The End of Billable Hours: Why Supply Chain Leaders Must Demand Results, Not Reports

McKinsey’s pivot to outcomes-based pricing exposes what supply chain executives have known for years: paying consultants for PowerPoints instead of performance is a losing bet.

McKinsey admitted what clients have suspected for decades. The traditional consulting model is broken.

Business Insider recently reported that 25% of McKinsey’s global fees now come from outcomes-based pricing, not billable hours. The firm is moving from advisory vendor to operating partner. Clients no longer pay for projects. They pay for results.

This shift represents more than a pricing adjustment. It signals the collapse of the time-and-materials playbook that Accenture, KPMG, PwC, Deloitte, Boston, Bain, EY and many others still rely on. For supply chain and procurement leaders facing pressure to deliver transformation results, the implications are clear.

Stop paying for advice. Start demanding accountability.

The McKinsey Model Breaks

Strategy work now represents less than 20% of McKinsey’s revenue. The rest comes from deep, multi-year AI and transformation execution. The firm gets paid only when it delivers measurable outcomes.

EY is openly considering a service-as-software model powered by AI agents. Multi-year, cross-functional transformations are pushing firms to behave more like long-term operating partners than advisory vendors.

The stakes are massive. Tens of billions in consulting revenue are tied to models that AI has made obsolete. Whoever adapts fastest wins the C-suite wallet.

Alex Richards framed the unanswered question. If outcomes drive fees, who owns the risk when AI underperforms or fails to scale?

Thomas Lund summarized the new reality. “Firms that master risk-sharing, AI-enabled delivery, and multi-year outcomes will capture the new C-suite wallet. The rest will sell PowerPoint decks.”

Why AI Changes Everything

AI exposes whether firms can actually deliver outcomes, not just decks. When execution becomes measurable, billable hours stop being the product.

Mark Anthony Brewer at Immortal Tek identified the fundamental shift. “The consulting model isn’t collapsing because of AI. It’s collapsing because AI finally exposes whether a firm can actually deliver outcomes, not just decks. When execution becomes measurable, billable hours stop being the product.”

He continued. “If firms are getting paid on results, they need AI systems that are auditable, governed, modular, and traceable, not black-box monoliths they can’t control. The real shift isn’t time versus outcomes. It’s advice versus accountability. Once AI performance is logged, versioned, and traceable, the firms that can prove their systems’ reliability win every long-term transformation deal.”

Richards agreed completely. “AI isn’t killing consulting, it’s just showing who can actually deliver. Once the work is trackable, you can’t hide behind a slide deck. It really is the shift you called out: advice to accountability. The firms that can prove their AI works in the real world are the ones that will win the long-term transformation deals.”

Dave Snowden at The Cynefin offered a different perspective. “There are two ways of looking at this. One is that AI changes the consultancy model, the other is that AI’s competence demonstrates that consultancy has, over the past few decades, impoverished itself by simply repurposing text based documents with no originality.”

The observation cuts deep. If AI can replicate most consulting deliverables, those deliverables never required human expertise in the first place.

What Supply Chain Leaders Should Demand

The shift to outcomes-based pricing creates opportunity for supply chain and procurement executives. Traditional consulting engagements deliver recommendations. Implementation responsibility falls on internal teams. When projects fail, consultants blame execution gaps. Clients absorb the cost of failure.

Outcomes-based pricing flips that dynamic. Consultants share risk. Success gets defined upfront. Payment depends on delivery.

Bryan Cassady summarized the change. “It is about time consultants are expected to deliver results instead of kilos of powerpoints.”

Gereon Hempel confirmed the pattern. “I couldn’t agree more. PowerPoint and chill times are over. I see it in my own consultancy where we’re providing solutions instead of creating a PowerPoint with tasks for our clients. All the way is the new name of the game.”

Diana Barber described what clients are rejecting. “The old Big 4 playbook, high rates, junior-heavy teams, and 1,000-slide decks, is no longer accepted by clients who need real outcomes.”

For supply chain transformation projects, this matters enormously. Warehouse automation implementations. Transportation management system deployments. Procurement technology integrations. These projects succeed or fail based on execution, not analysis.

