European supply chain consulting thrives on digital transformation

The growth of European management consulting firms is outpacing Europe’s GDP growth, and the focus is shifting from strategy to operations and supply chain consulting. Supply Chain Movement has analysed the European supply chain consulting market for the fifth time and once again positioned Europe’s most important supply chain consulting firms on the popular subway map. European supply chain consulting thrives on digital transformation.

By Martijn Lofvers

In Europe, management consulting turnover grew by 7.5% in 2016, according to the European consultancies association FEACO (Fédération Europérenne des Associations de Conseils en Organisation). The recovery in the European consulting industry has been very much driven – both directly and indirectly – by digital transformation projects; all countries highlight that client companies have been asking for ever-more advice and implementation support in that area since 2016. Because consulting on digital transformation requires significant investment, the growth in most European countries appears to have been driven by large and very large consulting companies (with more than 50 employees).

Looking at the various service lines of the consulting firms, it’s clear that strategy has lost its central position in the portfolio, declining from 30% (2006 to 2008) to 18% today. At 22%, operations, including supply chain management, is now the most important focus area. Sales & Operations Planning (S&OP) and Integrated Business Planning (IBP) remain the most important topics in supply chain consulting at the moment.

Growth is increasingly becoming a challenge for consulting firms because of the continuing fierce battle for talent within a shrinking (but diversifying) talent pool. Furthermore, the rise of independent consultants is creating freelance- and network-based models that are disrupting the consulting industry. For example, Comatch, a platform that matches clients with management consultants, has been named one of Germany’s ten fastest-growing digital companies. The firm, which has offices in the DACH (Germany, Austria and Switzerland) region, the Netherlands, Denmark, France, the UK and UAE, has expanded both its revenues and its workforce dramatically over the past year.

Organic growth and acquisitions

Almost all the consulting firms with supply chain activities in Europe that participated in the Supply Chain Movement study have grown in terms of their number of consultants, with evidence of organic growth for the big firms and the niche boutique consultancies alike. There were two interesting acquisitions in the supply chain consulting market last year. BearingPoint, one of the largest management consultancies in Europe, acquired UK-based LCP Consulting in March 2017. The addition of LCP Consulting’s expertise in supply chain network design and distribution management has increased BearingPoint’s footprint on the Supply Chain Movement consulting subway map. Meanwhile, the UK-based boutique supply chain consultancy Hughenden Consulting has joined forces with Efeso Consulting, an international management consultancy with 27 offices globally. Hughenden brings extra S&OP and IBP expertise to Efeso.

Consulting subway map

The fifth edition of the SCM Consulting Subway Map of Europe is based on information provided by the consulting firms themselves. A combination of the number of consultancy projects completed, the market share by revenue for each specific area of advice, the size of the company and the degree of specialization determines whether a company gets its own subway station on the relevant line, thus visualizing the company’s proven experience in a particular area of supply chain expertise. To be included on this subway map a consultancy firm must have offices in more than one European country, although a few exceptions have been made for supply chain consulting firms with a truly international customer base.

For each specific area of advice, the consultancy firms were also asked to name the three competitors that they come up against most regularly when pitching. Companies that named each other most often are located closest together on the map. As a result, the subway map shows distinct clusters: the so-called Accountancy Area, the neighbouring Technology Area and the Corporate District dominated by the management consultants – who, incidentally, are also increasingly moving into the area of supply chain management and operations. The rest of the subway map is populated by boutique supply chain consulting firms in varying shapes and sizes.