The ALM Services Forecast Supply Chain Consulting

Services Forecast

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The ALM Services Forecast: Supply Chain Consulting

Supply Chain Consulting Research Series May 2018

Nathan SimonSenior Director, Management Consulting Research T +1 212-457-9185 [email protected]

Author

For more information, visit the ALM Intelligence website at www.alm.com/intelligence/industries-we-serve/consulting-industry/

© 2018 ALM Media Properties, LLC 2

Supply Chain Consulting Services Forecast

Contents

Overview 3

Client Demand Trends 4

Market Size 6

Market Size by Service 11

Market Structure 20

Methodology 22

Definitions 24

About ALM Intelligence 25



Overview

Supply chain consulting aims to help companies improve the way in which they transform inputs into outputs to create

value for their customers. Supply chains are systems made up of both assets (capital, human, and information) and processes

and ways of working for actuating those assets in the context of both internal strategies and external market conditions.

The services that make up the supply chain consulting market target different aspects of this system. Supply chain planning

concentrates on managing information assets to optimize the balance of internal and external drivers. Capital projects

addresses the formation of capital assets, while production strategy, production operations, and asset management deal

with the configuration and operation of them. Logistics and sourcing strategy target the interface of a company’s internal

production function with external stakeholders.

While supply chain consulting continues to sidestep the trend towards more integrated service delivery among other

management consulting markets, demand is becoming increasingly integrated within the supply chain market as clients

prioritize a combination of efficiency and effectiveness in their supply chains and flexibility becomes an overriding source

of advantage. To date, this is occurring primarily in a pairwise fashion. Supply chain planning and logistics are converging

around Internet of Things (IoT) connectivity. Clients are treating capital projects and asset management less as alternative

and more as complementary capabilities. Production strategy and production operations increasingly need to flex together

to achieve the desired optimization of speed, agility, and resilience. Sourcing strategy, while it has retained more than the

other services a standalone delivery model, is emerging as a nexus of true cross-supply chain service integration targeted at

enabling innovative business models that hinge on collaborating and coordinating more effectively with external ecosystems.

Consulting providers are responding to this demand-side shift by redesigning longstanding operating models. Specialists

make up a substantial portion of the provider base in this market. While they continue to focus on particular service segments

within the market, they are increasingly organizing their offerings and capabilities to integrate both with other external

service providers, especially information and operations technology vendors, and a broader set of client stakeholders. Larger

providers are feverishly knocking down walls between internal silos with their supply chain practices.

Digitization is the order of the day in terms of provider capability building. This manifests itself in two ways. One is the digitization

of traditional consulting service delivery such as the use of digital platforms for managing and scaling management systems

for continuous improvement. The other is the extension of consulting into digital supply chain technologies such as analytics

for planning and asset management or automation for warehouse operations. To date, consulting providers are acquiring

these capabilities through a mix of organic investments and partnerships with technology vendors.



Supply Chain Consulting Demand Drivers

Driver Issue Client Imperatives

Demand

Supply

Technology & Risk

Source: ALM Intelligence

Client Demand TrendsBuyers of Supply Chain Consulting

Demand for management consulting traditionally resembled a pendulum, swinging between periods during which clients

focused on cost cutting versus growth. While most consulting markets evolved away from this, with buyers simultaneously

pursuing cost cutting and growth objectives, supply chain demand continued to resemble a pendulum. But this is changing as

companies adjust to a slow growth economic environment that makes productivity growth and operational flexibility conditions

of competitiveness and seek to capture the opportunities digitization affords for simultaneously driving effectiveness and

efficiency. The principal buyers of supply chain consulting nonetheless exhibit varying priorities amidst this changing context.

■ CEOs and CFOs: these buyers typically sponsor supply chain engagements in the context of wider corporate initiatives.

CEOs more commonly lead them in the wake of significant M&A activity or as follow-ons to major strategic redirections.

CFOs tend to focus on value, that is, getting more from less, and more frequently sponsor engagements as part of

turnaround programs or to support growth by freeing up cash from operations for investment elsewhere.

■ Functional leaders: COOs and heads of supply chain concentrate on cross-cutting performance objectives, typically geared

towards delivering on a new capability that depends on new ways of working across supply chain functions such as faster

speed to market, augmenting physical products with software and services, or making operations more flexible and agile.

■ Technical functions: heads of the various functions within the supply chain invariably sponsor engagements exclusive

to their respective function and tend to hold fastest to the traditional growth versus cost-cutting buying pattern.

