The Supply Organizational Structure Dilemma

Abstract

SUMMARY This article presents the findings of research into how and why large, multiunit firms make major changes to the organizational structure of the supply function. The research used case‐based methodology to investigate 10 large companies that had recently made a major supply structure change. A total of 15 major supply organizational changes were studied at the 10 sites. The research found that these major changes were a result of changes in the overall corporate structure, challenging the conventional view found in standard purchasing texts that supply executives have flexibility in matters of organizational design. The research identified that a common driver for corporate organizational change in each of the sites studied involved an attempt by the company to improve its cost structure. Chief financial officers (CPOs), business unit managers, consultants, and chief purchasing officers (CPOs) were all identified as having involvement in the supply organizational structure change process at some sites. A principal challenge for CPOs is to understand how to provide supply improvement opportunities under any organizational structure.