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Making Demand Management a Reality in Procurement
Change management is critical to realizing the full potential value of any initiative that seeks to change the way end users procure goods and services
Derrick Moreira with Censeo Consulting
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.
For starters, many and varied stakeholders across the enterprise need to devote time, effort and "personal capital" to develop and implement demand management strategies successfully. Second, demand management often requires significant change: People must act in new ways and organizations must rethink traditional structures and lines of communication. Finally, to be truly effective, demand management must become an ingrained, deeply embedded part of the culture over time.
So, with all of these challenges, what can an organization do to ensure demand management success? The answer, Censeo Consulting Group believes, lies in integrating change management as a core component of any demand management program. Change management strategies address the more complex human and organizational elements — the "soft" elements, so to speak — that often block effective demand management. Yet the results can be measured in hard dollars. For example, in one particularly dramatic example of the benefits of change management, a project team from our company told a client sourcing an IT-related commodity, "Without change management, you will realize only half of the projected savings." The cost to achieve the additional millions in savings through change management? A few hundred thousand dollars.
In this article, we will follow a single project through five key points where demand management and change management intersect. The client was a large organization, with hundreds of sites across the country, hoping to reduce its outlays for small package delivery services. Spend was in the hundreds of millions of dollars.
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.
For starters, many and varied stakeholders across the enterprise need to devote time, effort and "personal capital" to develop and implement demand management strategies successfully. Second, demand management often requires significant change: People must act in new ways and organizations must rethink traditional structures and lines of communication. Finally, to be truly effective, demand management must become an ingrained, deeply embedded part of the culture over time.
So, with all of these challenges, what can an organization do to ensure demand management success? The answer, Censeo Consulting Group believes, lies in integrating change management as a core component of any demand management program. Change management strategies address the more complex human and organizational elements — the "soft" elements, so to speak — that often block effective demand management. Yet the results can be measured in hard dollars. For example, in one particularly dramatic example of the benefits of change management, a project team from our company told a client sourcing an IT-related commodity, "Without change management, you will realize only half of the projected savings." The cost to achieve the additional millions in savings through change management? A few hundred thousand dollars.
In this article, we will follow a single project through five key points where demand management and change management intersect. The client was a large organization, with hundreds of sites across the country, hoping to reduce its outlays for small package delivery services. Spend was in the hundreds of millions of dollars.
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