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A new way to look at top consulting firms?

Attention executives: if you are considering outsourcing a project to a consulting firm, whether or not you have hired consultants before, we have great news—there’s a new way to view the value of the right consultant.
Did you know that executives who pay close attention, beginning with the procurement of the consultant through the completion of the project (including debriefing and follow-up), have a bonus waiting for them? It is that partnering with the right top consulting firm on a project offers unexpected key business lessons.
First, let’s look at what we mean by a “top consulting firm.”
You have heard the saying, “you can’t eat prestige.” Prestige has its place, but let’s face it: you can procure high-quality consulting services at a cost that fits into the budget of any enterprise. Creating a company budget crisis by opting for a global-brand consultant simply makes no practical sense. That consulting firm may offer one solution while putting a large enough dent in your budget, so that other projects suffer.
So where does that leave your consulting procurement? Actually in a better place! Here’s why.
A top consulting firm is one that has the skills and experience to meet your current project needs as well as complement your company’s culture and budget. The right firm may be a smaller boutique firm that specializes in just the type of project you have at hand, or a larger firm with the sub-specialty that you seek.
A top firm, then, has a track record of being in the right place for the right project, solid working relationships, flexibility, adaptable solutions, and great follow-up.
Happily, this leads us directly to lesson number one.

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Balancing resources.
You have made the decision to pivot to a consultant as a way to solve a problem and, at the same time, manage your overhead. Why then jeopardize that balancing act with a consultant out of your price range?
Instead, opt for a consulting services advisor with a depth of experience in matching enterprises with high-quality consulting services at the right price point. As an added bonus, your procurement team will save time, since a highly efficient advisor will have accessed, reviewed, and rated a broad range of consulting services for you in advance.
Implied in balancing resources, of course, is the idea of adequate resources. Before you choose a consultant, prepare thoroughly the scoping and the phasing of the project, and the necessary associated resources. You may realize that you don’t need the same resources for the different phases, and thus, decide to buy the phases separately. When you have chosen a consulting team, observe it during both the planning phase and the implementation phase of the project with a focus on balancing resources.
The planning phase is a strategic mapping session that identifies objectives, stakeholders, participants, and steps to success. Negotiating what constitutes adequate project resources (beyond procuring the consultant) is a key part of this phase.

Balancing resources in this phase often means applying some creativity in optimizing internal company resources at hand. Let’s say the consultant suggests that a person with a specific skill is needed for the project. Is there a person elsewhere in your company who has the right skill, perhaps from a prior workplace or career, and who is able to participate?
Now for implementation. Notice how the consulting team balances the utilization of people available to them on the project—and also within their own consulting team. That’s an example of project team leadership which manages to avoid burnout and staff turnover while getting the job done on time and within (a balanced) budget.
Notice, too, how the consultant encourages your team to share and conserve resources, and to be creative to resolve resource issues.
Marrying current knowledge plus experience
Lesson number two is about the value of taking a range of experiences and marrying them to the latest knowledge in the field.
Experience alone does not always optimize results. Do you want your child to be taught by a teacher who has taught for twenty years and who has “always done it this way”? Better to have a teacher with half the experience who stays current with the latest field-test results on pedagogical approaches.
Top consulting firms tend to have systems in place to ensure that team members share both knowledge and experiences.

They actively access—or contribute to—emerging thought leadership.

They debrief past projects internally (maintaining client confidentiality) to cull lessons.

Then they connect the dots from those experiences and ideas to your project.

Watch how your consultant draws on both her experience and her access to current intelligence in the field to fashion a solution that fits your needs perfectly. It looks something like this:
At a specific crossroad in the project, the consultant might say, Oh yes, I’ve seen this issue before. Company A handled it this way last year, but I just read where Company B solved it in a much more integrated way which would work well here, too.
Other examples will emerge as you debrief your consultant. It’s all about retaining knowledge, sharing it, and then connecting the dots to apply it appropriately.
Now it’s your turn: what is your takeaway lesson on marrying current knowledge and experience, and how will you apply that lesson across your enterprise?
The unforeseen significance of debriefing
Stifle that yawn.
Debriefing a project with a top consultant sometimes yields unforeseen golden nuggets if you know how to uncover them. For example:

Working on the project may have revealed talents among your employees that you had not been aware they possessed. Perhaps an employee’s leadership skills emerged.

Maybe a new way to reach potential customers or interface with current customers bubbled to the surface. How do you get that information to the marketing and sales teams?

Possibly the data provided to the project team also revealed tangential information that may be helpful to your company in another arena.

There is a simple way to ensure your access to these golden nuggets: insert into the consulting contract a paragraph requesting that the consultant document these types of data, even though they may be ancillary to the goals of the consulting project, and highlight them in her debriefing.
Working with a top consultant is an efficient way to meet your company’s current needs but it can offer a much richer value for the observant executive: new ways to think about balancing resources, marrying experience and ideas, and identifying new information during debriefings which, although ancillary to the specific project completed, may be significant to the company as a whole.
We now have reached bonus lesson number four:
Procuring the right consultant matters in more ways than it seemed before.
Competition among consulting teams currently is tighter than ever, but Consulting Quest has braved those choppy waters and stands ready to identify the perfect fit for your project and your company.

