Redwood & Strong: The Value of a Consulting Engagement Custom Case Solution & Analysis

1. Evidence Brief (Case Researcher)

Financial Metrics

• Consulting Fee: $450,000 fixed fee for a 12-week project (Exhibit 1).
• Client Revenue: Redwood & Strong annual revenue of $85M (Para 4).
• Projected Cost Savings: $1.2M identified in preliminary audit (Para 7).
• Internal Labor Cost: Estimated 1,200 internal hours diverted to project (Exhibit 3).

Operational Facts

• Industry: Mid-sized manufacturing (Para 2).
• Current State: Declining margins (12% to 8% over 3 years) (Para 5).
• Project Scope: Operational efficiency and supply chain restructuring (Para 9).
• Timeline: 12 weeks duration (Exhibit 1).

Stakeholder Positions

• CEO (Marcus Thorne): Skeptical of external consultants; believes internal teams can solve the issue (Para 12).
• COO (Sarah Jenkins): Favors external expertise to break internal deadlock (Para 14).
• CFO (David Chen): Focused on ROI; demands clear milestones for fee release (Para 15).

Information Gaps

• No data on the opportunity cost of internal teams during the 12-week period.
• Lack of clear historical performance data on previous consulting engagements.

2. Strategic Analysis (Strategic Analyst)

Core Strategic Question

Should Redwood & Strong engage external consultants for a $450k project to capture $1.2M in efficiency gains, or pursue internal remediation?

Structural Analysis

• Value Chain Analysis: The bottleneck is not manufacturing capacity but supply chain procurement costs.
• Resource-Based View: Internal teams lack the specialized data-scrubbing tools required for global supply chain benchmarking.

Strategic Options

• Option 1: Full Engagement. Hire consultants for the full 12 weeks. High cost, but guarantees external benchmarking data.
• Option 2: Hybrid Engagement. Retain consultants for 4 weeks to build the model, then transition to internal team execution. Reduces fee to $200k.
• Option 3: Internal Only. Reject consulting proposal. Saves $450k, but risks missing the 12-month implementation window due to lack of expertise.

Preliminary Recommendation

Pursue Option 2. It mitigates the cost risk while securing the proprietary benchmarking data the firm lacks internally.

3. Implementation Roadmap (Implementation Specialist)

Critical Path

1. Week 1-4: Consultant-led benchmarking and process map design.
2. Week 5: Knowledge transfer workshop to internal supply chain team.
3. Week 6-12: Internal team executes procurement renegotiations based on consultant model.

Key Constraints

• Talent Availability: The internal team is already at 95% capacity; dedicated backfill is required.
• Data Integrity: Legacy systems in the procurement department are fragmented; reconciliation will take longer than expected.

Risk-Adjusted Strategy

Implement a milestone-based payment structure. 30% of the $200k fee is contingent upon the delivery of the benchmarking model by week 4. If the model fails to identify at least $800k in potential savings, the engagement terminates.

4. Executive Review and BLUF (Executive Critic)

BLUF

Proceed with the hybrid engagement (Option 2). The firm suffers from institutional inertia; internal teams cannot objectively challenge existing supplier relationships. A $200k investment to secure $1.2M in identified savings provides a 6x return, far exceeding the cost of capital. The risk is not the consultant fee; it is the failure of the internal team to act on the data once provided. The engagement must include a mandatory weekly audit by the CFO to ensure the procurement team is moving toward contract renegotiation.

Dangerous Assumption

The analysis assumes internal teams will adopt the consultant-provided model without friction. In reality, procurement staff may sabotage the process to protect existing vendor relationships.

Unaddressed Risks

• Vendor Retaliation: Aggressive renegotiation may prompt suppliers to degrade service levels or delivery timelines.
• Cultural Resistance: The CEO’s stated skepticism will likely filter down to middle management, creating passive-aggressive non-compliance.

Unconsidered Alternative

Performance-based contracting. Pay the consultants a lower base fee ($100k) plus 20% of realized savings. This aligns incentives and forces the consultant to ensure the plan is actually implemented.

Verdict: APPROVED FOR LEADERSHIP REVIEW