McKinsey tested an outcome-based contract where it gets paid $1 million upfront plus 15% of savings it finds, capping at $8.5 million over 12 to 24 months. The firm used its QuantumBlack AI to analyze supplier spend and renegotiate contracts, with hard-dollar cost reduction as the only metric that matters.
McKinsey is doing an outcome-based contract in supply chain and procurement. They can scale fees to save dollars if they deploy Quantum Black, which is their AI agent tool to analyze historical supplier spending, renegotiate terms, and optimize purchasing. The metric is total hard dollar cost reduction achieved for over a 12 to 24 month period. The reduced base fee is $1 million, a performance bonus of 15% of the first $50 million in identified savings. McKinsey's total billing would be $8.5 million. So base fee plus $7.5 million success fee, which I think is good for both sides. So they make more money. They make more money, but It is tied a little more to, hey, you have to perform.