Traditional consulting delivers analysis. Outcomes-based models deliver working systems.

The Risk Question

Veronika Bruce at Adobe partnerships raised the critical tension. “If the traditional consulting model is collapsing, it’s because outcomes-based pricing fundamentally rewrites where accountability sits. But here’s the real tension behind the trend: when fees depend on outcomes, who actually owns the outcome? Is it a failure of implementation? Internal readiness? Cross-functional adoption? Or the limitations of the tech stack itself? And even more importantly, who defines the framework that decides this? Without clear ownership across these layers, shared risk becomes a negotiation rather than a model.”

This question determines whether outcomes-based pricing creates value or creates conflict. Success requires rigorous definition upfront. What constitutes success? Over what timeline? What variables can the consultant control? What depends on client execution?

Stefano di Bartolo emphasized the challenge. “The shift to outcomes-based pricing requires contracts to rigidly define roles and risk during implementation’s unpredictable stages. As AI handles analysis, the consultant’s indispensable value concentrates on three human assets: contextual expertise spotting pitfalls via use case ownership, objective advice providing technology-agnostic solutions, and people leadership driving stakeholder adoption and coordination. Firms must now aggressively capitalize on these three assets and come up with different fee models.”

Richards agreed. “The moment you move to outcomes-based models, the contract becomes a living map of who owns what, especially when real-world variables like turnover or shifting priorities hit. AI can take over the analysis, but it can’t replace the judgment, neutrality, and people leadership needed to keep a transformation on track. Context, objective guidance, and stakeholder alignment are the three levers that actually determine whether an AI program succeeds. That’s where firms need to double down and rethink how they price.”

The Accountability Gap

Another insider identified what outcomes-based pricing actually means. “This shift feels less like the end of traditional consulting and more like an overdue reckoning with accountability. The billable hour model always insulated firms from delivery risk. Clients paid for effort, not impact. Outcomes-based pricing flips that, which is healthy, but it also raises questions about who defines success and over what timeline. Success can be both measurable and tangible. The measurable is easy, the other is less defined. Sometimes the value comes from just having a second opinion. The best models are going to be a hybrid that tie measurable outcomes with knowledge gain that inspires innovation and creative solutions.”

Matthew Waugh agreed. “If you’re brought in as a partner you should be accountable for an outcome, not just hours on a timesheet. Whether AI is part of the solution or not doesn’t change the basics. Simply telling a client what to do, or dropping in a team to deliver something, rarely stacks up in a real cost-to-value analysis. A genuine partner should accelerate the realization of value, uplift the internal team working beside them and leave sustainable capability behind once the engagement is done. That’s the model clients are demanding now and it’s great to see the C-suite shifting spend toward partners who deliver that kind of impact, AI or no AI.”

Peter Welling emphasized the core principle. “Change the model where management consultants share implementation risk and reward not just upstream concepts and models. Will sort out who can deliver real value. Don’t need AI to do that.”

What Works in Supply Chain

For supply chain and procurement transformations, several outcomes lend themselves to performance-based pricing.

Cost reduction from category optimization. Measurable. Time-bound. Directly attributable. Consultants can share upside through success fees tied to documented savings.

Inventory reduction from demand planning improvements. Measurable. Requires system implementation and process change. Success depends on both consultant execution and client adoption.

Service level improvements from network optimization. Measurable. Requires analytical work, technology deployment, and operational change management. Shared accountability works when baselines are clear.

Procurement cycle time reduction from process automation. Measurable. Requires technology selection, implementation, and user adoption. Success metrics are objective.

Theodore Krantz Jr. noted practical applications. “The contextual AI tools cover better market analysis for our space in supply chain risk than the traditional enterprise B2B analysts. There will always be a need for some strategic analysis and consultation but the AI tools do a fantastic job of fundamental industry analysis already. We use Grok for supplemental corporate development analysis.”

The technology enables new delivery models. Analysis that required weeks of consultant time now takes hours. That compression forces pricing changes. You cannot charge traditional rates for work AI completes in minutes.

