Definition - What does Demand Management mean?
Demand management is a unified method of controlling and tracking business unit requirements and internal purchasing operations. It helps organizations remain engaged in their supplier relationships and related advantages. Organizations use demand management systems to address external spending factors, arrange purchase orders and eradicate waste.
Demand management focuses on the volume of products that are purchased from providers, rather than individual product pricing, in contrast to conventional sourcing initiatives.
Demand management is also known as consumption management or strategic spend management.
Techopedia explains Demand Management
Demand management helps streamline purchasing techniques. When applying demand management, key considerations include:
- Available options for volume discounts
- Order timing's impact on pricing
- Whether or not the best suppliers are being utilized
- Precise attention to described contract processes
Advantages of demand management are as follows:
- Screens the growth and decline of the quantity of transactions between suppliers
- Monitors all related expenditures
- Illustrates the reasoning behind continuing to strengthen supplier relationships - internally and externally