Self-Diagnostic to Improve the Management of Your Consulting Spend

Do you currently employ consultants on a regular basis? Perhaps you consider consultants a negligible part of your budget and overall business strategy—there for small, niche projects when you need them and gone as soon as that business is concluded. However, from our experience, consulting spend can represent millions of dollars for companies, and if not properly managed (or managed at all), you’ll miss out on the strategic opportunities a consultant can provide.
Today, we are going to look at a self-diagnostic to improve the way you manage your consulting spending. We will look at four key areas in which to assess your current management approaches: scope, panel management, performance management, and sourcing.
1. Scope
When considering the scope of consultants in your day-to-day and annual business, ask yourself these questions.

Do you know the amount your company is spending on consulting on a yearly basis

The first step toward improving the management of your consulting spend is to be sure you know just how much you are spending, on average, each year. Knowing this number will put in perspective for you the part consultants play in your business and allow you to better evaluate whether or not you’re seeing a strong return on your current investments.

What special skills do the consultants you employ possess?

More importantly, what skills do your consultants provide that add value to your business and to various projects? Look at the areas in which you are seeking the help of a consultant. What activities could be done in house? What about out of house? Are you hiring consultants that fill important skill gaps in your current personnel? Consultants should fulfill a specific need within your company, whether that be a new perspective, a special expertise, or a greater authority. Understanding this will help establish the scope of consultants you are currently working with.

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How does the work of your consultants align with your key strategic needs?

What are your needs this year, and from year-to-year? In order to manage your consulting spend, you need to understand how your consultants’ skills align with your business’s needs. When looking at your consulting spend with through a strategic lens, does your resource allocation align with your strategic intent? Are there areas where you could reduce costs? Areas where you should invest further? Too many companies tend to allocate their consulting budget in the same way every year, when a dynamic resource allocation would be better suited.

What is the rationale for using consultants?

There are many valid reasons for hiring and maintaining ongoing relationships with consultants. Be sure you understand your own. Maintain clear perspective and encourage (or even demand) that departments keep you apprised of their rationale behind hiring a new consultant. You should always be able to answer these two questions before bringing a consultant on board: “do we need this person?” and “why?”
2. Panel Management
When evaluating consultant panels and their usefulness, ask yourself these key questions.

Do you know how to qualify a supplier to a specific project?

Ideally, you should have a process in mind to evaluate a prospective supplier for each project. Less than ideal, perhaps, you have a list of prospective consultant suppliers and tend to go to one or two of your favorites, without weighing specific specialties and strengths, but simply trusting their reliability. Be sure you understand what each of your potential suppliers is bringing to the table and how that might complement a specific project.

Are you using a panel of qualified suppliers?

Do you have a ready-made panel of suppliers who you know to be experts in fields you need for your business? Perhaps you do not. Check in with your departments and find out how they access qualified services, and make sure that they have a predictable, responsible source of talent. Vet your suppliers to ensure that you are getting reliable and highly qualified consultants.

Do you easily find the expertise you need?

When the need for a consultant arises, are you able to quickly and easily find the best consultant or consultants for the job? Ideally, for any highly technical requirements, you should have a trusted advisor you can turn to for guidance that will have a selection of candidates on hand. With the right partner, it should be simple to access qualified consultants with the expertise you need.

Are your usual vendors always available to provide necessary expertise?

Consider this question carefully. Review past projects and times you needed third-party expertise from your trusted vendors. How did it go? Were your suppliers there when you needed them? If things did not go well, then that is a sign that you need to look at panel management and revise your approach, perhaps your panel list, and almost definitely, your process for soliciting the expertise you need when you need it.
3. Performance Management
Once you have the consultants you want, doing the work you need, you still need to monitor their performance. Here are some questions to ask regarding the performance management process.

Do you manage the performance of your suppliers?

Ideally, you should be, but the reality is that such performance management may be slack, especially in long-term business relationships. If you are not managing performance, or if that management is ill-defined, here is where you need to start. Set up benchmarks for the performance of your suppliers and be sure that they are meeting those expectations.

Do you know how to qualify a supplier to a specific project?

Ideally, you should have a process in mind to evaluate a prospective supplier for each project. Less than ideal, perhaps, you have a list of prospective consultant suppliers and tend to go to one or two of your favorites, without weighing specific specialties and strengths, but simply trusting their reliability. Be sure you understand what each of your potential suppliers is bringing to the table and how that might complement a specific project.

Are you using a panel of qualified suppliers?

Do you have a ready-made panel of suppliers who you know to be experts in fields you need for your business? Perhaps you do not. Check in with your departments and find out how they access qualified services, and make sure that they have a predictable, responsible source of talent. Vet your suppliers to ensure that you are getting reliable and highly qualified consultants.

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Are you usually satisfied with the ROI of assignments?

