Radically Rethinking Supply Chain Reorganization

The Olympics are over for another four years. We have celebrated our medal winners and commiserated with those who just missed out. Those world class athletes will now begin a new cycle of enhancing their performance to aim even higher at the next Olympics in Los Angeles — a place on the podium; a gold medal; a world record.

There isn’t a Supply Chain Olympics. But such are the high levels of exertion and competitiveness in operational roles that we can feel like we’re competing in one every day.

Supply chain professionals are being stretched by new commercial needs, more stringent cost targets and ambitious transformation agendas — and often feel like they’ve reached the limits of what their operating models can do in their current form. It’s like an athlete who reaches a performance plateau and knows they need to break through it to get to the next level.

Organization design is one area where we are seeing supply chain leaders breaking the mold to unlock greater levels of performance. 90% of supply chains are currently reorganizing, or plan to, in the near future₁. Reorganization clarifies accountability and authority to make better decisions for a better performing supply chain — or at least that is what it should do.

In reality, supply chain reorganizations are often done to meet a headcount efficiency target, or to apply a structure that has worked somewhere else for someone else. Neither of these approaches helps to design a supply chain organization that can break through the performance plateau.

Gartner encourages CSCOs to radically rethink supply chain reorganization and take an approach that mirrors an athlete developing distinct physical capabilities to achieve Olympic success. We urge CSCOs to make three outcomes central to their new organization design: balance, strength and speed.

Balance: Stop focusing organization design on one extreme end of a spectrum — such as centralization or decentralization. Start from the position that some supply chain activities benefit from being integrated under one leader, and some should be dispersed under multiple leaders across the organization (i.e. differentiated).

Integrate to drive standards and synergies across the enterprise’s physical networks and assets. Differentiate to serve diverse customer value propositions. This balance of integration and differentiation looks different for every enterprise. Build your balance by assessing each granular supply chain activity on its own merits.

Strength: I’m stating the obvious here, but it needs to be said: you want your organization to be stronger after a redesign than before. So don’t just move existing boxes around an organization chart.

Identify those roles that are crucial to success, invest in their development and increase their level of autonomy through empowerment and accountability. Also, recognize that strength comes from the informal personal networks or communities that employees develop. Leverage these to both enable better ways of working and to give employees support throughout the change.

Speed: Ineffective organizations suffer from decision latency, in which delays, ambiguities and gaps in ways of working slow down decision making, resulting in poorer service and difficult transformation efforts.

By sharpening accountabilities and integrating activities under new ways of working, organization redesign can remove decision latency. The results? Customers get better service and responsiveness; stakeholders know who to go to for rapid decision making; and transformation gains momentum.

When top athletes need to push beyond performance plateaus, they radically rethink how they develop their bodies via their training and preparation routines. Supply chain leaders seeking to revitalize their organization should read Gartner’s latest Supply Chain Executive Report: Radically Rethinking Reorganization (subscription required) for guidance on developing a more balanced, stronger and faster supply chain. You can also listen to our podcast on the topic on Gartner.com, Apple Podcasts and Spotify.

Alan O’Keeffe
Sr Director Analyst
Garner Supply Chain
Alan.OKeeffe@gartner.com

_{1. 2023 Gartner Organizing to Succeed in Digitalizing the Supply Chain Survey}

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