Thursday 24th Jan 2019 - Logistics & Supply Chain

Balancing risk and reward

How do you prove failure of duty? This appears to be a tricky issue for any claimant considering taking a consultancy to court. Most discrepancies relating to strategic organisational change that may not have delivered the desired results tend to be settled way before reaching litigation.

However according to reports in the Financial Times, Scottish & Newcastle has filed a claim against PwC for work the consultancy undertook on restructuring supply arrangements for the brewer’s UK based Scottish Courage subsidiary between 2001 and 2003. S&N claims that the restructuring and creation of a ‘lean supply chain’ was expected to lead to annual revenue savings of £35m a year by year four, but they say costs actually rose. Unravelling the complex trail of emails will undoubtedly be an expensive and lengthy proceedure.

Perhaps consultancies should engage more in risk sharing. Could there be mileage in consultancies being paid in proportion to the level of savings that result from their suggested schemes? Of course, an agreed set of KPIs would be a prerequisite, but ultimately, risk and reward would be held in balance.

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