Proactive Demand Management

Planning for future purchasing and supply requirements

Proactive demand management means working with internal customers to ascertain your organisation’s requirements over a future given period, e.g. the next financial year. Then working with them to identify the best sourcing options that have been generated from the strategic sourcing analysis.

Most organisations have two types of requirement; direct and indirect goods and services.

• Direct means requirements that go into the main value stream of the business; for example, in a car manufacturing plant it would be all the items such as sub-assemblies that go into the production of the cars. A retail example would include all the merchandise that is sold on the shop floor.

• Indirect generally refers to the rest of an organisation’s requirements and typically include energy, insurance, IT and so on, all of which enable an organisation to operate effectively.

There are obvious similarities in how direct and indirect spend requirements are procured and the amount spent by some organisations is greater on indirect goods and services as their direct requirements are minimal, e.g. consultancy or legal firms.