It’s time to break the mold in terms of supply chain reorganizations.
So says Gartner analyst Alan O’Keefe, in a blog post last week.
That comes, O’Keefe notes, as 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,” O’Keefe says, using a sports analogy.
Supply chain transformation, which often of course come with a new org structure, are very popular. Gartner says 90% of supply chains are currently reorganizing, or plan to, in the near future.
“Reorganization clarifies accountability and authority to make better decisions for a better performing supply chain — or at least that is what it should do,” O’Keefe says.
In reality, supply chain reorganizations are often pursued to meet a headcount efficiency target, or to apply a structure that has worked somewhere else for someone else,“ O’Keefe writes. “Neither of these approaches helps to design a supply chain organization that can break through the performance plateau,” O’Keefe observes.
Gartner recommends that CSCOs radically rethink supply chain reorganization and take an approach that mirrors an athlete developing distinct physical capabilities to achieve maximum success.
“We urge CSCOs to make three outcomes central to their new organization design,” O’Keefe says. Those three are:
Balance: Companies should stop focusing organization design on one extreme end of a spectrum — such as centralization or decentralization. Instead, they should 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).
Companies should also integrate to drive standards and synergies across the enterprise’s physical networks and assets. In addition, firms should differentiate to serve diverse customer value propositions. This balance of integration and differentiation looks different for every enterprise. Companies should build balance by assessing each granular supply chain activity on its own merits.
Strength: Gartner says that, perhaps stating the obvious, you want your organization to be stronger after a redesign than before.
“So don’t just move existing boxes around an organization chart,” O’Keefe recommends
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He adds that companies should Identify those roles that are crucial to success, invest in their development and increase their level of autonomy through empowerment and accountability.
 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, O’Keefe observes.
“By sharpening accountabilities and integrating activities under new ways of working, organization redesign can remove decision latency,” O’Keefe states.
The result: Customers get better service and responsiveness; stakeholders know who to go to for rapid decision making; and transformation gains momentum.
In conclusion, O’Keefe says that “when top athletes need to push beyond performance plateaus, they radically rethink how they develop their bodies via their training and preparation routines.”
He adds that supply chain leaders seeking to revitalize their organizations need to take a similar approach.
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