Every company operates within a large set of constraints, including annual budgets, material purchase contracts, resource capacity, hospital ward space, environmental regulations, customer order contracts, financial reporting regulations, and others. While these financial, physical and policy constraints can impact an entire organization, most planning processes are still done by department, business unit, geography or some other hierarchy. The need for true Integrated Business Planning (IBP) has never been greater.
No one would argue that major constraints, especially those impacting profits, are not important. Well understood and managed constraints, such as budgets, normally trickle down to various decision-making levels. However, companies often have many enterprise-impacting constraints, which are not always taken into account or followed.
This results in disconnects and inconsistencies in the decision logic process — often the case when organizations use a descriptive or predictive analytics modeling approach for planning decisions. Critical constraints are usually simplified or aggregated, and sometimes completely ignored!Read More