Demand Drivers of Supply Chain ConsultingConsulting demand derives from company efforts to respond to changes in demand, supply, and technology and regulation

in their markets.



Supply Chain Consulting Client Needs

Client Service Challenges Consulting Implications

Supply Chain Planning

Capital Projects

Production Strategy



Supply Chain Consulting Client NeedsAs companies respond to these drivers they encounter a number of challenges that furnish the underlying needs that

consultants must meet as they design and deliver solutions to their clients.




Supply Chain Consulting Client Needs Cont.

Client Service Challenges Consulting Implications

Production Operations

Asset Management

Logistics

Sourcing Strategy




Ente

rpris

e St

rate

gy

Corporate

Finance

Operating Model StrategyCustomer

Research &

Development

Supp

ly C

hain

Operations

Rewards

Management

Talent &

Workforce

Business Strategy & PlanningPortfolio & Capital Strategy

Strategic Risk

Cybersecurity

Transactions: Acquisitions

Transactions: Divestitures

Joint Ventures & Alliances

Balance Sheet Strategy & Investor Communications

Organization

Corporate Services

Branding & Marketing

Pricing

Commercial ExecutionCustomer Service

Innovation Strategy

Product Development

Supply Chain PlanningCapital ProjectsProduction

StrategyProduction Operations

Asset ManagementLogisitics

Sourcing Strategy

Procurement Operations

Service Operations

Finance

IT

HR

Retirement Bene�ts

Health and Wellness Bene�tsCompensation

Workforce ManagementCommunications & Change

Talent & Leadership

Source: ALM Intelligence estimates

Management Consulting

Market $X.X Billion

Market Size Market Size & Composition

Supply Chain constitutes the entire middle office services portion of the management consulting market, equating to approx-

imately X percent of overall management consulting with client spending of $X.X billion in 2016.



Legend: Very Strong Strong Moderate Weak Very Weak

Supply Chain Consulting Top Industry Sector Market Trends

Sector 2016 Growth Market Attributes

Manufacturing

Public Sector

Healthcare



Market Size Consulting Spending by Industry Sector



Market Size Consulting Spending by Geographic Region



Supply Chain Consulting Regional Market Trends

Region 2016 Growth Market Attributes

Asia Pacific

EMEA

Latin America

North America




Market SizeMarket Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by Service Consulting Spending by Service



Supply Chain Consulting Service Market Trends

Service 2016 Growth Market Attributes

Supply Chain Planning

Capital Projects

Production Strategy

Production Operations

Asset Management

Logistics

Sourcing Strategy




Market Size by ServiceConsulting Spending by Service cont.



Market Size by ServiceSupply Chain Planning Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by ServiceCapital Projects Planning Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by ServiceProduction Strategy Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by ServiceProduction Operations Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by ServiceAsset Management Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by ServiceLogistics Growth Outlook

Base Case Forecast

Forecast Scenarios




Market Size by ServiceSourcing Strategy Growth Outlook

Base Case Forecast

Forecast Scenarios




Market StructureMarket Share Rankings

Supply Chain Consulting RankingsRank Firm Total CY 2016 Growth % Change in Rank Market Share

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20




Market StructureStrategic Dynamics

* Concentration ratio is measured as the combined market shares of the largest three providers.Source: ALM Intelligence estimates



MethodologyOverview

ALM Intelligence has been researching the management, financial and IT consulting industry for over 40 years, studying

the global consulting marketplace at multiple levels. The resulting market analyses help buyers of consulting services to

effectively target best in class providers, and help consulting providers to identify and evaluate business opportunities.

The research is conducted around three primary dimensions:

■ Consulting Service Lines

■ Client Vertical Industries

■ Global Geographic Regions

The proprietary research methodology comprises four components:

■ Extensive interviews with consulting practice leaders, financial analysts, consulting clients, and clientside industry experts

■ Data and background material from the proprietary library of research on the consulting industry and individual firms

■ Quantitative data collection from primary and secondary sources

■ Key economic data relevant to the sector(s) being analyzed

The research output for a project is derived predominantly from primary research.

Data is obtained through a centralized effort, with teams of analysts collecting, assessing, fact-checking, and refreshing

baseline information on leading consultancies and consulting markets. This information populates an extensive knowledge

base of consulting providers, widely regarded as among the most comprehensive in the world.

Working collaboratively, analysts narrow their research to the most discrete and pertinent intersection of consulting service/

industry/geography.