Another key indicator of a good or bad business relationship is whether or not your are seeing a strong return on your investment. If you are keeping an eye on costs and scope, here is where you can follow up, by making sure that your consultants are justifying their cost. If you are not consistently satisfied with the ROI of consulting assignments (and how can you know unless you are monitoring), then you are not properly managing your consulting spend.

Have you benchmarked consulting costs with your peers?

Once you know the costs of your consultants, and what you are getting for your investment, it is important to make sure that you are still running lean and staying competitive. As with any expenditure you make, compare your spending to that of your peers. If you are spending more than others in your industry on consulting services, take a look at your process and see where it might be improved. Also, if you buy large amounts from the same vendors, are you getting the rebates you should?

Do you provide detailed feedback to your consultants?

Communication works best both ways. Whether for good or for bad, a reputable consultant will appreciate honest feedback. Clear communication allows you to improve your business’s bottom line and the overall business-consultant relationship. It may be easier to provide a list of requirements and say nothing until the work is done, but detailed, regular feedback can go a long way toward ensuring the project gets done right, the first time around.

Do you discuss feedback to improve your relationship with your consultants?

Once you have provided feedback, to maximize the effect, consider setting aside time to discuss what you have found. Give time for the consultant to ask his or her own questions. Again, good communication goes both ways. With solid metrics and a plan in mind, you have what you need to improve your relationship for this project, and for future projects to come.
4. Sourcing Process
The last area of concern, with respect to your consultants, is how you are managing the sourcing process. To diagnose the effectiveness of your current sourcing process, ask yourself these questions.

Do you have a process to acquire consulting services?

Having a clear plan in place for how you acquire consultants is imperative to improving your consulting spend. This process should be in writing and followed by all departments involved with the hiring of consultants. If you have gone through all of the above self-diagnostic questions, consider formalizing your process in writing, if you have not already. Also, make sure a professional buyer is involved in the process.

Do you have frame contracts set up with your major suppliers?

Once you have everything else in place, you should have general frame contracts with consultant suppliers with whom you do regular business. In this way, you can set up general fees with understood benchmarks, generate volume and loyalty based rebates,  and minimize your procurement time later.

Do you include performance in your criteria of choice?

When discussing with your suppliers the criteria you have for consultants, be sure that they are taking performance on past projects into account. A good supplier should be thoroughly vetting their candidates and checking references from previous employers to ensure that their consultants have the experience and positive track record they say they do. Don’t let performance abilities be pushed aside by other, seemingly more important criteria.

Do you systematically use Confidentiality Agreements when discussing your needs with consultants?

Even before you hire a consultant, in the course of discussing your needs, you may need to divulge privileged proprietary information. Make sure that your sourcing process includes a confidentiality clause, so that your competitors – and others – will not know what you are doing and why.
If you have answered “yes” to most of the questions in this self-assessment, congratulations! You are among the 7 percent of buyers who consider themselves fully equipped to manage their consulting spend. However, more likely, you have probably just realized that you now have a blueprint to improve your performance, generate tremendous savings, and get more value from your consultants.
At Consulting Quest, we aim to improve the overall performance of the consulting industry by carefully vetting our consultants and working closely with both consultants and businesses to facilitate more positive working relationships. We understand that there are many moving parts to effectively managing your consulting spend. If you found this self-diagnostic useful, please let us know how it helped and what you have done with it.

The Consulting Procurement Process Doesn’t Stop With the Order

When does procurement turn into a partnership? The easy answer is that as soon as the order is placed, procurement is over and done with. But in reality, the procurement process doesn’t stop with the order. To be successful, it should be a long-term process that goes beyond the moment the contract is signed.
Too many companies looking to work with consultants underestimate the complex procurement system. On the surface, it seems like a straightforward process that ends with the order. But consulting is not that straightforward; simply signing a contract and assuming everything will work out exactly as specified neglects the versatility of consulting, and intellectual services in general.
Ultimately, both sides hope to develop a mutually-beneficial professional relationship. Regarding procurement, as a long-term process improves communication, better aligns the scope of the relationship, and provides the necessary insights to achieve continuous improvement and productive partnership. Consider these 5 steps to a successful procurement process:
1) After the Proposal
Don’t disengage with consultants you did not select for mutual business. Instead, explain why you choose to go in a different direction, giving honest feedback about the strengths and weaknesses of their proposal and how it could have better aligned with your expectations.
For you, this step requires only a little effort. But for the consultants you didn’t select, you provide invaluable insights about your expectations, along with their ability to compete for proposals and opportunities like yours in the future.
Consultants who are willing to listen will be able to use these lessons to better compete for similar opportunities in the future. And who knows? Perhaps you will be in need of a consultant again in the future, so nurturing relationships with a range of consultants can be beneficial for both sides.

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2) Change Management
No matter how hard you try, establishing and maintaining a relationship with consultants in executing a project will not be a linear process. During the course of the project, a number of changes will take place that you didn’t account for during the proposal or contract. Some of these changes may include:

Scope changes. New tasks may be added as a need becomes clear, or deliverables that turn out to be impossible or difficult to reach may be dropped.
Staffing changes. Organizations are in constant flux, and both sides may have to account for turnover that requires adjustment and additional training.
Timeline changes. Everything before the project starts is an estimate; you may have to adjust the pace as the true duration of the project comes into view.
Unforeseen events. Budget changes, project merges, project freezes, or any other events may occur that affect the execution of the project.

