How can a Supply Chain Consultant help you to improve your ROI

There are several strategies you can apply to make major business improvements in your operations, exploit competitive advantages, increase revenues, grow your customer database, and enhance profitability. Hiring an external consultant is one approach that works very successfully, particularly a ROI-based consultant—one that can guarantee ROI (return on investment) benefits.

Agreeing on ROI terms before hiring a consultant ensures higher chances of guaranteed results. This approach increases the likelihood of achieving desired outcomes while minimizing risk and cost. While not all consultants may work with ROI terms, we recommend requesting this information beforehand and asking how you can make this arrangement possible.

Many businesses reject the idea of hiring a consultant due to the perceived high costs. Additionally, some take for granted the projects and potential solutions offered by larger consulting firms without proper evaluation. The reality is that only few organizations meticulously review the ROI analysis to quantify the long-term and short-term benefits, which is crucial for informed decision-making.

Businesses should not overlook the benefits and advantages a consultant can bring. The first approach should be to ensure there is a clear understanding of the desired outcomes. Clarify goals, quantify metrics, discuss timelines, expected results, and review costs and benefits. A key way to do so is by detailing the ROI on the projects to be completed.

Before hiring a consultant, it is imperative to consider the expected ROI calculation, evaluate ROI by carefully making before-and-after projections, review the current status of the situation you are trying to solve against the new consultant projections, and examine these cost-benefit results together making the necessary adjustments.

A typical formula for ROI is not complex, but detailing and forecasting the benefits will require more work.

ROI = (benefits – costs) / costs * 100%

In this case, the costs are directly associated with the incurred costs of hiring a consultant, as well as any equipment or software required to complete the project. The benefits will vary depending on the scope of the job. Below are a few areas where a Supply Chain Consultant can make an impact, set metrics and provide several benefits that can be expressed in dollar amount, and be included in ROI calculations:

Cost Reduction
1. Lowering Operational Cost: Process optimization and automation can maximize resource use and reduce costs in labor, transportation, inventory, and storage.
2. Adding Sustainability goals: Waste reduction, energy efficiency, and eco-friendly practices can lead to significant cost savings.
Improve Efficiency
1. 1. Reduce lead-times: Optimizing processes to shorten delivery times from supplier to customer directly reduces carrying costs and increases cash flow. It also creates competitive advantages by delivering faster than your competitors, increasing your sales.
  2. Minimizing errors: Fewer disruptions in material or processes result in cost savings from avoiding errors and making corrections.
  3. Better use of your assets: Reviewing data to optimize resource allocation, use of assets, inventory, equipment, labor, and capital.
Competitive Advantage
1. Enhancing Customer Experience: Technology and process improvements can enhance customer expectations by providing order accuracy and transparent tracking.
2. Agility and Adaptability: A good process in place, along with a responsive ERP, should allow quick adaptation to market conditions, anticipate market trends, and meet changing customer demands.
3. Increasing Visibility: Benefits are not just for the customer but also for internal teams to provide flexibility when changes arise.

Other benefits are more complex to calculate under a ROI analysis. They are intangible or indirect benefits achieved when hiring consultants. Some examples of intangible benefits include redesigned business processes and structures, increased employee morale, and enhanced strategic direction.

A supply chain management consultant should bring a new perspective, provide insights into your processes to streamline operations, enhance efficiency, and boost profitability. When the benefits are difficult to perceive in a specific area, it is even more critical to assess the ROI of supply chain investments by establishing realistic, traceable, and measurable goals that can produce achievable outcomes.

Evaluating projects completion advantages, cost savings and potential ROI benefits are essential before bringing on a consultant, but they are not the only considerations. Here, we outline three additional benefits of hiring a dependable supply chain consultant over relying solely on internal resources:

Minimize risks
Higher likelihood of success
Shorter-term results

Leanco Consulting is a boutique consulting firm specializing in Supply chain and offering consulting under a ROI-approach. Supply chain consultants possess specialized knowledge in various areas, including optimizing operations, reengineering processes, managing inventory, forecasting demand, and designing logistics networks.

By leveraging a consultant’s expertise, businesses can gain valuable insights and strategies to address typical challenges necessary for growth in the most effective way.

Damian Blanco

Damian is a senior Supply Chain Consultant, passionated about developing and implementing new strategies for operational excellence and helping businesses to drive value.

Leanco Consulting

How can a Supply Chain Consultant help you to improve your ROI