Gartner: Supply Chain Planning Leaders Must Design A “Fit for Purpose”
November 6, 2020
chain planning leaders that define their function’s “fit for purpose” and choose
a corresponding organization design will improve their results and be better
aligned to the overall business.
The term “fit for purpose” describes an approach where planning leaders focus on
what they should be doing, instead of benchmarking what others are doing, but
may not necessarily work for them.
Gartner analysts are discussing supply chain planning strategies and models at
the Gartner Supply Chain Symposium/Xpo, taking place virtually in the Americas
“Many supply chain planning leaders ask themselves if they should organize their
function in a more centralized or decentralized way,” said Ken Chadwick, vice
president analyst with the Gartner Supply Chain practice. “To answer that
question, they must first understand what their individual fit for purpose
organization looks like.”
To design a fit for purpose planning organization, leaders must consider their
companies’ business and operating model as well as the operational mindset.
Business and Operating Model
The first element of designing a fit for purpose planning organization is to
understand the business and operating model of the overall company – customer
base, products, serviced markets – and determine to what extent those factors
“Some companies are now moving from global to more regionalized supply networks
because global networks are less resilient when it comes to disruptions, such as
trade wars or the COVID-19 pandemic,” Mr. Chadwick said. “On the other hand,
there are companies that want to try a more centralized approach to better serve
their key customers.”
The next step is to focus on what is important to the company in operations and
decision making. Some companies’ mindsets focus on business unit accountability,
so they align planning to a commercial leader who owns those outcomes. Other
companies are driving an end-to end mindset, leading to one integrated planning
organization serving enterprise outcomes. Mindsets related to cost-focus,
customer experience, innovation, agility, resilience, and risk also have a
significant impact on how planning leaders organize.
“When planning, leaders know about their organization’s present and future
operating model and mindset, they can in turn think about what their own
function should look like to best fit in and serve its purpose,” Mr. Chadwick
Decentralized, Center-Led or Centralized
on the organization’s overall operating model and mindset, supply chain planning
leaders can evaluate if a decentralized, center-led or centralized model is the
best design for their function.
In a decentralized model, all planning roles report into the separate business
unit leaders. This approach makes sense for large portfolio companies with
mostly independent business units.
The center-led model leaves planning operations within the business units but
creates roles at a global level that focus on planning processes and long-term
planning. Finally, in the centralized model, all elements of supply chain
planning report into an integrated planning leader who is running all aspects of
planning across the different regions.
“There really is no one-size-fits-all solution for a planning organization, nor
is a decentralized model necessarily a sign of lesser maturity. Planning leaders
must evaluate their individual situation and future plans and design their
function accordingly,” Mr. Chadwick concluded.