Does anyone out there have any tips for landing the message of demand management on one’s teenage offspring? Someone? Anyone? Please…

But with energy prices having just risen by 50%+ here in the UK and inflation being forecast to grow from the current 5.5%, demand management whether at home or at work, is an important tool in one’s cost reduction arsenal and is a practical way of mitigating budget-busting inflation. This is where Procurement can bring serious value to an organisation.

The beauty and simplicity of demand management is that it is something that YOU can control.

Aside from reducing your demand (for example fitting motion sensors to office lighting, moving to virtual instead of face-to-face supplier meetings and eliminating heat-loss from production processes etc) there are a host of options around managing the specifications of your bought-in goods and services.

Conducting a value analysis / value engineering assessment of your specifications is a hugely powerful way of identifying and removing those non-essential features (and costs) that don’t provide value to your customer and are applicable to services as well as physical goods. This exercise can be undertaken on individual products / services, those whose margin has been most significantly eroded, or your entire product portfolio and is most effective when all the relevant functions are involved.

If your business has a less than rigorous approach to new product introduction, products may get to market based on organic design iterations, and you may be surprised at how the original specification has drifted to the extent that the cost / value equation has been distorted, with additional features being added at each iteration, none of which may add any real value to the customer.

The scope of value analysis/engineering is huge. It can highlight opportunities to lower the cost of your specification from substituting materials, commonising components and re-thinking the design to make the product easier to manufacture. Thinking more broadly, you can also consider optimising or “right-sizing” your service level to your customers.

Meanwhile, I’m up for the challenge of continuing to bang the demand management drum at home. I will be following compliance closely and hope that I don’t have to resort to the sanctions of super-gluing the heating thermostat or, take a deep breath, making deductions from weekly allowances! If all else fails, I could follow the path of least resistance and wait until the teenagers leave home…

If you think I could help your business with cost management, please schedule a free call with me HERE.

The best days lie ahead

Martin