If you’re a business leader or senior manager in a company that doesn’t typically use management consulting firms, or you just don’t have much experience of working with consultants, you might even wonder why you’d ever need to.
However, every company eventually hits challenges or issues which for one reason or another, are simply beyond its ability to economically resolve with internal resources alone.
When these issues arise within your company’s supply chain operations, a management consulting partner can diagnose the issues, offer cost-effective solutions, and help ensure smooth implementation, easily saving your company more than the applicable consulting fees, many times over.
Like anything though, there are certain ways and means of engaging and working with management consulting firms which if employed, will ensure you get the best from the partnership. Those ways and means will be revealed as this, our essential guide to supply chain management consulting unfolds.
First: Bookmark this Page
This client’s guide to supply chain management consulting is serialised, and will be published in sections over the following few months, so before you do anything else, please bookmark this page. You’ll need to return to this post monthly to read new sections as they are published.
Once this series is complete, it will be the most complete, insightful guide to supply chain management consulting services that you’re likely to come across.
If you enjoy what you read and find it useful, please remember to share the link with anyone you know whose business might benefit from supply chain management consulting help.
For now though, please read on for Part 1 of the guide, which explains some of the most important reasons to engage a supply chain management consulting partner, and the benefits you can realise from doing so.
Part 1: Making Sense of Supply Chain Management Consulting Services
So let’s begin by addressing that question which at the start of this post, we suggested may cross your mind.
“Why would a larger company ever want to call in a supply chain management consulting firm?”
Well, as we said, challenges can arise which aren’t easy to resolve internally, but of course that’s a high-level and simplified catchall statement. It doesn’t really explain the numerous reasons why a company might call on external expertise.
Here in Part 1 of our guide to maximising benefits from management consulting, we’ll take the helicopter down for a slightly lower-level view of supply chain management consulting benefits, and explain why hiring consultants often makes very good sense.
4 Reasons to Engage a Supply Chain Management Consulting Company
We’ll start with four of the reasons you might want to enlist the help of a management consulting firm to help you with supply chain issues.
1) To Gather Information: Supply chain improvement initiatives, or even efforts to resolve a specific problem, can often entail the need for large quantities of accurate, current data.
Management consulting professionals are adept at digging up information and presenting it as usable data. Moreover, they can often do so in less time than it would take to acquire the information internally.
2) To Solve Problems: Complex supply chain problems can be hard to identify, let alone solve with internal resources alone.
Those within your company may simply be too close to the operation to see the issues. A supply chain management consulting company can examine your supply chain from an objective, impartial standpoint, which often leads to more accurate problem-identification and more effective solutions.
3) To Recommend Actions: Once a problem is identified, there may be several possible solutions. A management consulting firm can evaluate all possible solutions and make objective recommendations as to which will be most cost-effective.
Using consultants for this purpose can be especially beneficial when possible actions may be politically sensitive or unpopular. Recommendations from external specialists may be received with less resistance than those originating from within.
4) To Assist with Implementation: In many cases, management consulting help culminates in recommendations for supply chain improvements or solutions to a problem. On occasion though, it can be helpful to retain consultants through implementation, especially for more complex projects.
These are the most common reasons to engage a supply chain management consulting partner. Other less-common reasons include:
- To augment or act as a substitute for permanent internal resources
- To introduce new ideas, methodologies, and best practices into a supply chain organisation
- To facilitate internal learning
Of course engaging a management consulting company isn’t always something done out of absolute necessity. It can often be advantageous to avail of consulting services even if internal resources are readily available.
The Primary Benefits of Supply Chain Management Consulting
Now you know a little about why companies engage management consulting professionals, let’s move on to some of the benefits offered—benefits which apply even to resource-rich organisations.
Many leading companies make use of supply chain management consulting services, because they recognise the value consultants can bring to the table. The advantages of hiring consultants include:
Objectivity: Supply chain management consulting professionals can provide independent, impartial, fresh viewpoints free from internal influences like culture and politics.
Focus: With the best will in the world, internal company managers can rarely be freed from the entire spectrum of competing obligations their roles entail. Management consultants have only one obligation; to solve their client’s problem. Hence these external experts can maintain a laser focus on the issues to be resolved.
