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# Siloed Planning Functions

The "I" in IBP stands for integrated. When functions plan independently and then argue about whose numbers are right, that letter is just decoration.

# The Pattern

The IBP meeting exists on the calendar. Representatives from sales, operations, and finance attend. But each function maintains its own plan:

  • Sales has a revenue forecast built bottom-up from account targets and pipeline estimates.
  • Operations has a production plan built from historical demand patterns and capacity constraints.
  • Finance has a budget-driven plan built from annual targets and quarterly adjustments.

These plans use different assumptions, different time horizons, and often different product hierarchies. The IBP meeting becomes a forum where each function presents its numbers and then the group spends 60 minutes debating whose forecast is right. No consensus is reached. Everyone leaves and continues executing their own plan.

The result: sales promises customers delivery dates that operations can't meet, operations builds inventory for products sales isn't selling, and finance reports a plan that matches neither.

# Why It's Tempting

  • Each function has legitimate planning needs. Sales needs account-level forecasts for quota management. Operations needs production schedules at the work center level. Finance needs P&L projections at the business unit level. These are real requirements that don't go away with IBP.
  • Integration requires compromise. Agreeing on one set of numbers means each function gives up some autonomy. The sales VP can't unilaterally adjust the forecast. The ops VP can't independently set production levels. That feels like a loss of control.
  • "One number" threatens individual accountability. If everyone owns the plan, nobody owns the plan — or so the concern goes. Functions worry that integration diffuses accountability for results.
  • Existing incentives reinforce silos. Sales is compensated on revenue, operations on cost and efficiency, finance on budget adherence. These incentives don't naturally align and can actively oppose integration.

# Why It Fails

# Execution is chaotic without one plan

When different functions operate from different assumptions, execution gaps are inevitable. Procurement buys materials based on the operations plan while the warehouse prepares for the sales plan. Customer service commits to lead times that manufacturing can't support. Every function is executing well against their plan, but the business as a whole underperforms.

# Resource allocation is impossible

If sales says demand is 10,000 units and operations plans for 8,000, how many do you build? How much inventory do you carry? How much capacity do you invest in? Without one agreed number, every resource decision is a gamble.

# Trust degrades

When plans don't align and execution suffers, each function blames the others. "We hit our sales target — operations couldn't deliver." "We built what the forecast said — sales overpromised." The IBP meeting becomes adversarial rather than collaborative.

# The customer pays

The ultimate cost of siloed planning falls on the customer: missed delivery dates, stockouts of popular items, overstock of slow movers, and inconsistent service levels. No customer cares which internal function caused the problem.

# What To Do Instead

# Distinguish inputs from the plan

The key insight is that functional inputs and the IBP plan are different things:

Functional Inputs The IBP Plan
Who creates it Each function independently The IBP process, cross-functionally
What it represents A function's perspective on the future The organization's agreed operating plan
What it's used for Functional analysis and preparation Execution, resource allocation, financial guidance
How many exist One per function One.

Functions don't stop planning — they contribute inputs to the IBP process. Sales brings the pipeline view. Demand planning brings the statistical baseline. Supply brings the capacity picture. Finance brings the budget targets. The IBP process synthesizes these into a single plan. The Management Business Review approves it.

# Establish the "one number" discipline

"One number" doesn't mean everyone agrees with every detail. It means:

  1. The organization has one set of demand, supply, and financial numbers it executes against.
  2. Assumptions behind the numbers are documented and visible.
  3. When functions disagree, the disagreement is resolved through the IBP process, not in bilateral conversations afterward.
  4. Once approved at the MBR, the plan is the plan — functions don't maintain shadow plans on the side.

# Align incentives

Siloed planning persists when incentives reinforce it. Consider:

  • Shared metrics — Forecast accuracy and customer OTIF should be shared across sales and operations, not assigned to one function.
  • Plan adherence — Measure each function's adherence to the IBP plan, not their own internal plan.
  • Joint accountability — The IBP scorecard (KPIs & Metrics) should include metrics that no single function can achieve alone.

# Use governance to enforce integration

Decision rights must be explicit:

  • Who has authority to change the demand number after consensus?
  • Who approves deviations from the supply plan?
  • What happens when sales and operations disagree and can't resolve it at the working level?

Without clear governance, integration depends on goodwill — and goodwill runs out under pressure.

# Warning Signs

You might be in this anti-pattern if:

  • Different functions present different volume or revenue numbers in the same meeting
  • Nobody can answer "what is our plan?" with one answer
  • The IBP meeting is spent debating whose forecast is right rather than making decisions
  • Functions maintain "their" plan alongside the "IBP plan"
  • After the IBP meeting, bilateral conversations override what was agreed
  • Customer service complaints cite internal misalignment as the root cause

# Further Reading