the inputs, and how exactly are you measuring progress? 

Ever heard the expression “Garbage in, garbage out”? That’s an overly simplistic argument for the critical role of quality data across your organization. Whichever sophisticated planning tool you apply to your supply chain planning, consistent, high-quality data points are a must to create an accurate internal view of the business but also assess external market conditions. That means setting both standardized terms and definitions to guarantee data consistency, but also appropriate KPIs to measure and analyze the data and chart progress. Your business will need to establish data governance to put policies and practices into place managing standards, guidelines, and data security. And it will necessitate regular data quality assessments, standardized collation, and documentation tools, as well as lifecycle management to minimize the risk of data degradation and loss.

While all of this may sound like a heavy lift for any business battling short-term supply chain chaos as well as midterm threats, these steps will be essential for solving every stage of your supply chain pain points – and helping deliver on your integrated plan for success.

Uncertain economies and consumer demand make it no longer practical for supply chain leaders to put off integrated supply chain planning. It is essential to find a balance between planning and execution while creating a path for long-term growth.

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Explaining the Integration With SAP Integrated Business Planning (IBP)

After completing this lesson, you will be able to:

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Integration to IBP

SAP Integrated Business Planning for Supply Chain (SAP IBP for Supply Chain) is a cloud-based solution. It combines sales and operations planning (S&OP), forecasting and demand, response and supply, demand-driven replenishment, and inventory planning. It enables customers to automate and tightly coordinate supply chain planning processes. It’s the future of supply chain management, and integration with SAP Build Work Zone helps bring together everything in a single workspace, making the life of a user easier.

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Create a Business Plan

You may have heard a lot about the business plan and its importance for a successful campaign. It’s an essential step toward the realization of your idea. With a proper business plan, you basically create a roadmap highlighting all the major steps of launching a retail business. Start writing your business plan by answering the following questions:

• What type of products will you sell?
• What target market will you work at?
• What unique attributes will your store have compared to others?
• How many workers will you need to run your business?
• What qualities your workers should have to be hired?
• Who will you receive goods and consumables from?
• How much will it cost to launch your business?

At first, it may look like a disaster because it’s your first experience. Still, when you have all these questions in front of you, it’s much easier to set priorities as you know what to start from. Move from one point to another, slowly decreasing the number of questions. You will understand what your business will start from and what to expect at the beginning.

Set a Budget for Business

A successful business is impossible without investments, as you need to spend a lot to start earning more in the future. When the teacher gives a perfect essayusa review of your work, they probably don’t know that you invested in writing, and it’s almost the same case.

When planning a business budget, start by calculating the cost of equipment, payroll, and insurance. Also, consider the price of rent, renovations, upgrades, and backup money for force-major situations. When your retail company has its first significant success, your workers may ask for a salary review, which may be a new potential point for budget planning.

Correct Business Registration

When it’s time to make it official and show your business to the world, you have to do it correctly. First and foremost, you should have a name. It should reflect the purpose of the brand and be associated with goods. For example, if you sell goods to farmers, think of a name that shows that your retail business offers products for farmers. Check through the Google search to ensure nobody is running the business with the same name. Make an additional search through the Secretary of State business to ensure no company has a similar name, so there will be no need to change the name.

Buy a domain for the website and create social media profiles. Usually, brands select three key platforms to establish their presence:

People spend most of their time surfing through these platforms, and you can take advantage of this by launching promotion campaigns and showcasing your products.

The next point is determining your legal structure and actually performing a business registration. It’s important because you determine the tax payment structure, the level of protection, the scheme of ownership, and the ability to receive funds. You can choose from dozens of business entities. If you are not sure about which type of entity will be good for you, take a consultation of a business attorney. This person will help you evaluate the pros and cons to decide which one should be registered.

Get Business Insurance, Permits, and Licenses

In some states, you may need a license to start your retail business. Also, it’s essential to get permission to do what you actually want to do. Sometimes, people are required to get multiple licenses to run their business and other documents like a resale certificate, local licenses, a certificate of occupancy, etc.

It’s not necessary to build a physical store. It’s only an option you can use depending on the demand and specifics of your store. You can go the other way and start an e-commerce store selling goods online. Shopify is a great platform to start your journey. You can customize your pages, add more product info, and make everything to ensure it works well. Later, when you get serious income, you can open a physical store and start promoting your products among local people. If they find your products necessary, you will succeed with the ability to scale your business.

