Demand Management can be defined as:

“the alignment of a business’ consumption with its business requirements”

It is applicable to all goods and services where internal demand and consumption can be influenced to reduce costs.

Demand Management is a key aspect of effectively aligning external resources to meet requirements. When Demand Management is considered, it is often seen as a simple matter of stopping people spending money. However there are ways to look at Demand Management without completely preventing spend.  These can provide notable savings and have a less drastic impact on the business.

Demand often results from internal practices and processes rather than from addressing a real need of the Organisation. The approach is about addressing change ‘in’ an Organisation. Therefore the starting point will be the culture, policy and behaviours of your Organisation.

Your Organisation can also participate by sharing best practice, benchmarking behaviour, creating policy guidance and undertaking peer review.

Demand Management can come at different points in the procurement process. For example, during the initial purchase point e.g. that software licences are purchased for the correct number of users at a single point in time. Demand Management can also occur in situations where costs are recurring as an ongoing activity such as in a category where spend is ongoing and regular (e.g stationery or postal services).

Demand Management, including behaviour change, represents a significant and untapped opportunity.

There are 3 main principles of demand management:

1. Each business unit should have exactly what it needs in order to deliver its business objectives;

2. Any resources consumed above this level represents a waste to the Organisation;

3. There may be many and very different ways of meeting a user's needs. Each way represents a different level of resource to achieve the same outcome.

The three strategies listed below could be independently or jointly applied.

With Demand Management you should consider:

• a reduction in the demand for goods
• if there is an option to use recycled goods to avoid buying new? Could recycled goods be supplied under an existing contract?;
• is there an opportunity to consolidate orders/ services to reduce costs?;
• improving your purchase to pay system to reduce transactional costs

There are a number of benefits to an effective Demand Management strategy. Many benefits are driven by:

• a change in the Organisation culture and outlook; and
• how goods and services are specified and requested.

When robustly implemented across all goods and services Demand Management drives public sector Organisations’ efficiency and effectiveness. The Organisation uses all  the external resources it procures to meet operational requirements.

The Demand Management process challenges the norms, standards, customs and practices of an Organisation. This is done to a degree not usually found in other processes.

Using Demand Management to prepare Strategic Sourcing, you can establish that the Organisation's requirements are sourced to a very specific level. This can avoid the development of a sourcing strategy for over-specified operational requirements.

Used routinely Demand Management can ensure the highest possible resource levels are directed at front line services. This is especially important in the public sector.

Consideration as to how the demand will be forecasted and fluctuations managed should be initially undertaken at the ‘Shaping the Requirement’ stage. This should be subsequently monitored and managed throughout the lifetime of the contract. Failure to do so could result in:

• excess material purchases and subsequent material write off/ waste disposal costs;
• inadequate material availability resulting in additional recovery costs and/ or service breakdown;
• excess, inadequate or inappropriately positioned resource;
• reputational damage as a result of service breakdown; and
• detrimental impact on the end user. 

Effective Demand Management forecasts also give the supply base the opportunity to manage their costs. This can be achieved by positioning resource and materials in line with demand.

Demand forecasting should be based on considerations such as:

• historical consumption
• supplier lead times
• market forces
• service criticality
• key stakeholder input
• purchase cost; and
• information from other buying organisations, trade bodies and business support organisations e.g. Federation of Small Businesses and Chambers of Commerce, etc.

Where practical, you should look to reduce future demand and costs by using strategies such as:

• considering if there is an option to fully or partially transition to recycled goods, instead of buying new;
• reducing transactional cost by improving the purchase to pay system;
• innovating supplier(s) to reduce mutual cost which should have been previously written into the contract / agreement with the supplier.

For any supplier to operate effectively, it must understand and manage its demand. They can use this knowledge to tailor its resources and processes proportionately.  This will ensure they deliver their service in the most efficient and cost effective manner. By understanding historical demand, an organisation can work with its suppliers to realise mutual cost and efficiency gains.

The most effective way to forecast future demand is to consider a combination of:

• historical demand;
• market forces;
• the Organisation’s business plan/strategic direction.

Forecasting is not an exact science and will never be 100% accurate. However these elements should provide sufficient information to allow the Organisation to develop forecasts. These forecasts should be accurate enough to accommodate demand fluctuations during the lifetime of the contract(s) with minimal cost.

The Organisation should ensure the supplier stays in regular contact with all key stakeholders (including other suppliers).  This will ensure that all parties are aware of the supply/demand position, especially during periods of fluctuation.