Change management is necessary to ensure that these changes do not derail the project. By keeping an active log of all changes as they occur, you can adjust the commercial conditions in due time and before they become dangerous.
3) Mid-Project Assessment
As early as possible, set yourself and your consultants a benchmark toward the middle of the project. This is the perfect time to review the initial objectives and get back on track toward accomplishing them on time.

As you get into the details of any project, it’s easy to get carried away with minutia that ultimately won’t affect the overall success. A Mid-Project Assessment enables you and your team to ensure that these inevitable tangents don’t endanger the timeline and success of the larger project.
The Mid-Project Assessment should be a major event for everyone involved. Keep it separate from regular operational project reviews, which should happen in smaller circles and on a regular basis.
4) Project Closure
Once the project has drawn to an end, it’s time for a thorough evaluation. Now it’s time to compare your end results with your initial goals, which enables you to understand and begin to prepare the adjustments that are still necessary to reach your ultimate goal.
At this time, you can also evaluate the relationship with your consultants, and whether they delivered on the initial promise. Evaluate your provider using dimensions such as commercial quality, delivery quality, posture, talent & expertise, and ROI as it relates to the project.
5) Mutual Continuous Improvement
Nobody is perfect, and no project or professional relationship will be flawless. The project closure is an opportunity for you to give feedback to your project suppliers about your thoughts on the results, relationship dynamic, and any other dimensions you covered in your project closure review above.
Giving feedback enables your consultants to improve their business by gaining a clearer understanding of client expectations and identifying potential blind spots. Constructive feedback will also uncover relationship difficulties that may be improved on a future partnership with you or other clients.
You can take advantage of the same intelligence because it better enables you to understand the consultant journey through your project. As a result, you will improve supplier competitiveness, and ultimately increase the potential for positive outcomes. Improving your procurement process, you will be able to contribute to intelligence gathering about the market and its segments.
Finally, you can benefit from feedback about the project as much as your consultant. Hearing from your partner about the relationship and its successes and failures allows you to uncover what you can do better in the future, ultimately helping you work your way toward better project implementation. Simply asking for feedback will position you as being committed to good practices, openness, and transparency.
At its core, consulting should be based on a mutually beneficial partnership. If you treat procurement as a linear process that ends the moment the contract ink is dry, you probably will have trouble getting the best possible results out of that partnership. But by treating the relationship as dynamic and flexible throughout the project, you and your consultants will both benefit and improve their business practices as a result.

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Connect with other Consulting Buyer to step up your game

Among many professionals, the temptation to work alone, without the support of peers, is high. Innovative business people understand the need for connections with peers, with consultants, with journalists, and with the public at large. Great professionals need to build a network of peers, learn from experience of others, reach collective critical mass, get sparring partners, cherry pick best practices, and stay current on the latest trends.
The situation of procurement professionals and particularly the one of those in charge of procuring consulting services falls into this category. Procuring consulting services is quite different from procuring goods. Consulting is a complex industry often described as a matrix of capabilities and industries. Just add a layer a hard and soft skills. A zest of fee structure. And you have got yourself in the shoes of many Consulting Procurement leaders. They need to connect with peers to be able to exchange about their daily challenges with people who can actually understand what they are facing.

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1. Build a Network of Peers
Even though Companies can have a significant budget for Consulting Projects, most Consulting Procurement executives handle a limited number of project in relative isolation.  Many of them have been trained with core-business procurement, or indirect procurement. So, when facing consulting projects, they are very tempted to reinvent the wheel each time, or to just apply the sound principles that they have learned in their previous jobs. Just like this procurement leader, working in a railway company, who insisted in adding a 10-year guarantee clause in a consulting agreement, “because that is the company policy”.
Rather than just seeking consulting procurement information through only books and online material, find ways to connect with peers in your industry. Trade shows, a community of practice, professional organizations, and firms who specialize in networking consultants with clients are all important tools to connect with peers.
2. Learn from the experience of others
Exchanges with peers from diverse backgrounds, culture and activities give professionals the ability to discover new perspectives on consulting procurement, and learn about cases that you haven’t face yet. Increasing your surface of exchange will increase your exposure to the variety of situations faced by your peers.