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Walgreens plans store closures as CEO says consumers are 'stunned' by prices

Walgreens is planning potentially sweeping store closures as it faces what its CEO called a “challenging” environment for pharmacies and U.S. consumers.

The pharmacy chain announced quarterly earnings Thursday morning that fell short of Wall Street expectations. Walgreens' stock price dropped 22% on the day.

In an interview with CNBC , CEO Tim Wentworth said the company now forecasts weaker consumer spending for the rest of the year.

″We assumed ... in the second half that the consumer would get somewhat stronger,” but “that is not the case," Wentworth said. 

"The consumer is absolutely stunned by the absolute prices of things, and the fact that some of them may not be inflating doesn’t actually change their resistance to the current pricing," he added. "So we’ve had to get really keen, particularly in discretionary things."

Last month, Walgreens, following Target's lead , announced plans to slash prices on 1,300 items to better serve customers it said were increasingly under "financial strain."

Wentworth didn't state an exact number of closures, but it implied it could be as much as 25% of the chain's approximately 8,600 stores.

“Seventy-five percent of our stores drive 100% of our profitability today,” he said. “What that means is the others we take a hard look at, we are going to finalize a number that we will close.”

Walgreens has contended with difficulties for years.

Its share price has declined steadily for about a decade, dropping from a peak of more than $95 a share in 2015 to less than $15 today. It has reported reduced revenues from prescription drugs, and its retail offerings remain under pressure from both big-box chains and Amazon.com. And it already announced a plan to close 150 U.S. stores last summer.

Today, Walgreens is about one-third the size of its chief rival, CVS , which has also been under pressure over the past two years.

Since the Covid 19 pandemic, Walgreens has gone through a period of executive leadership turmoil: Wentworth was named CEO in October after his predecessor, Starbucks and Walmart veteran Rosalind Brewer, unexpectedly announced her departure less than three years into the job.

A bright spot was its health care segment, which topped revenue estimates. Walgreens views on-site medical services and specialty pharmacy offerings as critical to its push to transform from a major drugstore chain into a large health care company. 

Rob Wile is a breaking business news reporter for NBC News Digital.

Annika Kim Constantino covers the biotech and pharmaceutical industry for CNBC Digital.

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Walgreens to close stores across the country. Will more in Iowa close?

Walgreens is planning to close a substantial number of stores  in the United States.

The pharmacy chain confirmed its plan to close underperforming stores in an emailed statement to USA TODAY Thursday morning after the parent company, Walgreens Boots Alliance, disclosed the news with its 2024 third quarter fiscal results.

In the statement, a Walgreens spokesperson said the company is repositioning its store footprint, noting that about 25% of its stores are not contributing to the chain's long-term strategy.

When will Walgreens start closures?

The spokesperson also said the company is working on a program to close a significant portion of these locations over the next three years.

Why is Walgreens closing some stores' doors?

Tim Wentworth, CEO of Walgreens' parent company Walgreens Boots Alliance, said in an interview with CNBC that the  company now forecasts weaker consumer spending  for the rest of the year.

How many Walgreens locations are closing?

Wentworth also said in an interview with the Wall Street Journal that the  company has not settled on a final number of locations to close .

Walgreens operates roughly 8,700 stores  in 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, according to its website.

Wentworth also told the Wall Street Journal that Walgreens will reduce its stake in primary-care provider VillageMD and will no longer be the company's majority owner.

Wentworth said the company is focused on improving its core business: retail pharmacy. The company is launching a "retail pharmacy action plan" that will "invest in and deliver an improved customer and patient experience across channels," according to the strategic review section of the fiscal results.

Will people lose their jobs because of the Walgreens closures?

According to his interview with the WSJ, Wentworth said the company expects that it will be able to reassign staffers so that its U.S. retail footprint reduction "doesn't result in a meaningful loss of jobs."

Have any Iowa Walgreens stores closed recently?

Iowa has already lost a few Walgreens in recent years. In Des Moines, a downtown location at 606 Walnut St. closed Feb. 26 due to a decrease in foot traffic. It ended a 95-year run of Walgreens pharmacies in downtown Des Moines .

Davenport also lost a Walgreens this year. The store, located on the corner of Brady and Locust streets, closed April 3, according to WQAD . A Sioux City store closed in April 2023, according to KTIV .

