Many supply chain reorganisations suffer from at least one of three critical organisational design mistakes that can derail their efforts to achieve critical business outcomes, according to Gartner.
Chief supply chain officers (CSCOs) who improve outcomes radically redesign their structure based on their distinct organizational needs, while prioritising balance, strength and speed as key business objectives.
“Supply chain reorganization is high up on CSCOs’ agendas, yet many are unclear about how organisation design outcomes link to business goals,” says 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 organisations, resulting in the ability to deliver on new and transformational operating models.”
The research was based in part on qualitative interviews conducted between February and June 2024 with supply chain leaders from organizations that had undergone organisational redesign. Insights were drawn from those who had successfully completed a radical reorganization, defined as a shift that enabled organisations to deliver on new activities and operating models that better met the needs of the business. Additionally, more than 1 200 inquiries with clients conducted between July 2022 and June 2024 informed the report.
Gartner experts found that successful companies did not design similar organisational solutions. They assigned responsibilities to reporting lines in radically diverse ways. They focused on the unique characteristics of their business and networks to design organisations that were tailored to meet the unique needs of their organisation.
“The commonality between successful organisations is that their leaders intentionally prioritized the organisational goals of balance, strength and speed into their design process,” says O’Keeffe. “In doing so, they sidestepped the most common pitfalls in supply chain reorganisation design.”
These mistakes include:
Mistake 1: The “Either/Or” Approach
Unbalanced organisational 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 organisational 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,” says O’Keeffe.
Mistake 2: Debilitating Headcount Reduction
Reducing headcount as a primary goal of reorganisation 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 organisation strong in the short, medium, and long term. Prioritise the development and leveraging of people capabilities, social networks, and autonomy. This approach not only enhances organizational effectiveness but also ensures that the organisation is ready to meet future challenges.
“High-performing organisations invest in talent and intentional work design to strengthen their organisations,” says O’Keeffe. “This includes reassessing the scale of work, adjusting where work happens, and ensuring that talent is appropriately placed to achieve the organisation’s unique goals.”
Mistake 3: The Copy/Paste Approach
Copying organisational designs from other companies without considering enterprise-specific variations can slow decision-making and hinder organisational effectiveness. Each organisation has unique characteristics that must be factored into its design.
CSCOs who successfully redesign their organisations 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,” says O’Keeffe. “This helped in creating single points of contact and removed confusion about who the decision makers were.”