Making Demand Management a Reality in Procurement

By Derrick Moreira

Most supply management organizations recognize the value of demand management in theory as a key lever for driving efficiency and reducing total costs. But they also know that realizing the value of demand management in reality is hard work. It requires patience and a willingness on the part of internal customers to change.

Too often, demand management strategies falter or fail — or are never pursued to begin with — even though the payoff can be substantial. Companies can reduce spend by 10-20 percent through demand management. But realizing those savings can be daunting indeed.

What is Demand Management?

Simply speaking, demand management is a key lever in the procurement process for reducing costs by managing requirements, controlling demand (e.g., policy that limits who can receive a desktop printer), and distinguishing between "wants" and "needs."

1. Zero in on demand management opportunities.

2. Identify the stakeholders — all of them — and their concerns regarding the changes.

3. Communicate with stakeholders to get "buy in" from the beginning.

4. Adapt policies and processes to realize demand-driven efficiencies.

5. Instill demand management in the culture so it becomes self-sustaining and automatic over time.

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