Breadth of Experience: Your company may only experience a given issue once. A supply chain management consulting partner will have dealt with the same issue in different organisations many times over. This means consultants have more tools at their disposal, more experience and most importantly, the know-how to navigate the issue and its potential solutions.
Extra Skills: Aside from their expertise in supply chain matters, experts from a management consulting company maintain skills necessary for projects to be executed successfully. These skills include change management, project management, communication, leadership and analytics.
Quantified Change Benefits: Due to their extensive experience of change and improvement projects, management consulting professionals can help you quantify the benefits of change in your supply chain.
Recommendations for change are supported by rigorous modelling and benchmarking, an innate knowledge of where to look and what to look for, and professional insight into a range of improvement opportunities.
These steps all help to take guesswork out of change initiatives, build a solid business case for change and to produce measurable outcomes that meet stakeholders’ expectations.
Hiring A Management Consulting Partner: Knowledge is Value
In Part 1 of this guide, we’ve outlined why your company might make use of supply chain management consulting services. We’ve also listed some of the benefits of management consulting.
Attaining these benefits though, depends upon engaging the right management consulting firm under the right circumstances, and on maintaining an effective partnership throughout the engagement.
It’s very much a two-way street, so the more you and your team know about how consultants work, the more value you can derive from consulting services.
As this guide expands, it will help you gain the necessary knowledge to:
- Identify when to take advantage of consulting services
- Choose the services and roles you need consultants to provide
- Maximise value from the consultant/client relationship during your projects
We continue in Part 2 by sharing some common scenarios in which management consulting can help you improve logistics costs, efficiency, and effectiveness, or overcome supply chain challenges facing your organisation.
Part 2: When to Hire a Supply Chain Management Consulting Firm: Some Scenario Examples
As mentioned in Part 1, the aim of this guide is to help companies improve their understanding of consulting services and how to make use of them. Part 1 provided an overview of supply chain management consulting and the benefits that can be had from working with a consulting partner.
It’s time now to venture into slightly deeper waters, which we’ll do by exploring some typical situations in which your supply chain management team might benefit from consulting help.
Developing an Effective Supply Chain Strategy
Our own research findings and those of other organisations (which you can find with a little online searching) shows that the majority of companies have no clearly documented supply chain strategy.
The problems don’t end there. Of the 30 to 40% of companies that do have a supply chain strategy, many find that somehow, their supply chain and logistics operations still don’t support the business as they should.
In our experience, this commonly turns out to be because the supply chain strategy is at odds with the business strategy, or has not been clearly communicated throughout the enterprise.
If developing an effective supply chain strategy was easy, a lot more than 35% of companies would have one. Without an effective strategy though, your company’s supply chain will…
- Cost more to run than it needs to, reducing overall profitability
- Create service constraints, making customer satisfaction harder to achieve
- In the worst cases, it will oppose, rather than support the goals of your company’s business strategy
As tough as it may be to get supply chain strategy right then, you really need to ensure…
- That you have a supply chain strategy
- That it’s one which everyone can understand and buy into
- That it is completely aligned with the overall strategy of your business.
Supply chain management consulting professionals can make strategy development a much easier task, since they do it all the time for companies of all sizes, across a wide range of industries.
This is not about having someone come and tell you what your strategy should be though. A management consulting company will simply help you identify and plan the steps needed to build an aligned and effective supply chain strategy—one which matches the needs of your business, as defined by your business leaders.
Building a Better Distribution Network
How much do you know about the way your company’s distribution network is designed? Was it designed at all, or did it just evolve, as is the case for many enterprises?
If your distribution network is a result of evolution, rather than conscious design, it might be hiding huge opportunities for improvement. Network optimisation can generate savings equating to more than 10% of your overall distribution costs.
However, a network redesign can be a substantial and expensive project, and not one you want to execute very often. Therefore it’s vital to get it right the first time—something a supply chain management consulting firm is perfectly equipped to help you with.
