Demand management is a term used in business to describe the process of managing demand to achieve business objectives. It is also used to describe the demand management practices of supply chains, which are used primarily to prioritize demand fulfillment and improve demand visibility.
On this week’s Smart consulting Sourcing podcast, I explain how to manage demand management for consulting services.
Key Takeaway: Implementing demand management for consulting services means building a decision-making process in order to filter the projects you want to launch based on their impact on your business and keep your expenses under control. Demand management gives you a great opportunity to boost the transformation of your organization. Still, it requires some degree of centralization and transparency. The key to success is to build an agile demand management system to adjust the thresholds, the criteria of analysis, and the panel of providers on a regular basis.
Hello and welcome to episode 70 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be your host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
In Last week’s episode, I talked about how to manage the relationships with your consulting suppliers.
And we saw that managing the relationships with consulting suppliers, from a procurement perspective has many advantages. You will need to identify your strategic suppliers and qualify your panel. But then you can start measuring the performance and building improvement plans. And consultants that you work with on a regular basis will better know your business, your industry, your culture, and your organization. And that can be very valuable to you.
But this week, I wanted to focus on the dos and don’t of demand management for consulting services.
First of all, let’s start with the definition of demand management. Demand management is a term used in business to describe the process of managing demand to achieve business objectives. It is also used to describe the demand management practices of supply chains, which are used primarily to prioritize demand fulfillment and improve demand visibility.
Now, demand management for consulting services is slightly different from demand management for other types of services.
Why? Because the demand for consulting services is usually more difficult. And that’s because the demand for consulting services usually depends on the needs of the client, which can change rapidly. Then, you need to develop a process to evaluate and prioritize potential projects.
So in short implementing demand management for consulting services means building a decision-making process in order to filter the projects you want to launch based on their impact on your business and keep your expenses under control.
Here are the things you should do to get started:
Number 1: build a transformation roadmap.
When you launch a transformation, you build a roadmap to identify the different phases of the execution. In other words, you need an IKEA notice to execute your strategy.
And that roadmap should break down the work to be done in workstreams and define the associated skills and objectives. These workstreams should have little interdependencies with each other.
Number 2: prioritize projects.
There is a saying in French: “Qui trop embrasse, mal étreint.” It means that if you try to do too many things at once, you’ll end up doing none of them well.
The same is true for your projects. You need to prioritize them in order to focus your resources on the most important ones.
You will need to define an analysis grid to sort your projects and determine which ones are more important or should be launched first. Impact vs. budget is often a good start, but nothing prevents you from being more creative in your criteria. Try to identify projects that are enablers for other projects with higher priority.
Number 3: leverage make or buy
That’s where the understanding of the skills associated with each project kicks in. You may not have all the resources in-house, and may not be able to mobilize all of them for your projects.
Identify what can and should be done in-house and what should be outsourced for each of the projects.
Also, don’t forget to include a budget estimate in your outline.
Best practice number 4: Define your envelope
In order to control your expenses, you will need to define an envelope for your projects, because you won’t be able to launch all the projects this year. Where do you stand in your transformation? How much money do you want to spend? You will also need to build in a buffer for unexpected expenses.
Try to include projects that will generate immediate savings and fuel additional projects and identify which projects will maximize the impact for the business.
Last but not least, you need to define a budget for strategic projects and a budget left at the managers’ discretion. That way, you keep some flexibility in the system and increase the chances of buy-in for the business lines.
Best practice number 5: Define a flexible decision-making process
The decision-making process for Consulting Projects should be formalized and communicated to the teams. Any demand above a certain threshold has to be addressed to either the strategic or the indirect procurement team for instance.
All projects are assessed using the same methodology. Top projects are launched immediately. Other attractive but nice-to-have projects are placed in a pool and prioritized based on budget feasibility. Small projects (under the threshold) are left to the discretion of the management (resource permitting).
One mistake often made with demand management is defining the threshold solely on the project’s cost. So no matter how vital or strategic a project is, it can go under the radar. And that means that you can find yourself with several projects with contradictory recommendations on the same topic.
Another element, very often underestimated, is the sequencing of the projects and their positioning during the course of the year. Achieving a good balance between transformational projects and projects generating short-term results can help you to do more with less. In other words, some cost savings projects can unlock enough resources to kickstart a digital transformation for instance.
Besides, it is sometimes tricky for Companies to finance major Consulting Projects over the course of a fiscal year. If the costs are on year 1 and the results on year 2, the bottom line is impacted. A simple way to circumvent this unfortunate situation is to start projects after the summer break. With a 60 days payment term, there is a good chance you will start paying in January and the cost vs benefits will end up positive.
Mistake number 4: putting a decision-making process too rigid or a threshold too low. If that’s the case you might see your managers find ways to work around the process or ask for exceptions all the time. But truth is, you cannot really know before you start if your process will be the most efficient.
But if you lead a post-mortem analysis at the end of each project to assess the performance of the Consulting Firm and check if the priority criteria were justified enabling a virtuous cycle, then you will have the keys to adjust the decision-making process and the panel of Consulting Firms.
In conclusion, demand management gives you a great opportunity to boost the transformation of your organization. Still, it requires some degree of centralization and transparency. The key to success is to build an agile demand management system to adjust the thresholds, the criteria of analysis, and the panel of providers on a regular basis.
And that marks this end of our podcast, folks. Next week, we won’t publish a podcast, and instead, we will be enjoying the holiday time with our families. We hope you will enjoy the time off as well.
We will see you all in January for our next podcast. I’ll tell you why all your stakeholders must be involved in choosing the right consulting services.
Till then, stay safe and happy sourcing!
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If you have other questions about how to manage the relationships with consulting suppliers, remember you can contact me directly on Linkedin or by email at helene.laffitte [at] consultingquest.com. Because I am always game for a chat!
If you want more episodes or read the transcript of this podcast, you can find them on consulting.wiki or our Youtube channel.
You can also have a look at our website consultingquest.com to know more about our book, our publications, and our services to improve your consulting sourcing.
Bye and see you next week! Au revoir!