The experience and knowledge of the analyst team are critical to the success of these research endeavors. Directors and

associate directors average over a decade of consulting and/or analyst experience, with an emphasis on professional services.

Junior analysts typically bring an average of five years of consulting and/or analyst experience.

The group’s long-term relationships with consulting clients and industry leaders are based on trust and respect. ALM

Intelligence’s fundamental goal is to deliver objective assessments and insightful viewpoints on the management, financial

and IT consulting market.



MethodologyHow We Evaluate Consulting Markets

ALM Intelligence’s goal is to deliver objective analyses to help providers of consulting services understand the structure and

prospects of the markets in which they compete in order to assess business opportunities and competitive threats.

ALM Intelligence evaluates consulting trends with respect to a particular consulting area in terms of the following elements:

■ Market Size & Outlook: What is the size of the market in the context of the consulting area? What are the distribution

and drivers of client spending across geographic regions and industry sectors? What is the outlook for market growth and

how might different scenarios alter the expected trajectory?

■ Market Structure: What is the distribution of providers in the market? How concentrated is the market? What are the

provider-level strategic dynamics that will shape market structure in the context of changes in demand, barriers to entry,

and returns to scale?

■ Client Demand Trends: What are the drivers of client demand? How do client needs influence the nature of consulting

solutions?

■ Consulting Provider Trends: What differentiates providers in terms of their consulting approaches and service delivery

models? How are providers positioned relative to client functions and activities? What differentiates providers’ business

and operating models? How do the attributes of different provider peer groups manifest in patterns of capabilities?

In addition to briefings with consulting buyers and providers, ALM Intelligence uses a mosaic approach to derive its findings.

This incorporates primary research conducted with industry practitioners, academics, and other experts and secondary

research on providers’ public information and other third-party sources of data and analysis.



DefinitionsWhat is Supply Chain Consulting?

Supply chain consulting forms part of the management

consulting services directed at clients’ middle office

activities. Its objective is to improve the way in which

companies transform inputs into outputs to create value

for their customers.

Supply chain consulting consists of seven services.

■ Supply chain planning: managing the flow of

information among value chain participants to inform

supply and demand balancing decisions in response to

market volatility and variability

■ Capital projects: connecting enterprise and financial

strategies to the supply chain by optimizing the capital

portfolio and effectively managing new capital projects,

including project design and engineering, procurement,

and construction services

■ Production strategy: configuring a company’s network

of capital assets, optimizing the scope of internal versus

externally sourced production activities, and aligning

production technology to build the capabilities required to execute against strategic performance priorities.

■ Production operations: improving the operation of existing capital assets by adjusting the plant layout, processing flow,

and the management system for sustaining and furthering performance gains

■ Asset management: maximizing the productivity of a company’s existing capital assets through reliability engineering,

utilization optimization, and effective maintenance and repair services

■ Logistics: managing the movement and storage of physical and intangible inputs, in-process inventory, and finished

products along the supply chain and to end customers

■ Sourcing strategy: enhance the value generated by external production input suppliers by integrating sourcing into

product and production design choices, improving supplier selection, optimizing supply financing, and collaborating

more effectively with suppliers.

Ente

rpris

e St

rate

gy

Corporate

Finance

Operating Model StrategyCustomer

Research &

Development

Supp

ly C

hain

Operations

Rewards

Management

Talent &

Workforce

Risk

Digital &Technology

BackO�ce

CorporateO�ce

FrontO�ce

MiddleO�ce

About ALM Intelligence

ALM Intelligence provides accurate and reliable market sizing and forecasts on consulting services worldwide, needs-analysis

and vendor profiling for buyers of consulting services, timely and insightful intelligence on the top consulting firms in their

respective markets, and operational benchmarks that measure consulting performance. ALM Intelligence’s research spans

multiple service areas, client vertical industries, and geographies. Our analysts provide expert commentary at consulting

industry events worldwide, and offer custom research for Management Consulting and IT Services firms. More information

about ALM Intelligence is available at www.alm.com/intelligence/industries-we-serve/consulting-industry/.

ALM, an information and intelligence company, provides customers with critical news, data, analysis, marketing solutions and

events to successfully manage the business of business. For more information, visit www.alm.com.

About the Forecast Consulting Research SeriesALM Intelligence’s exclusive, quantitative assessment of provider size by service segment, industry and geography, creates a

short list for the buyers of the most extensive consulting firms. The forecast consulting series explores nine service segments,

12 industries and four geographic areas.

For further information and to purchase ALM Intelligence research, contact [email protected], 855-808-4550.



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