Demand Management
Demand management is the practice of influencing what, how much and how often an organisation buys, in order to reduce unnecessary or excess demand.
Where sourcing lowers the price of what you buy, demand management challenges the buying itself: do we need this, in this quantity, at this specification, this often? Techniques include questioning requisitions, standardising specifications, setting consumption policies, aggregating orders and substituting lower-cost alternatives. The savings come from avoiding spend altogether, not just negotiating it down.
Because it changes behaviour, demand management works best alongside clear policy, approval controls and good spend data that shows where consumption is excessive. It sits naturally with cost avoidance and tail-spend control. Aggregating demand across an organisation also strengthens buying power, so managing demand often improves both what is bought and the terms on which it is bought.
Frequently asked questions
- What is demand management?
- Demand management is influencing what, how much and how often an organisation buys, to reduce unnecessary or excess demand and avoid spend rather than only negotiating price.
- What are examples of demand management?
- Questioning requisitions, standardising specifications, setting consumption policies, aggregating orders and substituting lower-cost alternatives all curb unnecessary or excess demand.
Related terms
Demand Aggregation
Demand aggregation is combining purchasing requirements across departments, sites or buyers to increase volume and unlock better pricing.
Read definitionCost Avoidance
Cost avoidance is procurement value that prevents future or potential cost increases, rather than reducing current, budgeted spend.
Read definitionTail Spend
Tail spend is the large number of small, low-value purchases that together make up a modest share of total spend but a big share of transactions and suppliers.
Read definitionDemand Forecasting
Demand forecasting is the practice of estimating future demand for goods so that purchasing, inventory and supply can be planned accordingly.
Read definitionExplore related across the knowledge graph
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