You’re probably well aware that software tools exist which can be used to model your network and test alternative scenarios, but…
- Do you have the people in your organisation with skills to use that software properly?
- Do you have the resources to commit to a hefty design project and if so, are they the right resources?
Management consulting firms generally have access to the best network modeling applications and have people who specialise in their use.
A management consulting partner can help you take a lot of the guesswork out of redesigning a distribution network, ensuring that nothing is missed and that the right tools and data are used to quantify the benefits of different “to-be” scenarios.
Making the Right Outsourcing Decisions
Supply chain outsourcing is a common practice nowadays, but many companies still make outsourcing mistakes. Poor outsourcing decisions can increase costs instead of reducing them, and can also prove detrimental to customer service.
In some cases, outsourcing errors lead to the cost and disruption of a strategy reversal and a hasty return to in-sourced operations.
Even for companies well-versed in using outsourced logistics services, the environment is something of a minefield, making it worthwhile to have a management consulting team on your side. Consultants can help you establish the right goals for outsourcing, evaluate the tradeoffs and determine if outsourcing will really help you meet those goals.
Outsourcing is no panacea and what works for one company can easily set off a downward spiraling chain reaction for another.
Then there is the daunting task of finding the right partner to outsource to. You need to know exactly what to look for and how to evaluate the potential value of partnership. Contracts and service level agreements must be negotiated and a business relationship must be built between client and provider.
Remember too, that your company won’t go through this process on a frequent basis, whereas third-party providers do it all the time. They know how to play the game.
For the unwary, it’s easy to fall into traps which put all the power in the hands of the contractor, or place the buyer at the mercy of hidden costs from which there is no escape.
A supply chain management consulting firm, like the 3PL companies from which you will choose, will have been through all the ups and downs of outsourcing many times over, which means they can help you maintain balance when negotiating with prospective logistics providers.
Before You Hire: Know What Services Are Offered
In this second part of our guide to supply chain management consulting, we’ve explored just a few scenarios where it makes sense to bring in a consulting company.
Of course we could quote many more examples. But that would make it necessary to get into more detail about specific services offered by management consulting companies, which is what we’re going to cover anyway in Part 3 of our guide.
The range of possible supply chain management consulting services is pretty vast, and not every firm will offer every type of service.
In Part 3, we’re going to list many of these services to give you an idea of what’s possible. The list will also help you describe what you need when talking to a prospective consulting partner.
Part 3: Supply Chain Management Consulting Services: Strategic and Tactical
In Part 2 of this guide, we shared a few examples of scenarios in which your business could benefit from management consulting help. However, to ensure you maximise the benefits of management consulting, you really need to know just when and where you can call upon a consulting firm to help, and what type of help to ask for.
Some supply chain management consulting firms offer such a wide range of services that it would take a book, rather than a blog post (even a comprehensive, serialised post like this) to describe them all in detail.
So just for a flavour of the many ways in which a company like Logistics Bureau can help your business, we’re devoting parts 3 and 4 of this guide to the types of services offered by supply chain consulting specialists.
Here in part 3, we begin with services relating to supply chain strategy and tactics, while Part 4 will cover supply chain optimisation, operations, and execution.
Strategic Supply Chain Consulting Services
The importance of supply chain strategy is often underestimated and occasionally even overlooked. Yet without a well-defined strategic approach, supply chain management can easily become a constraining factor in a company’s overall success.
Many operational business components comprise supply chain activity, which if not carefully coordinated and aligned by a unified strategy, remain fragmented and hence lack efficacy in supporting business goals.
We’ve already looked at the alignment of business and supply chain strategies, which is typically a core service offering from supply chain management consulting companies. In this section, you’ll find a brief review and summary of strategy alignment as a consulting service, along with overviews of other strategic services a good management consulting partner might provide. So let’s begin.
Supply Chain Strategy Development: Your company may have no defined supply chain strategy, or perhaps you have one, but it seems to be ineffective. In these cases a supply chain management consulting team can help you develop a new strategy, or redevelop an existing one to support your business more effectively.
