What is the Integrated Reconciliation Review (IRR)?

Definition and Core Purpose

The Integrated Reconciliation Review (IRR) is the fourth step in the monthly five-step Integrated Business Planning (IBP) process. It serves as the critical control tower where the specific plans resulting from the Portfolio, Demand, and Supply reviews are consolidated, harmonized, and converted into a unified financial view.

Its primary purpose is Financialization and Gap Management. The IRR compares the consolidated operational plan against the Annual Operating Plan (AOP) and strategic commitments to identify performance gaps. It acts as a filter, resolving issues at the process-leader level so that only critical strategic trade-offs are escalated to the executive Management Business Review (MBR).

Core Mechanics: From Volume to Value

The IRR is the stage where "volume meets value." It is the first point in the monthly cycle where process leaders view the business holistically. The review focuses on three key areas:

1. Financialized Operational Plans: Converting unit-based inputs (cases, hours, pallets) into financial outputs (Projected P&L, Gross Margin, Cash Flow).

2. Gap Identification: Rigorously comparing the latest forward view against the AOP. If a revenue gap exists 6 months out, the IRR is where it is quantified and solution scenarios are prepared.

3. ARO Management: Reviewing material changes in Assumptions, Risks, and Opportunities to ensure the financial outlook is grounded in current reality.

Strategic Context: The Gatekeeper of the MBR

For the CFO and IBP Process Leader, the IRR is essential for preventing "detail dysfunction" at the executive level.

Skipping the IRR is considered a "grave mistake." Without it, the subsequent Management Business Review (MBR) devolves into a data validation meeting where executives argue over numbers rather than making decisions.

• IRR (Week 3): The working session where data is validated, issues are solved, and decision templates are drafted.

• MBR (Week 4): The decision forum where executives approve the recommendations prepared during the IRR.

The IRR ensures that the executive team receives a curated agenda focused on "knowable surprises" and strategic choices, not operational noise.

The Simulation Advantage

In traditional setups, the IRR is often a frantic week of "spreadsheet harmonization," leaving little time for actual analysis.

Simulation-based IRR automates the conversion of operations to finance. Instead of spending days consolidating data, the team spends the session running "what-if" scenarios on the consolidated plan.

• "If we close the supply gap with overtime (Supply Review input), does the resulting margin erosion push us below the quarterly profit target?"

SIMCEL answers this instantly, allowing the IRR team to develop and present fully costed, robust solution options to the executive board, ensuring the organization responds to change rather than reacting to it.

About SIMCEL

SIMCEL unites your planning processes into one seamless platform. Whether you're optimizing inventory in Supply, refining forecasts in Demand, aligning financial strategy in Finance, or driving sustainability in Carbon—SIMCEL empowers your team to simulate, visualize, and align every decision across the business. Say goodbye to silos and hello to truly integrated, agile planning.