Blog #31. Remove That Cape!
Someone in your business is frequently making critical supply allocation decisions. Picture the room - multiple screens, derivatives positions, futures contracts, weather forecasts, commodity pricing. Smart people. Deep expertise. All well-meaning, all highly technical.
And probably only loosely governed. Definitely not in the planning mainstream.
Nobody can point to where it sits in the planning cycle. But that room - and the decisions coming out of it - is shaping everything your supply chain does downstream. Every month.
If that room has a proper seat at your IBP table, good. You’re ahead of most.
If it doesn’t - keep reading.
The decision the standard model wasn’t built for
This isn’t a niche problem. It shows up wherever supply arrives, whether you’re ready or not - because the cows don’t care and neither do the logs or the oil or the wind - wherever a single input can become multiple outputs, and wherever the financial position and the production decision have to move together. You can’t do one, then the other.
Think dairy. Forced milk supply. Multiple output streams with different returns. Forward pricing positions that shape what you make - and production decisions that shape your market exposure.
Same shape in electricity generation. A mixed asset portfolio - hydro, geothermal, wind, thermal - each with different dispatch economics, sitting alongside spot market and forward contract positions that shift constantly.
Oil refining. Poultry processing. Sugar milling. Anywhere a constrained input fans into multiple outputs, with margins and financial positions moving in real time.
The standard IBP cycle has no step for this. So either that room is making the call quietly in the background - or nobody’s making it properly at all.
A governed decision moment - consider it a 6th step if it helps
I know. Another step. More meetings. More overhead. But, hear me out…
That room already exists. Those decisions are already being made. What’s missing isn’t the decision - it’s the home for it. A governed moment that brings the right people together, surfaces the trade-offs, and lands the output before the supply plan gets locked in. That’s not more formality. It’s less chaos.
Right now the smart people in that room are doing brilliant work. In isolation. They present conclusions, not working. Commercial, demand, and finance never see the choices that were considered and discarded.
This governed step drags that expertise into the open. Cross-functional. Not a readout. A decision.
Someone has to integrate the soloists without trying to replace them. That’s what this step makes possible.
It doesn’t sit inside PMR, DR, SR, or Reconciliation. It touches all of them. It takes inputs from PMR and DR. It defines the brief for Supply. It reduces what Reconciliation has to unpick. Constraints move upstream - from footnotes to inputs.
The standard IBP framework was designed for businesses where demand leads, and supply follows. This is an extension for businesses where that assumption doesn’t hold. If you’ve built something like it, you probably had to figure it out yourself - because this terrain wasn’t in the original map.
In practice, the cadence varies. Some businesses run it monthly. Others fortnightly, triggered by an external market event - a commodity auction, a spot price movement, a demand signal that can’t wait. What matters isn’t where it sits in the calendar. It’s that it exists, it’s governed, and it lands before supply gets locked in.
Supply Review’s role changes. But that’s the point.
When this step makes the strategic call, Supply Review becomes what it was always supposed to be - an execution planning forum.
Some supply chain people will squirm at that. But here’s the reframe: without it, Supply Review is doing two jobs at once - making the strategic call AND planning execution. It does neither well.
Supply was never the right place to make these calls. Asking it to do so wasn’t empowering the supply chain. It was setting it up to fail.
The five-step IBP cycle doesn’t need to be replaced. It just needs this. That’s the superpower sitting under the cape.
Does your business have a version of this?
If any of the above made you think “that’s our room” - I’d love to hear how you’ve handled it. And if you haven’t formalised this yet - you might want to ask who’s really governing the decisions coming out of it.
I don’t write these to chase work. I write them because too many planning processes run on autopilot, and nobody says anything. If it sparked a thought, that’s enough. If you want to talk about it, I’m at planninglab.co.nz/blogs.
#IBP #S&OP