And who knows. Someone in your network may have faced the same challenge…
This increased surface area multiplies the opportunities for growing as procurement leader by learning from practical cases, sharing challenges and identifying best practices. You can learn from peers, academics, journalists, as well as consultants. This community of learning empowers you to not only increase learning, but facilitates the reach of critical mass.
3. Reach Critical Mass Collectively
Many rare skills, such as consulting procurement, are acquired and maintained on the field through facing again and again the same issues. As a business professional, your services are limited by your ability to access enough information to identify trends and best practices in your field. It is hard to reach that critical mass of information to allows you to master your skill.
With more peers around the table, you accelerate the building process and guarantee that you are able to reach that critical mass collectively. Through your peers, you each gain momentum and reach the critical mass necessary to succeed faster.
4. Get Yourself Sparring Partners
Not only does collaboration increase learning about specific situations and projects, it helps you improve your internal processes at a faster rate as well. Two heads are better than one, and two sets of hands go faster. Although it feels risky for business leaders to open themselves up to even one peer, let alone a network of peers, the open source revolution in software and computing shows the power of collaboration in a field which was driven by secrets and control for many years.
Sharing about Consulting Procurement does not mean you risk to lose your competitive advantage or breach confidentiality, because you can just decide what you share. Good networking merely takes others’ work and integrates it with your own business so that everyone is empowered to grow more. Networking defines relationships based upon the level of connectedness you have with your peers: the more connected you become, the more meaningful the interactions become.
5. Cherry Pick best practices
A key part of building a network of peers and increasing your collaborative processes is to be able to identify the best practices as a group. Before integrating in your own processes, think about how it would fit with your strategy, your organization and your existing policies and what impact it would have on other processes.
Let’s say you have heard that Wenowatwedoo, a leader in your industry, is using independent consultants for their needs for marketing excellence. You immediately think you should do the same. But what you don’t know is that Wenowatwedoo has a dedicated team in charge of Marketing Excellence made of former consultants. So for that specific needs, they merely need arms and legs to complement their team, where your company would need the whole team of marketing excellence. Excellent best practice, but not for you.
Cherry picking on what consulting other companies have used might be the most difficult exercise as it requires a fit with your context and strategy but there are many other process elements that can garner tremendous value without presenting the same challenge. But on managing confidentiality, scoping projects, sourcing, selecting consultants, negotiating fees, using creative fee structures or measuring consultants’ performance, there are many levers that can help you to professionalize your own practices.
6. Stay current on the latest trends
Your needs for consulting are changing every year to adapt to new strategic context, to new opportunities opened by new technologies, etc. You have to stay current on the latest trend and be connected with academics and thought leaders. This will give you the ability to spots threats and opportunities early on, and anticipate the impact on your field.
Besides, keeping up-to-date with your industry is key for building expert power and earn the trust and respect of the other executives in your company.
Connecting with peers is part of your development as a professional, it will help you in getting better at your job, become the go-to partner for the executives of your company, and provide you with sparring partners to call when you are facing a tough challenge. It will give you the keys to enable deliver quality procurement services for your business, to get more value of your consulting spend and to create more value for your company. On a personal level, you will have the opportunity to develop meaningful relationships with your peers.
So now the question is … what are you waiting for?

Activate the right levers to meet your financial targets

You made your resolutions for 2018 on REBITDA and Cash, but here’s Q2 and your leadership team is starting to look at their mid-year commitments with furrowed brow. It might feel like déjà vu but the fact is they’re approaching the task with a limited set of tools. Sure, focus on innovation and increasing your customer base, and address short-term targets with new value sources that won’t compromise on the future. At the same time, you can use a few more levers in your tool belt, such as these ideas to get back on track to meet target:

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Buy Better on Direct Costs
When you optimize procurement costs, you have a fast lever to impact your PNL and Cash lines. Evaluate supply and demand on each category and break down the spend by SKUs. Identify some quick wins and assess your bargaining power. Choose the negotiations you’re confident in winning. There must be a few that were not on your plate already

Renegotiate contracts based on the supply and demand balance and market volatility (when your supply is greater than the demand, you don’t necessarily want to lock yourself in with a long-term contract unless you get extremely competitive conditions).
Renegotiate the tail spend – those contracts you almost never renegotiate.
Bring in second-source suppliers to reduce your risk, increase your bargaining power, and keep your incumbent reasonable.

Example: In the chemical industry, even long-term contracts often include a “meet or release” clause that allows a company to use different suppliers if the offer isn’t competitive. Time to check and see how competitive that old contract is today.
Leverage Pricing
Pricing is usually your second-fastest lever. Simple math shows pricing is often the biggest profit driver in the Price-Cost-Volume equation. If you have to choose one of these three, go for pricing whenever you can as long as you’ve got low margins. With high margins, go for volume.

Differentiated Products: You’ve got the bargaining power – assess the willingness to pay to capture the value you bring to your customers without pushing them to find alternatives or alienating them.
Commodities: Depending on supply and demand, your bargaining power can evolve considerably – and pricing must follow. Devise a smart price-volume pricing strategy and you can maximize your profits while optimizing your assets at the same time.
Services: Are you pricing for the level of service you provide? Do you have advanced inventory? 24/7 reactivity and customer support? Auto-refill leveraging the internet of things? Teams on site supporting the operations? …. maybe there are services you could monetize by implementing a differentiated service offering.

