Jump start supply chain savings with little upfront investment
Learn more about the Responsible Supply Chain advisory team
The decision to spend money is rarely an easy one. How do you decide what is valuable and what isn't?
A recent article tried to help companies with one possible purchase - hiring someone to dig into their supply chain in search of cost savings and new efficiencies.
Supply Chain Quarterly outlined a way to measure the investment and determine if a consultant is worth the price.
It used an example of a typical engagement - a deal between a car parts company and a consulting firm with a price tag equal to 500,000 euros or about $550,000. Its hypothetical company waited three years to recoup the cost of the deal.
Steve Polski of Cargill wants companies to know there's another - less expensive - way.
Polski, senior director of sustainability at Cargill, worked with PwC to create a new tool for exploring customer's supply chains and finding opportunities to drive down costs, elevate brands and fend off risk.
It's called the Responsible Supply Chain, or RSC, Advisory Business.
Polski says it costs a fraction of what you would pay to hire other firms.
"Our intention is to create an immediate internal rate of return with limited to zero capital, limited expense and really start changing behaviors," says Polski.
Companies that sign on for an RSC deployment commit to about one day of pre-work, two half-day sessions with Cargill and PwC and a follow-up meeting to review recommendations.
Polski says the RSC service is about positioning yourself to generate a series of quick wins.
"I think where many companies have missed the boat is that they only try to incorporate improvement in yields, cost and energy reductions and environmental changes into a long-term strategy, " says Polski.
Polski says long-term strategies are great but they can be costly and become bogged down in the planning phase.
He says the RSC tool helps companies quickly identify, prioritize and then act on opportunities in the supply chain. He says swift action has the potential for an almost immediate financial impact.
He gives the example of one company that learned - through an RSC deployment - to quantify a reduction in carbon dioxide emissions in their supply chain and how to tell that story to its retail customer. The retailer rewarded the company with better product placement and sales increased within months.
Cope Willis, a director in PwC's Sustainable Business Solutions practice, is working with Polski.
"Often the RSC framework is identifying opportunities that have the potential to - if the customer decides to act - reduce costs or grow margins by amounts that are many multiples greater than the fees involved here," says Willis.
Polski explains that the speed and agility of an RSC framework deployment allows them to keep the fees low.
Mike Etzel, vice president of North American Food Ingredient sales for Cargill, works directly with customers who can benefit from an RSC deployment. He says some businesses may think that they need to spend a lot of time and money to find value from a consulting project. He says they may be skeptical of the low cost and quick pace of RSC.
He counters that suspicion.
"We believe that if we come in for a reasonable fee, customers will see the immediate value of it," says Etzel. "In the long term, if we help them run their business more successfully our payoff is a year from now, two years from now, four years from now. When their business is more profitable, we're going to sell them all of the things that Cargill makes."
It's similar to the method that has worked for the unit currently housing the RSC advisory business - Cargill Process Optimizers, or CPO.
Mike Hoerle is the global business director for CPO, which works to find opportunities for customers within their four walls, rather than in their supply chain.
"Our job is to help customers and help them thrive," says Hoerle. "The belief in Cargill is that if we help people thrive and grow then we will be allowed to grow with them and being allowed to grow with them means that as they grow we will be allowed to sell them more ingredients."
"The whole purpose is to help our customers grow their business, mitigate risk and reduce cost and improve their profitability," says Polski, "If we are doing that for our customer, we'll be doing that for ourselves, and the rest of our supply chain as well."