The purpose of operational business planning is to set medium-term goals based on the organization’s strategic targets.
Operational business planning sets flexible targets for planned activity and consumption quantities and values derived from these for clearly defined periods of time (usually one year). The aims of operational business planning are:

• To plan the organization’s future for a specified period of time. The focus is on defining precise targets and goals, taking into account both organizational and market conditions as well as the organization’s strategic plan.

• To define measures for controlling business practices during the current accounting period. Planning should take place dynamically so that targets can be adapted to changing conditions.

• To check economic efficiency following the accounting period by comparing plan and target values with actual values.

• To form a basis for valuating business activities that is independent of incidental fluctuations.

The targets and the planned degrees of goal accomplishment must be coordinated with the persons responsible. Business practices in the individual divisions can only be steered effectively and economic efficiency can only be checked adequately if these individuals are involved in the planning process.

The starting point for operational business planning is to create a sales plan, where you decide what quantities you expect to sell in the period being planned.

The principal functions in operational business planning are covered by the planning functions of the Controlling (CO) and Production Planning (PP) modules. The integration of the R/3 System ensures that values and quantities are calculated in a consistent manner throughout the system.

You can create a sales plan either in Profitability Analysis or in the Sales Information System. Then you can transfer the planned quantities to Production Planning.

There you determine the required capacities and the required quantities of raw materials and operating supplies. The activities and activity requirements planned in the production plan are then passed on to the cost centers, which need to provide these activities in the form of activity units. In addition, the managers of the cost centers need to plan the costs they expect to incur and the services they expect to require from other (secondary) cost centers on the basis of the planned capacities and quantities.

Plan price iteration, which is the final step in cost center planning, is then carried out to determine planned activity prices. These are used to valuate the quantity structures in standard costing. The costing results for the products, for which sales quantities were planned in the initial step in Profitability Analysis, can now be used to valuate these same quantities in profit planning. Revenues can be calculated on the basis of the planned costs and sales quantities, and planned contribution margins can be calculated from this.

The costing results also serve to valuate the products sold using standard costs of goods manufactured when billing documents are transferred from Sales and Distribution to Profitability Analysis. In addition to the standard cost estimate, the planned activity prices found in plan price iteration can be used for direct activity allocation in Overhead Cost Controlling and for valuating the activity quantities used in production (preliminary costing with completion confirmation for the production orders).

Operational business planning is also dependent on financial planning, which can have a restrictive influence on the production plan and the cost center plan.

If process cost planning is implemented operationally, then business processes are part of the integrated business planning. This way, you can determine planned process quantities for overhead costs/business processes within SOP/LTP.

The following quantities and values are created as a result:

• planned costs and sales quantities plus planned revenue
• data for capacity planning
• data for cost center planning and budgeting
• data for production planning
• planned activity prices
• planned contribution margins
• information for investment planning

Operational business planning makes it possible to calculate the planned quantities and provides you with data that lets you efficiently create a financial budget. Other areas of the organization, such as marketing, can then begin their planning.