For example, you can create a simple chart to analyze the level of unit margin and yearly volumes of each product-customer couple. This will help you identify outliers benefiting from much better conditions than other customers for historical reasons. Those customers are good candidates for a price or volume adjustment.
Buy Better on Indirect Costs
Optimizing indirect costs is an evergreen topic. Many companies have already regrouped their indirect procurement to better manage expenses. Typical levers are:

Regroup and manage decentralized expenses such as insurance, travel, consulting as a category
Freeze external expenses for items that can be delayed or produced in-house.
Implement more stringent validation rules for travel to ensure you leverage all of those conferencing and video conferencing tools you already own.
Bring in niche experts to optimize overlooked categories like office supplies, printer leases, car rentals, etc.

Here’s a great example: Recently while meeting with a large bank with almost $200M in consulting expenses per year, we learned that Procurement wasn’t involved in their purchasing process. Imagine for a moment what that would mean. How much difference would it make in terms of regrouping expenses, strategizing the procurement, and negotiating with the different providers in competition for key projects? Just a 20% savings could represent 0.2% directly on gross margin. That’s $40M to this company. Are you interested in saving $40M? Most companies would say yes.
Play on Cash
Is cash king? Of course it is. Cash is also fuel – without it your company can only go so far. Here are tips for handling your cash better:

Delay payments for big investments – CAPEX first.
Delay hiring for a few months. This can make a big difference in your year.
Play on payment terms with your supplies. This means renegotiating longer payment terms or supplier financing programs with banks.
Chase down customer payments. You might even pull in a company that specializes in recovering aged receivables.

A perfect example: Following the pressure from retailers, CPG Companies negotiate longer payment terms with their suppliers every year. One fragrance company saw its working capital shoot through the roof, increasing by more than 30% by doing this. The next logical step was to negotiate the same conditions with their own suppliers but it took them two years to react.
Optimize Assets
Traditionally, companies apply the principle of Economics of Scale (produce more for new markets and give discounts for additional marginal volumes), and Scope (diversify your assets’ production and markets) to optimize their assets and generate efficiencies. Take moment to look outside the box and beyond your own back door. Some strategic partnerships can prove to be extremely interesting:

Optimize your asset utilization by partnering with companies that are evolving in the same market. Propose more competitive costs than their own (economies of scale with a competitor).
Develop common platforms on non-strategic parts to reduce your engineering costs and those of your suppliers.
Optimize your asset utilization by partnering with companies that are evolving into different markets (economies of scope with another company)

For example, a defense company partnered with an automotive company to fill up their production pipeline during low-activity periods. By producing parts for the automotive company, the defense company covered their fixed costs. This helped the automotive company increase production without investing in new assets. They also benefited from higher-quality work since defense quality management is extremely rigorous. Nor did they have to share their opportunities and knowledge with potential competitors.
Get Back on Track
Whether you want to recover from a low first quarter or create a buffer for future headwinds, there are some excellent levers here for you to activate. Remember that time is of the essence – don’t hold off on action until Q3 rolls around. To maximize the impact on the current year, dedicate internal resources now and considering bringing in external resources or consultants.

Leverage Management Consulting to boost the Performance of your Business

The world of consulting has been seen as out of reach for small to midsize businesses for far too long. In the past, only large corporations had the resources to find, vet, and pay for consultants, giving them a distinct competitive edge over smaller companies in their industry.
However, with advancements in technology and communication changing the way we all work, the consulting industry has suddenly opened up to businesses of all sizes and stages of development. Large players in search of growth pockets have turned to SMEs, while spin-offs focus on medium-sized businesses.
Companies and nonprofit organizations that would never have been able to find or afford the right consultants in the past, now have the opportunity to get world-class consulting services for an affordable price.

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Naturally, when new opportunities and tools become available, there’s a learning curve that goes along with that.
I was recently speaking with the CFO of a small business from the Food Manufacturing Industry. He confessed he had never used management consultants, and asked for some more information about what they could bring to the table.
So, how do you find the right consultant? How do you know if they can actually do what they say they can? What are the real benefits of using a consultant?
This is a very common conversation that we, at Consulting Quest, have with friends, colleagues, and clients every single day. So, we thought we’d answer some of the most common questions we hear and provide you with the “why,” “where,” and “how” of leveraging consultants to enhance your business’s performance.
Why
There’s a famous story of a manager in the Toyota corporation briefing an executive on how well the company is doing. Profits are up, customer satisfaction is up, production is up, sales are up, and costs are down. From the manager’s perspective, nothing could be better.
After the manager’s gleaming report on the state of the company, the executive asked: “where are the problems?” Shocked, the manager replied, “There are no problems.” The executive simply shook his head and said, “No problems is a problem.”

