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Summary
As conventional business models fragment, business-to-business (B2B) planning has become increasingly important. Companies more and more are relying on contractors and subcontractors to supply components, parts and services that they once might have created themselves. On the supply side, they increasingly look for global opportunities. Although this fragmentation has multiplied opportunities for lower costs, greater flexibility in production and more rapid innovation, it poses significant challenges for coordination and logistics management. Companies can benefit from improved collaboration in dealing with more complex supply chains, but to achieve it they need processes and information technology that can make it as effective as possible.

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B2B planning is an emerging imperative, driven by the disintegration of familiar vertically integrated business models and the resulting challenges posed to supply chains. For more than a century, many industries operated effectively by relying on vertical integration, owning the various links in the supply chain and the means to transport them. But the rationale for ownership or control of upstream suppliers and/or downstream distribution and sales weakened as trade became freer and markets more transparent. Rather than capturing value, such organizations increasingly found parts of their business losing money. As a result, over the past 25 years vertical integration has been waning, and businesses now have longer, more complex supply chains to manage.

On the downside, more extensive and fragmented supply chains have exposed corporations to risks that vertically integrated companies don’t face. Buyers must keep on top of suppliers’ ability to deliver reliably at agreed prices, while suppliers must  have accurate forecasts of demand. The more specialized the product and the longer the lead time to deliver it, the greater the risks. Timely and accurate sharing of information through collaboration across the supply chain is the best way to mitigate these risks. Over the past decade, well-managed companies have started to focus their business-to-business planning efforts with a select group of trusted strategic suppliers and/or customers. They have developed a planning framework to enable executives and management across the entire supply chain to integrate their planning and forecasting activities. When conditions change, as they all-too-often do, companies then can adapt quickly, and do so on the basis of collaborative consultation to ensure they choose the most strategic path.

The lack of such ongoing planning may not be a fatal problem when business conditions are stable, but no one can count on that in today’s dynamic global economy. Over the past two years, businesses worldwide have had to contend with extraordinary levels of volatility in commodity prices and exchange rates. Economies once booming have fallen into recession. When forecast accuracy is almost impossible, the value of having up-to-date demand visibility and the ability to replan quickly with the most important members of a supply chain becomes clear. Effective B2B planning ought to be a structured dialogue across the organizations – one that includes all the players needed to bring depth and perspective to the discussions. The goal of this process is to collect relevant, forward-looking data and analysis from the various participants and assemble them into a coherent, timely and accurate view.

Assessment
Companies need tools to help them establish and maintain an effective business-to-business planning effort. Until recently information technology could not support a structured dialogue across an organization in ways people find easy to use. Most companies have not caught up with advances that enable this, instead continuing to use stand-alone spreadsheets to manage individual planning processes and not realizing that the limits of spreadsheet technology constrain the ability to share information effectively. We recommend that companies review how they manage their B2B planning efforts with key suppliers and customers to determine where and how they can achieve cost savings and  promote better coordination between organizations. They must ensure that the right people are involved in planning and that workable processes are in place. Equally important, they must support these efforts with better tools than the standalone spreadsheets most of them currently use.