Demand reduction
What would it be like to not have to buy anything? In the 21st century, certain groups of indirect material can be eliminated. For example, a paperless office is now feasible since all work can be performed with technologies that enable our decision making, operating processes, documentation, and communications. And in the face of rising energy prices, it is also conceivable to have a company where no one travels because a virtual conference room makes it possible to meet with colleagues and customers at the other end of the world in a way that feels almost true to life.
These are only a couple of the ideas behind the concept of reducing demand. Going entirely paperless and eliminating all travel may not be likely, but encouraging the use of new methods, technologies, and policies to reduce demand is a valuable way to manage costs. Appropriate strategies can be found in many areas. By adopting a systematic and well-communicated procedure, a company can, for example, lower its energy bill at no detriment whatsoever to either its personnel or its processes by switching computers off at night instead of leaving them on standby or by turning the heat down or the air conditioning up by one degree. In addition, simple systems are available to monitor office supplies such as paper and pens, which employees tend to view as items they can appropriate for their own private use. These systems do not normally need any follow-up. The fact that the company knows what supplies an individual is removing increases discipline.
The core elements of demand reduction are as follows:
Establish cost awareness and corresponding standards
Improve and streamline approval processes
Make greater use of lower-cost substitutions
Reduce the frequency of use
Limit the scope of requirements
Reduce purchased quantities
Eliminate demand for certain products
These elements are most effective when they are all used at the same time, but even applying a few will result in savings. Because a savings mentality does not match the corporate culture at some companies, consistent change management—accompanied by an explanation of the broader context, the reasons why the measures are meaningful, and what alternatives exist—is a success factor well worth considering.