The Implementation Challenge

Scott Alexander identified what changes. “The days of the multi-year, multi-million dollar transformations are a thing of the past. AI tools are taking the technical skills-for-hire out of the equation. Consulting will be more focused on the human and organizational side of client challenges.”

This creates opportunity for supply chain leaders. Traditional transformation projects included massive analysis components. Market assessments. Competitive benchmarking. Data modeling. Process mapping. AI handles most of this work now at fraction of cost and time.

What remains is the hard part. Change management. Stakeholder alignment. Cross-functional coordination. Technology integration. These human-centric challenges determine success or failure.

Consultants who master these skills create value. Those who rely on analysis become obsolete.

Ikum Kandola at TheAX.ai, who spent five years at PwC, identified the missing link. “The missing link for most consultancies is poorly managed data which is the risk for AI to underperform. Due to too much red tape, I left and created a platform for AI-productised consultancy. To offer outcome based pricing at scale consultancies need to be productising with repeatable delivery, clear benchmarking and faster time to value. By using a platform you can have your own IP and frameworks guide AI to assess, analyze and write reports along with all your data in system. McKinsey might do it in-house but boutique consultancies can’t afford the same luxuries.”

The Market Reality

Not everyone believes the shift is permanent. Rasmus Brix raised skeptical points. “I don’t believe performance based pricing will be the dominant revenue component for three simple reasons: one, it requires endless and detailed estimation of baseline what would have been the case without consulting team. Two, there’s tons of factors that a consulting team can’t control that significantly impacts value delivered. That’s a risk that has to be priced for, higher cost for client. Three, in many cases the value delivered by a consulting team is should be to upskill a team, function, or company and define an operating model that allow those skills to be deployed effectively to create value. Developing a pay for performance pricing model that measures that will take longer time than the project itself and still be wrong.”

His conclusion: “Claiming death of consulting due to AI is like claiming death of executive search because everyone is on LinkedIn so you can just go find them yourself.”

The parallel has limits. Executive search requires human judgment and relationship building that AI cannot replicate. Much of traditional consulting does not.

Ying Ying Shi at Accenture raised a practical concern. “Outcome-based pricing requires significant financial runway. Firms need the resources to wait years for results to materialize and absorb the risk of uncertain timelines. That creates an interesting challenge: if outcomes take 3 to 5 years to fully take shape, how do smaller consultancies structure deals that work for both sides? The firms that navigate this successfully will likely need to get more surgical about defining outcomes, focusing on shorter-term, measurable results they can directly influence rather than broad transformation goals that depend on countless variables.”

This creates advantage for large firms with balance sheets that can absorb multi-year payment delays. Smaller consultancies need milestone-based hybrid models that provide cash flow while maintaining outcome accountability.

What Supply Chain Leaders Should Do

Stop accepting traditional consulting engagements for transformation projects. The billable hour model creates wrong incentives. Consultants optimize for engagement duration, not delivery speed. Junior staff maximize utilization. Analysis expands to fill available time.

Demand outcome-based pricing for measurable results. Cost reduction targets. Inventory improvements. Service level increases. Cycle time reductions. These outcomes are objective and time-bound. Structure fees to reward delivery and penalize failure.

Require hybrid models for complex transformations. Blend fixed fees for defined deliverables with success fees for outcome achievement. This provides consultants with working capital while maintaining accountability for results.

Insist on capability transfer. Outcomes-based engagements should leave internal teams more capable, not more dependent. Build knowledge transfer into success criteria. Measure team capability at project end.

Define risk allocation explicitly. What can consultants control? What depends on client resources? What requires executive sponsorship? Clear contracts prevent disputes and enable genuine partnership.

Leverage AI to compress analysis phases. Do not pay traditional rates for work AI completes quickly. Redirect consultant effort to change management, stakeholder alignment, and implementation support where human expertise still matters.

The consulting industry is undergoing forced evolution. AI accelerates the exposure of firms that deliver PowerPoints instead of performance. Supply chain and procurement leaders have leverage to demand better models.

Use it. The firms that adapt will deliver more value at lower risk. The firms that cling to billable hours will price themselves into irrelevance.

The future of consulting is accountability. Supply chain transformations are too important and too expensive to fund on hope and hourly rates.

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