Strategy Alignment: As discussed previously in Part 2, a supply chain strategy should be aligned with that of the overall business. Misaligned supply chain strategies can create issues detrimental to customer service and profitability. A supply chain management consulting specialist can work with you to realign your supply chain strategy to support the attainment of business goals.
Business Rationalisation: If your company is growing through acquisition, you will at some point find yourself merging supply chain operations. Such mergers commonly result in a surplus of assets and facilities, excess inventory, or distribution networks no longer appropriate for a consolidated business operation. A good management consulting firm can objectively review your supply chain and recommend steps to capitalise on synergies and eliminate redundancy.
Distribution Channel Strategy: The explosion in ecommerce has added complexity into the process of getting goods to market. Consumers in particular, are dictating the need for brand-owners to manage omni-channel strategies, and business customers are following suit, albeit at a slightly slower pace.
Many companies are struggling to adapt to these new market forces without losing efficiency or adding cost into their supply chains. A supply chain management consulting firm can help you choose the most effective channels and integrate them by way of an optimal and profitable strategy.
Tactical Supply Chain Consulting Services
Of course, a strategy is nothing more than a plan, albeit one that’s vital for successful supply chain management. Supply chain strategy execution requires tactical proficiency in many specialised disciplines, in which your company may or may not have sufficient depth of expertise on hand.
For most companies after all, supply chain and logistics practices are essential, but not considered to be core business activities.
At the same time, even organisations that outsource supply chain activity must have an internal team to manage the necessary business partnerships and make tactical supply chain decisions. Management consulting providers exist to help all companies improve supply chain performance, regardless of the level of internal resource and expertise.
That’s why supply chain management consultants can be an especially valuable source of support. They are ready to step in and assist with specialised time-bound tasks which your company may never have worked on, and which need highly skilled, knowledgeable people to plan and execute.
Here are some examples of these important tactical services of which your business can avail when required.
Business Integration: Today’s supply chains can comprise dozens of organisations. As well-known supply chain leader Wael Safwat tells us, it’s no longer businesses that compete in the marketplace, but supply chains.
However as you might imagine (or know from experience) getting multiple businesses to work together effectively can be very hard work.
The best supply chain management consulting firms offer business integration services, and as outsiders looking in to your supply chain, are in a great position to serve as impartial go-betweens. Consultants are able to separate real integration issues from the (often emotional) internal biases which can otherwise sabotage the ability of one company to work well with another.
Insourcing/outsourcing Decisions: Business integration becomes all the more important when working with outsourced supply chain services. That fact alone can be enough to stop companies from outsourcing logistics or other supply chain components, when actually, outsourcing might be the right decision for improved performance.
On the other hand, there’s no shortage of tales of outsourcing gone wrong, where companies make the wrong outsourcing decisions, only to see partnerships falling short of performance expectations.
The decision to outsource or not is not to be taken lightly, and here again, management consulting professionals can help you take an objective approach, consider all the pros and cons of in-house versus outsourced services, and choose a partner best suited to meet your supply chain needs.
Asset and Inventory Services: Assets and inventory are often key factors in outsourcing/insourcing decisions, but if your company prefers to keep control of its supply chain operations, the choice and efficient utilisation of assets is vital to ensure optimal supply performance, as is the right balance of inventory levels.
A supply chain management consulting partner can work with your team to evaluate warehouse, transport and IT assets, make decisions about ownership and deployment models, and optimise their use to suit your particular business profile.
Freight Contract Services: Many companies prefer to make use of third-party assets, especially for transportation—a notoriously expensive element of supply chain operations. But of course, while it can certainly make economical sense to use freight service providers, the costs of transportation have to be covered, and those who provide the services must make a profit.
So how do you know if your company is paying a fair price for the services of third-party carriers?
Naturally, the more internal knowledge of carrier cost drivers and rate structures you have, the greater your success will be in negotiating the price aspect of freight contracts. Most companies though, have insufficient knowledge in this area, putting carriers in a position of power at the bargaining table.
A consulting company’s freight contract expertise can save you a great deal of transportation cost, by bridging your knowledge gaps and ensuring transparency when selecting carriers and agreeing rates.