Sometimes, you can’t read the label when you’re inside the jar. Meaning, it can be hard to be unbiased and objective about your business, while also being emotionally and financially invested in the company.
Hiring a consultant allows your business to get objective, unbiased, third-party expertise that can not only offer solutions to problems you know exist, but also root out and solve problems that you didn’t even know you had. A consultant can act as a sparring partner, of sorts, who can bounce ideas back and forth with you and help you identify areas where you can improve.
Consultants also fill the skill and knowledge gaps that may exist in your current workforce, diagnose the problems in your organization others can miss, and help you get through special projects and periods of increased demand with ease. They can play the “bad guy” in tough situations where you’d prefer not to involve your regular staff, help you brand your business, or articulate and convey important messages. Essentially, a consultant can be there to support your business in whatever way necessary.
The role of a consultant is simple: help your business achieve a goal as effectively and efficiently as possible, while helping you, if necessary, with your management or shareholders in the process.
Where
The beauty of using consultants is that you can bring someone on board that has the exact expertise you need, at the exact moment you need it.
Because of this, consultants can be used in any area of your business that needs help or attention (or they can be used to locate which areas of your business need help and attention).
Consultants can be particularly useful in the top levels of organizations, when executives may be looking for guidance on strategic planning, resource allocation, culture, leadership development, or other areas that have widespread impact throughout the organization. In these kinds of situations, consultants can be seen as coaches or advisers that help businesses make big decisions and implement those decisions afterwards.
Similarly, consultants can be a great source of guidance during special projects or demands that your business’s core staff doesn’t have the experience or manpower to handle. These could be anything from ensuring compliance with new regulations, handling a special request from a top client, or deploying new technologies throughout your organization.
Consultants can also be assets to your company’s top line, helping to drive sales and profits through new strategies. For example, if you have a major marketing campaign on the horizon and want to be sure you have the best possible team assigned to the task, hiring a consultant may give you that additional competitive edge you need. With an outside perspective, a consultant can bring fresh ideas to the table that can increase marketing reach, improve audience engagement, and drive greater sales.
If inefficiency and soaring costs are plaguing your business, a consultant can come in to help you streamline those parts of your business. A consultant can provide expertise that allows them to better see areas within your business that could be made more efficient, or identify expenditures that could be reduced or eliminated altogether. Whether it be a breakdown in your production process, a lack of communication and cooperation between your team members, or a product or service that is eating away at your operating budget, a consultant will help you pinpoint, and then fix, those problem areas, in order to reduce costs and maximize efficiency.
Regardless of what your business’s needs are, the size of your organization, or the challenges that your face, there’s a consultant out there who can help.
How
So, you’re ready to get a consultant to come in and help you re-vamp your business. Now, where do you go to find the consultants, evaluate their skills and expertise, research their past performance, and negotiate their rates?
Those are great questions. In the past, you would have had to know someone who knew someone who used a consultant that could give you their contact information, or you had to put out a call for a consultant and hope that someone with the right skills responded.
However, in an age where you can look up reviews and shop online for anything from boats to goats, houses to airplanes, it only makes sense that you should be able to go online to find the right consultant for your needs.
Ultimately, justifying the hire of a new consultant can be difficult if you don’t know what exactly it is they can offer your business. But, with the right tools and the right people behind you, leveraging consultants to improve your business’s performance can be a seamless experience. Many companies have already dared to take the leap. Why not you?

Leverage consulting to accelerate the execution of your Strategy

Having emerged in the 1930s and grown rapidly since the 1960s, strategy consulting has progressively shifted its focus from defining strategy to executing it.  As a result, strategy consulting has become increasingly specialized at the crossroads of function and industry.
Companies, constrained by limited operations budgets (where consulting expenses are allocated), must carefully prioritize and efficiently organize their projects, which may include external consulting services.  As they do so, successful companies apply a sound financial management principle: hiring external consultants has to bring more value than leading the project internally.

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Considerations when hiring consultants:

Assigning an independent external task force can bring focus, speed, and pressure to the table, which is sometimes enough for the success of a project. Moreover, because the leaders of internal projects are often high-potentials on the leadership fast track they often find it difficult to push boundaries and confront the more established leaders and influencers who hold the key to their careers.
External consultants also offer other advantages.  Because they are familiar with the problem they can often solve it more efficiently and at less cost than internal resources. They can also make up for a lack of internal resources and for a lack of flexibility that prevents internal personnel from being diverted from their regular jobs.
Companies may also want to use consultants for larger purposes than the project itself.  These could include training of executives on new skills, introducing external change agents, learning best practices in the industry or in a capability, exposing the organization to a fresh perspective, or relying on the stamp of a recognized consulting brand to reassure board members or investors.

But even under those conditions, hiring external consultants is not always the best solution. For example, consulting services that meet your needs may not be available in your industry or your country. 

