Procurement Intelligence Unit

If any trend provided evidence of procurement's changing role, then it's demand management - defined as "an approach aimed at influencing the type and quantity of bought-in goods and services consumed by an organisation, primarily in a bid to reduce costs and/or improve environmental performance." In the past procurement would, with some justification, have argued that its role wasn't to challenge a requisition but to action it.

That, it seems, is no longer the case. A demand management study by the Procurement Intelligence Unit, published today, found that procurement was increasingly being asked not to ask when an order was needed, but rather whether it was needed at all.

Of course, given the seismic shifts delivered by the credit crunch, there are probably many of you out there in the wider business world asking why procurement wasn't doing this before. But while some organisations undoubtedly were, others were reluctant to challenge procurement's traditional role – until now.

The PIU study examines the demand management strategies put in place by a number of the corporate world's highest-profile companies and reveals how these firms are tackling an issue that has been brought to the fore by the economic turmoil triggered by the collapse and subsequent bail-out of some of the world's most iconic financial institutions.

The study's findings make for interesting reading and appear to provide a window into procurement's future, a future that sees the function taking a far more hands-on role and using the full extent of its strategic capabilities to bring its influence to bear.

Key to any successful demand management strategy is compliance and while some firms are taking a top down approach, issuing edicts relating to categories of spend such as travel and recruitment, others are relying on procurement to put forward a business case that illustrates that, in some instances, less equals more.

Changing attitudes and behaviours is always an imprecise science, but by working hand-in-hand with budget holders and internal stakeholders, and communicating the exact aims of a company's demand management strategy, procurement can ensure that its voice is heard and that, crucially, the right questions are asked before any order is requisitioned.

The profile of procurement has risen hugely over the past two years, and now represents a perfect opportunity for that profile to be put to good use. If your procurement organisation already has a credible reputation within the business then any demand management discussions are likely to be met by far more receptive ears - where credibility is an issue, procurement may still struggle to make an impact.

So how credible is your procurement organisation? And does it have the power to influence decision makers and budget holders? You could be about to find out. 

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If you would like a free copy of the report's Executive Summary, please click here. 

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