Other Tactical Services: In addition to the services already mentioned, management consulting expertise can be applied to many other supply chain problems and challenges, including:
- Supply chain social responsibility
- Customer service improvement
- Alignment between retailers and suppliers
- Development of specialised supply chain infrastructure
Supply Chain Strategy and Tactics on Demand
The consulting services described above are offered by management consultants for a good reason—because they know companies like yours are in business primarily to make and sell whatever you make and sell, not to run a supply chain for its own sake.
If you’re a big corporation, you might have an entire organisation dedicated to supply chain operations, but there is still much value in gaining an external perspective on your strategy and tactics.
If you’re a smaller company, the possibilities for human capital investment in your supply chain will be fewer, and there will be more occasions when knowledge gaps need to be filled, but only for a limited period.
Supply chain management consulting services bridge those gaps, providing clear focus on a given strategic or tactical problem, making unbiased recommendations for solutions, and if necessary, getting hands-on with your team to implement.
Whatever your reason for developing strategy and/or tactics, supply chain management consultants will have seen it all before, which can be a huge advantage when you’re charting a new course.
After charting a course though, you need to navigate it, preferably as quickly and efficiently as possible.
In Part 4 of our guide to maximising consulting service benefits, you’ll learn about the operational services a management consulting partner can offer (to help you steer the ship true), along with optimisation services, (which keep the metaphorical motor running sweetly).
Part 4: Supply Chain Management Consulting Services: Operating and Optimising
Hopefully, Part 3 of this guide was useful in helping you discover how you might engage a management consulting firm to help you make key strategic and tactical decisions. Now it’s time to learn how consultants can help you execute your operational strategies.
Most supply chain management consulting firms offer a range of services to assist you with operational projects, process improvements, and problem-solving. Here in Part 4, you can find out about some of those services and how they can help to reduce supply chain costs, improve performance and provide better service to your customers.
We’ll begin with an overview of general operational services, and then move on to explore how a management consulting partner can work with you to optimise key aspects of your supply chain and logistics operations.
Operational Supply Chain Consulting Services
Operational services are designed to help you target and tackle fundamental problems and overcome challenges in specific supply chain elements, such as:
- Demand planning
- Inventory management
- Warehouse and distribution centre operation
- Transport management
- Technology selection and implementation
Let’s take a more specific look at some of the problems a management consulting partner can help you solve in each of these areas of supply chain management.
Demand Planning and Forecasting: A great number of companies are challenged by the need to improve demand and supply forecasting accuracy, and to plan resources according to forecasts. That’s why most supply chain management consulting companies specialise in this complex facet of supply chain management.
A management consulting firm can help you select appropriate forecasting and planning software applications, train your planners to deliver more accurate forecasts, or even provide an extra pair of hands (and an extra brain or two) if you find your planning team unexpectedly under-resourced.
Some supply chain management consulting companies—like Logistics Bureau for example—specialise in the implementation and improvement of sales and operations planning (S&OP) programs, which can be hugely effective for improved demand planning, but are notoriously tricky to put in place and run successfully.
Inventory Management: Sub-par inventory management is a sure way for your company to incur unnecessary costs throughout its supply chain. If you’re struggling with inventory management challenges, a supply chain management consulting team can work with you to:
- Reduce the amount of working capital tied up in inventory
- Improve on-shelf availability
- Reduce inventory touches in the supply chain
- Find the most cost-effective way to deal with obsolete inventory
- Improve inventory management processes to prevent obsolescence and other undesirable holding costs
Distribution Centre Operations: Management consulting professionals can aid you in achieving warehouse and DC savings and service improvements.
Firstly, they can objectively evaluate the layout of your warehouses, model alternative layouts using sophisticated analytics software, and then recommend changes to make your layouts more efficient.
Secondly, they can work with you to improve warehouse processes through technology implementation, changes in equipment, elimination of waste, and better workforce management.
Transport Management: If you’re concerned about mounting transport costs and the efficiency of your transport fleet, you should look for a supply chain management consulting firm that specialises in transport as well as warehousing and inventory management.