Confidentiality can also act as a restraint on looking for external help who may ask for sensitive operating or other data for purposes of benchmarking your company’s performance
On the other hand, leading an internal project can be tricky. The internal team may be unaware of the latest trends in the industry or capability.  They may waste time reinventing already well established improvement methodologies, resulting in longer projects and greater overall costs. Again, the fact that the team members are part of the company can make it difficult to disrupt the established order.
How to crack the make or buy dilemma?
Most companies and their procurement function work to optimize their external spend and their pool of suppliers in order to better support the overall strategy. They have developed methods for answering a variety of difficult questions:  What are the key activities that can be outsourced?  What does the pool of potential suppliers look like?  How mature is the market for suppliers?  What providers are appropriate for us?  Is it worth it to outsource a particular activity for the long term?
The same questions apply to consulting procurement.  Unfortunately, most companies have neither the experience nor the methods for answering them.  Yet, today, all leaders throughout an organization, from the head of procurement to senior executives responsible for signing off on major consulting projects, are expected to align their activities with the overall strategy of the enterprise.  But when it comes to making decisions about consultants, they fall back on word of mouth, on perceptions of the reputations of various providers, and on the sometimes outsized claims of the consultants themselves.  Or they take the line of least resistance and simply hire the consultants they have used in the past, regardless of whether those consultants are the most appropriate for a particular project or for furthering the larger strategy of the company.  These leaders have no reliable way to determine whether a particular consultant precisely meets the company’s needs, no way to gauge a consultant’s likely level of performance, and no benchmarks against which to compare providers.  And until they avail themselves of an independent, credible means of assessing providers and matching them to their company’s needs, they are likely to lag their competitors who have.
Some companies have responded to what is essentially a ‘make-or-buy’ dilemma by centralizing consulting procurement.  The aim is to have a more global vision of consulting efforts, better understanding of the costs, and more powerful levers for negotiating volume discounts and creating synergies across functions and business units. Recognizing that consulting is an accelerator of change, these companies make consulting management the responsibility of the head of strategy or a transformation leader. But they still struggle with a stubborn fact.  The increasing need for highly specialized consulting makes it far more difficult for buyers to have experienced the volume of consulting projects that would enable them to develop portfolios of reliable and high-performing consulting providers. By working with companies specialized in this field, those companies will be able to analyze their consulting spend, refresh their make or buy strategy, identify robust suppliers and areas where new blood is needed. In a way they will be able to develop a consulting strategy for their strategy consulting.

Is it better to work with familiar consultants?

When you have a new project, you might wonder whether you should return to the consultants you’ve used in the past or start over again with a new set of proposals. There are a number of factors to consider, with good reasons for doing either. Whether you work with someone you already have a relationship with, or you take a chance and start from scratch, there are some key questions and considerations to keep in mind.
Do you want a consultant who is familiar with your business and your style?
A consultant with whom you’ve worked in the past has already done the necessary research to understand your company. She will understand your values, your core beliefs, and the fundamental information that shapes your company. This means that she will already have a solid understanding of how all of those things will shape the project that you want done, which makes her more likely to be successful the first time. She also will have existing relationships with the members of your company, which will make working with them easier.

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Working with the same consultants on a regular basis will improve your ability to effectively communicate what you want from them. The individual relationship with each consultant isn’t cultivated overnight. In fact, you’ll start working on this relationship when you hire a consultant for the first time. If you like a consultant’s style, you can cultivate her into a fully informed and regular consultant for your business with a minimum of effort.
On the other hand, a consultant who is familiar with your business and your style won’t necessarily bring the fresh new ideas to the table that you’re looking for. After all, taking a chance on a different consultant will give you the opportunity to interact with someone new and benefit from the talent that she brings to the table.
What is the consultant’s area of expertise?
As with any other profession, there will be consultants who are more skilled in some areas than others. When you work closely with a consultant, you’ll learn quickly where her specific skills lie. Over time, you will learn when it’s best to call in a particular consultant who has the skills necessary for the task at hand and when it’s better to look to a different consultant.
You should always choose the consultant with the best skills for the job, rather than allowing yourself to stay with the old and familiar, simply to avoid needing to go through the proposal process.

A returning consultant will need less input from you, but a new consultant will be more likely to come back to you for feedback.
After the job has been outlined, a returning consultant will be able to get down to it. This means that your time is freed to deal with other issues, while the consultant takes care of the job that you hired her for. There might be less frequent communication as you hire the same consultant more often, which can be both good and bad.
As you develop a relationship with a consultant, you’ll learn what information she needs to work, without quite as much supervision.
On the other hand, this does mean that she is more likely to assume that she knows what you want, right up until the final product is handed over. If you’re not satisfied, it may mean that you have a delay while you wait to see the changes.
Is your business becoming too dependent on a particular consultant?
You don’t want to feel as though your business can’t function without the input of a familiar consultant, especially one who could become aware of that dependency. You always want to be able to enter into a new relationship with a new consultant if prices change or you start to see a decline in the quality of your consultant’s work.
New consultants offer new ideas and new skills.
You’re always looking for fresh new material, and bringing in new consultants is one of the best ways to get it. Your familiar consultants will bring their usual ideas and experience to the table, but a new consultant will have a different perspective to offer.
Ideally, you should always ask for a quote from at least a couple of different consultants before diving in with a single one. This will help ensure that you receive the best possible price. There’s a balance to be struck in knowing the right time to use familiar consultants and when to bring in new ones. Choosing the best option will ensures your company the greatest success.

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Self-Diagnostic to Improve the Management of Your Consulting Spend

Do you currently employ consultants on a regular basis? Perhaps you consider consultants a negligible part of your budget and overall business strategy—there for small, niche projects when you need them and gone as soon as that business is concluded. However, from our experience, consulting spend can represent millions of dollars for companies, and if not properly managed (or managed at all), you’ll miss out on the strategic opportunities a consultant can provide.

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