Reorganization is always a useful tool when companies are looking to improve outcomes. What isn’t always common is designing these structures with a clear vision of the organization’s specific needs in mind.
"Supply chain reorganization is high up on chief supply chain officer’s agendas, yet many are unclear about how organization design outcomes link to business goals," said Alan O’Keefee, senior director Analyst in Gartner’s Supply Chain practice, in a statement. "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.”
The research found successful designing focused on the uniquecharacteristics of their 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.”
These mistakes include:
Mistake 1: The “Either/Or” Approach
Unbalanced organizational structures result in delays, gaps in performance, and confusion about responsibility. This often stems from a binary choice between centralized and decentralized models. Such an approach limits design possibilities and can lead to organizational power struggles, with teams feeling overwhelmed and misaligned.
Successful CSCOs recognize balance as a critical outcome. They employ both integration (combining activities under one team structure) and differentiation (empowering multiple units to conduct activities in unique ways). This granular approach ensures that decisions, expertise, and resources are allocated optimally to serve diverse customer needs while maintaining internally coherent operating models.
“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: Debilitating Headcount Reduction
Reducing headcount as a primary goal of reorganization can undermine long-term organizational capability. This approach often leads to a focus on short-term cost savings at the expense of losing critical talent and expertise, which are essential for driving future success.
Instead, CSCOs should focus on understanding what capabilities will make the organization strong in the short, medium, and long term. Prioritize the development and leveraging of people's capabilities, social networks, and autonomy. This approach not only enhances organizational effectiveness but also ensures that the organization is ready to meet future challenges.
“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: The Copy/Paste Approach
Copying organizational designs from other companies without considering enterprise-specific variations can slow decision-making and hinder organizational effectiveness. Each organization has unique characteristics that must be factored into its design.
CSCOs who successfully redesign their organizations make speed an explicit outcome by assigning and clarifying authority and expertise to remove elements that slow decision-making speed. This involves:
- Designing structures that enable rapid response to customer needs
- Streamlining internal decision-making processes
- Differentiating between operational execution 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.”