Services typically offered by these providers include:
- Equipment and asset evaluation – to help you determine if your fleet is the right size and has the right mix of vehicles
- Route planning and optimisation – to increase fleet utilisation and efficiency
- Evaluation of fleet ownership options – to help you decide whether to own your assets, lease them, or outsource your transport operation to third-party logistics providers
Supply Chain Technology Services: While human capital is still the most important asset in supply chain management, technology today comes a very close second. When carefully selected and implemented, supply chain technology (hardware and software) can be leveraged for substantial improvements in performance.
The difficulty though, is in knowing what technology to invest in and how best to implement it. That’s why it’s almost always advantageous to engage a management consulting company for technology implementations, especially for complex solutions such as:
- Warehouse management systems (WMS) and material-handling technology
- Sales & Operations Planning applications
- Demand-forecasting software
- Route planning and scheduling tools
- Transport management systems (TMS)
- Supply chain traceability and visibility solutions
When looking for help with supply chain IT solutions, try to avoid management consulting companies which affiliate with any particular software vendors. A fully independent, vendor-agnostic provider will be much more likely to help you find the right solution to suit your business profile and strategy.
Supply Chain Optimisation Services
Maintaining optimal supply chain performance is quite a task—one which entails regular reviews and analyses of your distribution network, warehouse layouts, and operational processes.
These activities require specialised technology and skilled analysts, as well as being time and resource-intensive to execute. By engaging a management consulting partner for optimisation projects, you can be sure that the right skills and tools are employed, and that fewer internal resources must be diverted from day-to-day supply chain management.
This is important, because to forego supply chain optimisation due to resource constraints is to potentially miss out on some major cost savings and improvement opportunities.
That’s why the fees for an external consulting firm to map your supply chain, analyse cost drivers, and model alternative solutions should be considered as an investment—one which can (and often does) return millions of dollars in revenue and cost savings.
Which Optimisation Services Should You Choose?
In determining the optimisation services which would be most advantageous for your company, look first to those with a cross-functional range of potential benefits. These services might include:
- Cost-to-serve and time-to-serve analyses
- Distribution network optimisation
- Supply chain mapping
- Supply chain and logistics benchmarking
If you already suspect the presence of specific performance issues though, or you really want to focus on one or two functional areas to improve, other types of optimisation service might be more appropriate.
For example, you can ask your management consulting provider to help you benchmark the functions concerned (using internal or external benchmarking as appropriate), or identify performance weaknesses by way of functional process mapping and/or auditing.
Combining Management Consulting Services for Best Results
As you should have noted by now, the services provided by supply chain management consulting companies are many and varied. Some firms will offer all of these services and more, while others will specialise in one or two of them to the exclusion of pretty much everything else.
Of course in reality, you’re more likely to want a combination of services in order to carry out a supply chain improvement project or program.
Maximising the benefits of management consulting therefore, requires that you determine clear improvement goals, consider the services which are most likely to contribute to those goals, and finally, speak to a consulting firm that offers those services.
When entering discussion with a management consulting provider, rather than “we need process mapping” or “we want a consultant to recommend a WMS solution,” it’s better to talk in terms of the goals you’ve identified.
A good consulting company will be able to ask the right questions to understand your goals, and then explain exactly how they can help you to achieve them.
In some cases—especially for more complex programs of improvement, you might want to work with more than one consulting firm, perhaps to take advantage of different specialisations. In any case, it’s important to prepare your internal teams for the arrival of external consultants, especially if your managers are not used to working with people from outside your organisation.
It’s all About the Partnership
Now you have an idea of some of the services offered by supply chain management consulting companies, so you know what to look for when selecting a firm to work with. This in itself will help to ensure that consulting services yield beneficial results.
Once committed to the involvement of a management consulting team though, the way in which you work with your external partners will have a profound impact on project success. Getting this part right is essential to benefit fully from supply chain management consulting.
In Part 5 of our guide, we’ll share some insights to ensure you and your internal staff work and collaborate effectively with consultants during your projects.
It’s the last piece in the puzzle and perhaps the most important, so don’t forget to check back soon for the fifth and final part of this Logistics Bureau ultimate guide for management-consulting clients.