Supply chain regulations like the EU's Corporate Sustainability Due Diligence Directive (CSDDD), CSRD and EUFLR are becoming increasingly complex and demanding. While consultants can provide valuable expertise, relying solely on them for compliance carries significant risks that many organizations overlook.
Research consistently shows that over-reliance on consultants often fails to deliver promised results. A study by Harvard Business Review found that nearly 70% of major consulting engagements fail to deliver the promised outcomes. In the context of supply chain compliance, these shortcomings become particularly concerning.
Let's take a look at why relying solely on consultants is risky to your business.
Internal Knowledge Gaps Remain Unfilled
When companies outsource their compliance entirely to consultants, they often fail to develop internal expertise. This creates a dangerous dependency where the organization lacks the fundamental understanding needed to make informed decisions about their supply chain. Your team needs to understand the regulations intimately to implement effective day-to-day practices and identify potential risks before they become problems.
Limited Integration with Business Operations
Consultants, despite their expertise, are ultimately outsiders to your organization. They may not fully grasp your company's unique operational challenges, culture, or existing processes. This disconnect can lead to compliance recommendations that look good on paper but prove impractical or disruptive when implemented. True compliance needs to be woven into the fabric of your business operations, not bolted on as an afterthought.
Cost Implications and Scalability Issues
Relying exclusively on consultants can become extremely expensive, especially as regulations evolve and require ongoing updates and modifications. While initial consulting might seem cost-effective, the long-term expense of continuous external support often exceeds the investment required to build internal capabilities. Additionally, consultants' time and availability constraints can limit your ability to scale compliance efforts quickly when needed.
Delayed Response to Changes
The regulatory landscape for supply chain due diligence is rapidly evolving. Waiting for consultant input before responding to changes can slow down your organization's ability to adapt. Internal teams empowered with knowledge and authority can react more quickly to new requirements or emerging risks, maintaining continuous compliance rather than playing catch-up.
Surface-Level Understanding
Consultants often provide standardized solutions based on best practices. While this approach can check regulatory boxes, it may miss deeper issues specific to your supply chain. Without internal expertise to complement external advice, companies risk developing a superficial understanding of their supply chain risks and compliance obligations.
Limited Stakeholder Engagement
Modern slavery and sustainability regulations like LKSG in germany increasingly emphasize stakeholder engagement. External consultants may lack the relationships and cultural understanding needed to effectively engage with workers, local communities, and other stakeholders throughout your supply chain. This can result in missed opportunities to identify and address human rights risks.
Instead of relying solely on consultants, consider a hybrid approach:
1. Use consultants strategically for specific expertise and guidance
2. Invest in supply chain risk technologies that can surface data efficiently and consistently
3. Create clear processes for knowledge transfer from consultants to internal staff
4. Establish ongoing technology monitoring systems managed by your own team (not an outside team!)
As supply chain regulations continue to evolve and expand, organizations need robust internal capabilities to ensure genuine compliance. While consultants play a valuable role in providing expertise and guidance, they should complement, not replace, your organization's own understanding and management of supply chain risks and responsibilities.
The most successful organizations will be those that strike the right balance between external expertise and internal capabilities, creating a comprehensive approach to supply chain compliance that goes beyond mere box-ticking to deliver real impact.
To learn more about how FRDM can reduce cost and timeline of supply chain due diligence email hello@frdm.co
