# Governance & Decision Rights

IBP without governance is just a series of meetings. Decision rights define who can make what decisions, at what level, and through what process — they are the mechanism that turns cross-functional conversation into organizational commitment 🔒.

The most common IBP failure is not a bad forecast or a supply miss — it is decisions that don't stick. Someone approves a plan in Tuesday's review, and by Thursday a different leader has overridden it. Clear governance prevents this by specifying who decides, who is consulted, and what happens when people disagree.

# Why Governance Matters

Three problems emerge when decision rights are undefined:

Decisions by default. No one explicitly decides, so the status quo wins. Opportunities and risks go unaddressed.
Decisions by loudest voice. The most forceful person overrides the process, undermining trust in the IBP cycle.
Decisions revisited endlessly. The same issue gets debated in demand review, supply review, and the MBR — each time without resolution.

Governance is not bureaucracy. It is the difference between a process that produces decisions and one that produces slide decks.

# The RACI Framework for IBP

R — Responsible: The person or team doing the work. They build the plan, run the analysis, and prepare the recommendation.

A — Accountable: The single person who owns the outcome. They approve the recommendation and are answerable for the result. There can be only one A per decision.

C — Consulted: People whose input is sought before a decision is made. This is two-way communication — their perspective shapes the recommendation.

I — Informed: People who are notified after a decision is made. This is one-way communication — they need to know, but their input is not required.

The critical distinction is between Accountable and Responsible. The person accountable for demand plan accuracy is typically the VP of Sales or the Demand Planning Director — not the analyst building the forecast. Accountability sits with the person who has the authority and organizational standing to drive the right outcome.

# RACI Matrix for Key IBP Decisions

Decision	Demand Planning	Supply Planning	Finance	Sales / Commercial	Executive (MBR)
Demand plan approval	R	C	C	A	I
Supply plan changes	C	R	C	I	A
Inventory targets	C	A	C	I	I
Capacity investment	C	R	C	I	A
Product launch / discontinue	C	C	C	R	A
Pricing changes	I	I	C	R	A
Budget reforecast	C	C	R	C	A

This matrix is a starting template — every organization should customize it to reflect their actual decision-making structure. The important thing is that it exists, is documented, and is enforced.

# Decision Types by Level

Not all decisions belong in the same meeting. IBP governance defines three tiers of decision authority, each aligned to a specific review in the cycle.

# Operational Decisions

Made within each functional review without requiring escalation: inventory rebalancing, production mix adjustments, short-term demand allocation, SKU-level forecast overrides.

Authority: Functional leader (e.g., Supply Chain Director, Demand Planning Manager)

# Tactical Decisions

Made at the IBP cycle level, requiring cross-functional agreement: consensus demand plan approval, supply plan changes affecting service levels, procurement commitments beyond standard lead times, promotional plan adjustments.

Authority: Cross-functional IBP leadership team, confirmed at MBR

# Strategic Decisions

Exceed any single review's authority: capital investment in new capacity, portfolio changes (market entry/exit), structural supply network changes, significant financial target revisions.

Authority: Executive team at the MBR, or escalated to the board if beyond MBR authority

# Escalation Paths

When a decision exceeds a review's authority, it must flow upward — not sideways. The escalation path is simple:

Functional review identifies an issue that exceeds its scope.
The issue is documented with a recommendation, options, and financial impact.
It is placed on the MBR agenda as a decision item, not an informational update.
The MBR either decides, requests additional analysis for the next cycle, or escalates to the board.

The key discipline: escalation must include a recommendation. Pushing a problem upward without a proposed solution is not escalation — it is abdication.

# Escalation SLA Examples

Escalation speed should match business impact. Use explicit service-level agreements (SLAs) so critical issues do not stall between meetings.

Decision Type	Example Trigger	Decision SLA	Owner
Service-critical operational issue	Risk to customer delivery within current month	Resolve or escalate within 48 hours	Functional leader
Tactical cross-functional trade-off	Demand-supply mismatch with margin impact	Decision within 5 business days	IBP leadership team
Strategic resource commitment	Capacity investment or portfolio shift	Decision at next scheduled MBR	Executive owner
Board-level strategic exception	Decision exceeds MBR authority or budget guardrails	Board proposal prepared within current cycle	CFO / GM

SLA misses should be visible in the monthly governance dashboard.

# The One-Number Plan 🤝

The one-number plan is arguably the most important governance concept in IBP. It means the organization operates from a single agreed plan — one demand number, one supply plan, one financial projection — rather than allowing each function to maintain its own version of reality.

What it means in practice:

Sales does not have a "sales forecast" that differs from the demand plan
Finance does not have a "budget forecast" that ignores the demand review output
Operations does not build to a "supply plan" disconnected from the consensus demand

How to maintain it: The demand plan approved in the demand review becomes the single input to supply and financial planning. Changes between cycles require explicit approval — not informal adjustments. KPIs measure adherence to the plan, not just accuracy against actuals.

When functions disagree: Disagreement is expected and healthy. When Sales believes demand will be higher than the statistical forecast, that tension is resolved in the demand review through structured assumption review. The output is one number, even if it reflects a compromise. What is not acceptable: agreeing to one number in the review and then operating against a different number afterward. That is the governance failure that kills IBP credibility.

# Common Governance Failure Scenarios

Failure Scenario	Typical Root Cause	Countermeasure
Decisions made outside process	Informal leadership overrides	Require all plan changes to reference a Decision ID
Repeated re-litigation of same issue	No clear accountable owner	Enforce one `A` per decision and due date at meeting close
Late escalations	No escalation thresholds or timing rules	Publish and track escalation SLAs by decision type
Shadow plans by function	Weak one-number discipline	Reconcile all functional plans against approved baseline weekly
Unowned actions	Poor decision logging	Block closure until owner and due date are assigned

When one of these patterns appears for two cycles in a row, treat it as a governance incident, not a normal variance.

# Connecting Decision Rights to Meeting Cadence

Each meeting in the IBP cycle has a defined scope of authority. This prevents both under-decision (issues left unresolved) and over-reach (meetings making decisions beyond their authority).

Meeting	Scope of Authority	Escalation Path
Demand Review	Approve consensus demand plan; resolve forecast assumption disagreements	Unresolved demand risks escalate to MBR
Supply Review	Approve supply plan; set inventory targets within policy; flag capacity constraints	Capacity investment decisions escalate to MBR
Financial Reconciliation	Quantify gaps to budget; prepare scenario analysis; recommend gap closure actions	Gap closure requiring executive trade-offs escalates to MBR
Management Business Review	Approve integrated plan; authorize resource commitments; resolve cross-functional trade-offs	Strategic decisions beyond MBR authority escalate to board

When this structure is respected, each meeting knows what it can decide and what it must escalate. The result is a process where decisions are made at the right level, by the right people, with the right information — and those decisions hold.

# Monthly Operating Rhythm

Use a repeatable monthly governance routine:

Week 1: Publish prior-cycle decision execution status and SLA misses.
Week 2: Demand review closes open demand authority items.
Week 3: Supply and finance reviews close tactical items and prepare escalations.
Week 4: MBR resolves escalated decisions and resets the one-number baseline.

This rhythm keeps governance active between meetings instead of treating it as a once-a-month compliance exercise.

# Further Reading

Management Business Review — The executive meeting where strategic and cross-functional decisions are made.
Planning Horizons — How decision authority aligns with short-, medium-, and long-range planning windows.