Why Supply Chain Strategy and Business Strategy Drift Apart

Executive Summary

Alignment between business strategy and supply chain strategy is often presented as a given. In reality, they diverge more often than they converge. This article explores why the two strategies are rarely on the same page, what makes the gap widen during the year, and why it matters for resilience, sustainability and performance.

The Top-Down Nature of Strategy Setting

In research I conducted with around 20 supply chain leaders, only one told me they had a formal role in setting business strategy. For the others, strategy development was a top-down exercise. Targets for revenue and profit were defined centrally, with budgets allocated on the assumption that they would resemble the previous year but with some additional cost savings.

This approach may work when the business environment is stable. But when strategies require material changes to the operating model, such as building resilience or improving sustainability, the lack of operational input becomes a problem. Supply chain leaders point out that targets set without reference to actual capacity, cost structures or network constraints can be unfeasible from the outset¹.

Different Metrics, Different Languages

Even when headline goals appear consistent, the metrics used by business leaders and supply chain teams often point in different directions. Business strategy might call for market expansion or customer experience improvements, while supply chain KPIs still focus on efficiency and cost reduction.

Routine planning processes like S&OP or IBP tend to reinforce these tensions. They translate strategy into volumes, forecasts and supply plans, but without a unified view of trade-offs through cost-to-serve analysis, the corrective actions they generate can quickly diverge from strategic intent².

One director described it plainly: “The strategy and the actuals may be aligned in January but by March the gaps are beginning to appear and by November they are not even on the same page.”

The Drift Over Time

The problem is not only at the point of strategy creation. Even if supply chain and business strategies start aligned at the beginning of the year, they often drift apart. Unplanned disruptions, changes in demand, or shifts in input costs force the supply chain to adapt. Business targets, however, are rarely revisited with the same flexibility. The result is a widening gap between what the business thinks is happening and what the supply chain is actually managing.

This is one of the most consistent frustrations voiced in our peer discussions. Supply chain leaders feel accountable for delivering operational outcomes without having had a voice in the assumptions that underpin the strategy. Business leaders see supply chain as failing to execute. Both perspectives are valid, but the underlying cause is a lack of integration in the planning cycle³.

Why It Matters

When strategy and supply chain diverge, companies carry hidden risks. Forecasts look achievable in board packs but operationally they are already slipping. Sustainability targets are announced but the supply chain lacks the tools or budget to deliver them. Promises of resilience are made to investors while supplier concentration risk or inventory fragility go unaddressed.

Alignment does not guarantee success, but misalignment almost always leads to disappointment. Research shows that firms that successfully align supply chain and business strategies outperform peers on both financial and operational measures⁴. The leaders I spoke to were clear: until supply chain has a real seat at the strategy table, divergence will remain the default rather than the exception.

Conclusion

The gap between business and supply chain strategy is structural, not incidental. It stems from how strategy is set, the metrics each side uses and the way planning cycles translate goals into action. Bridging that gap requires not just better processes, but a recognition that strategy without operational input is incomplete.

1. Deloitte, The Challenge of Strategic Alignment in Supply Chains, 2020.
2. Gartner, Five Steps to Align Business Strategy with Supply Chain Capabilities, 2021.
3. IndustryWeek, Six Steps to Align Supply Chain with Corporate Strategy, 2019.
4. Reklitis, Panagiotis et al., Performance Implications of Aligning Supply Chain, Sustainability, 2021.