SM Organizational Design

Global companies have shifted the organizational structure of their supply management and procurement groups through the years, between decentralized and centralized designs. Though decentralized structure is becoming less common, each has advantages and disadvantages. Decentralized structure limits organizations’ ability to leverage corporate spend, align with the business, share best practices, and reduce supply costs. On the other hand, centralized design can be a detriment to regional purchases, increase risk of maverick spend, cause friction, and delay reaction times to supply and demand. For these reasons, there is an uptick in a hybrid organizational model (8% of the companies we surveyed), which can leverage advantages and avoid the pitfalls of both.