Where are the remaining Walgreens in Iowa?

There are Walgreens in 37 Iowa towns across the state. With seven in Des Moines and 10 across the metro.

• Altoona: 1 store
• Ames: 1 store
• Ankeny: 2 stores
• Clive: 1 store
• Des Moines: 7 stores
• Johnston: 1 store
• West Des Moines: 3 stores

Gabe Hauari is a national trending news reporter at USA TODAY. You can follow him on X  @GabeHauari  or email him at [email protected].

Kate Kealey is a general assignment reporter for the Register. Reach her at  [email protected]  or follow her on Twitter at @ Kkealey17 .

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Walgreens to close 'significant' number of underperforming stores, cuts profit forecast

Retail pharmacy chain cited a 'difficult operating environment'.

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Walgreens on Thursday announced plans to close a "significant" number of underperforming stores across the U.S. due to ongoing challenges with profitability and declining margins.

The store closures are part of the company's multi-year footprint optimization program. While Walgreens didn't specify how many of its more than 8,700 stores will be affected, CEO Tim Wentworth told The Wall Street Journal that a "meaningful percent" of the underperforming locations would shutter. 

Walgreens shares tumbled in pre-market trading on Thursday after the company cut its 2024 profit forecast. Over the past year, shares have dropped over 45%. 

WALGREENS CUTTING PRICES ON 1,300 PRODUCTS

"We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins," Wentworth said.

A pedestrian is reflected in a window of Walgreens in Washington, D.C., on Nov. 2, 2022. (Brendan Smialowski/AFP via Getty Images / Getty Images)

Sales at stores open for at least a year slipped 2.3% compared with the year-ago quarter, which Walgreens blamed on a challenging retail environment . The company also noted that its retail margin was negatively affected by increased promotional activity and higher shrink levels, which is the loss of inventory from things such as theft.

WALGREENS SLASHES DIVIDEND EVEN AS QUARTERLY PROFIT BEATS ESTIMATES

The company now expects fiscal 2024 full-year adjusted earnings of $2.80 to $2.95 per share, down from its previous estimate of $3.20 to $3.35 a share.

People ride an escalator at the Walgreens store near State and Randolph streets in Chicago. (Phil Velasquez/Chicago Tribune/Tribune News Service via Getty Images / Getty Images)

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This change reflects the challenging pharmacy industry trends and a worse-than-expected consumer environment, according to the company. 

The company's results and outlook reflect such headwinds, despite solid performance in its international and U.S. health care segments, according to Wentworth.

"Informed by our strategic review, we are focused on improving our core business: retail pharmacy, which is central to the future of healthcare," Wentworth said. "We are addressing critical issues with urgency and working to unlock opportunities for growth." 

Watch CBS News

Walgreens to close up to a quarter of its roughly 8,600 U.S. stores. Here's what to know.

By Kate Gibson

Edited By Aimee Picchi

Updated on: June 27, 2024 / 5:35 PM EDT / CBS News

Walgreens Boots Alliance will close a significant portion of its roughly 8,600 U.S. stores as the pharmacy chain seeks to turn around its struggling business, which has been hit by inflation-weary customers paring their spending.

"The current pharmacy model is not sustainable," CEO Tim Wentworth told investors on a Thursday earnings call.

With 75% of the company's U.S. stores accounting for 100% of its adjusted operating income, the company plans to examine the remaining 25% of its stores for closures, which would occur over the next three years, said the executive, who took the company's helm in 2023. Shuttering 25% of its 8,600 U.S. locations would result in about 2,150 store closures.

"Changes are imminent," but some of the specifics are still fluid, Wentworth said of the impending shutdowns. "There's not one exact number" of closures. 

Wentworth added that the company will definitely shutter a number of its underperforming stores, but that other locations could be shifted to profitability.

Inflation has taken a toll on Walgreens' business, with consumers "increasingly selective and price sensitive on their selections," according to Wentworth. But analysts said that the chain's problems are also of its own making.

"Walgreens does itself no favors in this environment by having a lackluster proposition and broadly uncompetitive prices compared to mass merchants," Neil Saunders, managing director of GlobalData, stated in an emailed research note. "It is no good executing selective promotions, which the chain did over the past quarter, there needs to be a more fundamental overhaul of the retail offer."

Walgreens a month ago cut prices on 1,300 products , following Target and other retailers in lower prices as the U.S. economy shows signs of slowing. 

