Common supply chain reorganization approaches gone wrong

With the rise of resiliency and risk mitigation efforts across supply chains, more are looking to strategically redesign their networks. But common mistakes can doom these efforts, or at a minimum, result in changes that add little to no value to the organization.

However, those organizations that embrace radical change are finding more success, says research from Gartner Supply Chain.

“Supply chain reorganization is high up on CSCOs’ agendas, yet many are unclear about how organization design outcomes link to business goals,” said Alan O'Keeffe, senior director analyst in Gartner’s Supply Chain practice. “Our findings reveal that the leaders who achieved success took a more radical approach to redesigning their supply chain organizations, resulting in the ability to deliver on new and transformational operating models.”

Gartner conducted research on this topic from February through June 2024, basing its analysis in part on qualitative interviews with supply chain leaders from organizations that had undergone an organizational redesign. It also included research from over 1,200 inquiries with clients conducted between July 2022 and June 2024.

A common problem

Gartner found that organizations achieving the most success in a redesign were those that avoided a redesign with similar organization solutions. Instead, they reimagined the effort, assigning responsibilities to reporting lines in diverse ways, and focusing on the unique characteristics of the business and networks.

“The commonality between successful organizations is that their leaders intentionally prioritized the organizational goals of balance, strength and speed into their design process,” said O’Keeffe. “In doing so, they sidestepped the most common pitfalls in supply chain reorganization design.”

Avoid these mistakes

The research identified three common mistakes that if avoided, can lead to better outcomes, Gartner said. They are:

Mistake #1: The “either/or” approach is best

Gartner said successful CSCOs find balance as a critical outcome. But those that fail offer use unbalanced structures that result in delays or gaps in performance. Or, even worse, confusion about responsibility. According to Gartner, this is the result of looking at a redesign as a binary choice between centralized and decentralized models.

In a balanced approach, organizations “employ both integration (combining activities under one team structure) and differentiation (empowering multiple units to conduct activities in unique ways)” which ensures decisions, expertise and resources are aligned with the goal of meeting customer needs.

“CSCOs should integrate activities that benefit from standardization for efficiency and differentiate those that require customization to meet unique business needs,” said O’Keeffe.

Mistake #2: Reducing headcount achieves goals

People matter, but as Gartner found, reducing headcount can be counterproductive to the organization’s goals. It is a focus on short-term cost savings, but the result is often a loss of critical talent and expertise which can hamper long-term success.

Instead, Gartner suggests understanding what capabilities make the organization strong throughout its lifecycle, and prioritize the development of people, social networks and autonomy.

“High-performing organizations invest in talent and intentional work design to strengthen their organizations,” said O’Keeffe. “This includes reassessing the scale of work, adjusting where work happens, and ensuring that talent is appropriately placed to achieve the organization's unique goals.”

Mistake #3: Copycats win

Organizations sometimes look to competitors or others in the market that have had success and simply try to copy their approach. Doing this does not consider unique characteristics of the organization which must be factored into the design. Skipping this step can lead to slower decision-making. Gartner suggests designing structures that enable rapid response to customer needs, streamlines internal decision-making processes, and differentiates between operational executive and transformation efforts.

“Successful CSCOs aligned roles to stakeholders to reduce complexity and ensure clear decision-making authority,” said O’Keeffe. “This helped in creating single points of contact and removed confusion about who the decision makers were.”

The full analysis from Gartner is available here: Supply Chain Executive Report: Radically Rethinking Reorganization.

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