Author: Niels
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Extended Planning & Analysis (xP&A), is the evolution of financial planning beyond the finance function. It requires planning that is highly integrated with other business functions, a transformation of analytics, and a business partner culture, which combined lead to the requirement for modern FP&A skills in the workforce. In two articles, based on the webinar “XP&A in action: Enhancing FP&A Agility with Supply Chain Planning”, I will discuss the future of xP&A and supply chain planning. This first article focuses on integrated planning and decision-making.
Integrated Supply Chain & Financial Planning
According to Gartner®, “Through 2024, 30% of FP&A implementations will be extended to support operational finance processes with 50% requiring a substantial xP&A roadmap from the vendor.”
Although there might be a renewed interest, a formalised integration between supply chain planning and finance is not a new idea. It has been a long-evolving trend. In the 80s, the supply chain developed a process called Sales & Operations Planning (S&OP). This process tries to balance demand and supply in a business in order to understand volume and value discrepancies, assess impacts, and determine action.
Over the years, S&OP has Evolved
S&OP has become more integrated with other business functions. It transformed into what is now called Integrated Business Planning (IBP). A good IBP process can refresh all relevant business plans, project a monthly Rolling Forecast on the EBIT level, and identify P&L risks and opportunities. It then capitalises on those insights by making the best decision possible for the business under the known circumstances.
Arguably, xP&A and IBP have the same objective: tightly integrating strategic, financial, and operational plans w
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