Are layoffs planned? 

The company does not anticipate large-scale layoffs in closing stores, as it believes most employees at those locations would transfer to other Walgreens outlets, Wentworth said.

"You don't need to have the number of stores we have today," he said, adding that Walgreens expects to retain most of the subscriptions-filling business from the still-to-be-closed locations. 

"Reducing capacity is not a bad thing, from a payer standpoint," Wentworth said. "We can serve payers very effectively from the footprint that remains." 

The call with analysts came after Walgreens cut its guidance and reported worse-than-anticipated third-quarter earnings that received a negative reception on Wall Street, with shares of Walgreens falling by $3.47, or 22%, to close at $12.19 each, on Thursday.

Pharmacy troubles

Walgreens is not alone in struggling to grow its U.S. retail pharmacy business.

In October, Rite Aid said it planned to shutter 154 stores nationwide as part of its  bankruptcy filing , which came amid slumping sales and mounting  opioid-related lawsuits . 

Pharmacies — both independent locations and retail chains — are closing around the country amid low reimbursement rates for pharmacy care as well as low dispensing fees for Medicaid enrollees. 

Further, while Medicaid enrollment ballooned during the pandemic, some 18 to 20 million people have since been dropped from the program, with some of those patients failing to pick up other coverage, another loss for the pharmacy industry at large, Wentworth noted. 

Walgreens and other pharmacies often lose money selling brand name drugs due to agreements with pharmacy benefit managers, or PBMs. These groups, who serve as middlemen between health plans and drug manufacturers, negotiate prices with drug companies and set reimbursement rates for pharmacies. 

"The playbook is a bit dated; we are working with PBM partners to make those changes," Wentworth said.

Meanwhile, some pharmacies are also coping with labor issues, with  pharmacists at Walgreens and CVS Health walking off their jobs last year to protest longer hours and insufficient staff.  

Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance.

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Parent item expand the sub menu, robert wun fall 2024 couture: delving into surrealism, snowflakes and skeletons, christopher esber wins 2024 andam, lanvin goes for experience, taps peter copping, hongkong land unveils $1 billion landmark revamp plan.

Ten luxury tenants — including Cartier, Chanel, Dior, Hermès, Louis Vuitton, Prada, Saint Laurent, Sotheby's, Tiffany & Co. and Van Cleef & Arpels — will contribute a total of $600 million to the renovation.

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Hongkong Land , a major luxury real estate developer in Hong Kong , has revealed plans to invest more than $1 billion in revamping its flagship Landmark shopping mall project.

Hongkong Land said that Landmark, a luxury destination located in Hong Kong ’s Central district, will be transformed into an “ultra-luxury destination of tomorrow” with 10 multistory storefronts.

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“Notably, four brands will have the opportunity to debut al fresco terraces, allowing their valued clientele to enjoy a glass of Champagne while taking in the beauty and buzz of tomorrow’s Central,” Hongkong Land said in a statement.

Unfolding in phases over the next three years, Sotheby’s 24,000-square-foot exhibition and retail space will be the first to open in July, followed by the reopening of The Landmark Mandarin Oriental hotel and the opening of two brand stores in 2025.

“Central has been the barometer of the city’s transformations for over a century, so developing Landmark marks an important chapter that will define the future of luxury experiences in Hong Kong and the rest of the world,” said Alvin Kong, executive director at Hongkong Land.

“This strategic transformation is a pivotal milestone exemplifying our Global Central vision — to create world-class luxury lifestyle and retail destinations that serve as gravitational hubs for the world’s most prestigious brands and discerning consumers,” Kong added.

The ambitious plan aims to help Landmark retain its loyal customer base, which represents 80 percent of total sales. In 2023, these VIPs spent on average 1 million Hong Kong dollars, or $128,000, with purchases at the luxury mall every other week. Landmark’s top 70 customers spent a total of 1 billion Hong Kong dollars, or $128 million, last year.

The upgrade is the most ambitious project for the luxury destination since it opened 44 years ago.

Despite macro challenges that gave the price advantage to markets like Japan , the Hong Kong luxury market is set to achieve a compound annual growth rate of 4.5 percent from 2023 to 2030, reaching 125.8 billion Hong Kong dollars, or $16 billion, by 2030, according to a report by PWC Hong Kong in April. The report said that the growth will be powered the leather goods, watches and jewelry categories.

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