Contract management activities must include sufficient checks to ensure suppliers are meeting their Data Protection Legislation obligations as the Processor. These checks  may include audits undertaken by the controller or a third party auditor.

If obligations are not being met, organisations should take urgent remedial action with the supplier to address issues and risks.

More detailed information can be found in Additional Resources.

Weak interactions between an Organisation’s  finance, commercial, and contract management functions provide an opportunity for fraud and overbilling. This could be as a result of error and inefficiency, or by deliberate intent.  

Without basic scrutiny of payments and performance an Organisation’s departments may rely on the supplier to interpret the contract correctly which may result in errors . Better scrutiny of payments and improved contract knowledge within your Organisation will identify any possible overbilling and fraudulent activities Organisations can then take appropriate action.

Guidance on fraud can be found in the Additional Resources section of the Procurement Journey

A key element of Contract and Supplier Management is the proactive identification and management of risk. Guidance can be accessed on the Risk Management page.

Blacklisting refers to the practice of systematically denying individuals employment who would otherwise be able to be employed.  This can be on the basis of information, accurate or not, held in some type of database.

The Scottish Government regards blacklisting or the compiling of a blacklist as unacceptable. 

Effective contract management ensures the practice of blacklisting does not occur in public contracts.

The Employment Relations Act 1999 (Blacklists) Regulations 2010 provide rights for individuals if blacklisting results in refusal of employment, detriment, dismissal or redundancy.  

Any bidder which has been found to have breached, or has admitted breaching, these Regulations must be excluded from the procurement process for a period of three years. This is unless it can demonstrate to you that it has taken appropriate remedial steps.  The Scottish Government regards blacklisting or the compiling of a blacklist as totally unacceptable. Blacklisting refers to the practice of systematically denying individuals employment, who would otherwise be able to be employed, on the basis of information, accurate or not, held in some type of database.

Suggested Responsibilities/Considerations

• understanding requirement specification/contract scope and deliverables
• confirm roles and responsibilities
• review contract documents, KPIs and reporting requirements
• involvement of procurement
• risk assessment
• financial checks

Why it is Important

• it’s the bridge between procurement and delivery
• ensures both buyer and supplier understand what’s been agreed, what needs to happen next, and how performance will be measured
• prevents confusion or misalignment once the contract goes live
• makes sure the supplier is ready to deliver as promised from day one
• confirms pricing structures, invoicing processes, and performance measures are clearly understood
• avoids costly misunderstandings, disputes, or delays later in the contract
• reduces operational disruption when switching from an outgoing supplier or starting a new service

Suggested Responsibilities/Considerations

• ensuring documentation is correct and accessible (contract, terms, annexes)
• contract handover—who does what – complete a contract handover document (a template can be found at the bottom of the page for you to use)
• ensure contract documentation is accessible.
• complete handover checklist (a checklist document can be found at the bottom of the page for you to use)
• once the handover is complete, responsibility for the day-to-day performance management sits with the contract manager - with the procurement team available for advice and escalation (if required)

Why it is Important

• it’s the bridge between procurement and delivery
• ensures both buyer and supplier understand what’s been agreed, what needs to happen next, and how performance will be measured
• prevents confusion or misalignment once the contract goes live
• makes sure the supplier is ready to deliver as promised from day one
• confirms pricing structures, invoicing processes, and performance measures are clearly understood
• avoids costly misunderstandings, disputes, or delays later in the contract
• reduces operational disruption when switching from an outgoing supplier or starting a new service

A CSM Handover document and a CSM Handover Checklist are available for you to use, these can be found at the bottom of this page.

Suggested Responsibilities/Considerations

• for low-risk contracts, monitoring may simply be occasional check-ins and good record-keeping.  Before continuing, refer to the contract handover from the Procurement Team to ascertain the level of contract management that was agreed with the supplier.
• schedule regular performance meetings (agree frequency of reporting – e.g. monthly, quarterly etc.)
• what performance data should be tracked (cost, time, quality, supplier risk etc).
• track KPIs, SLAs, and delivery milestones.
• record issues and actions taken.
• use the Balanced Scorecard, if applicable (this can be found at the bottom of this page)
• maintain accurate records for audit (A Compliance and Audit Checklist document is available at the bottom of the page if it is relevant and proportionate for your contract)
• consider how to capture benefits / savings / sustainable outcomes achieved

Why it is Important

• ensures continual oversight
• allows identification of trends or issues early
• confirms that the supplier is delivering the goods, works, or services as specified in the contract — on time, to the right quality, and within budget
• highlights early if there are any deviations, delays, or performance shortfalls
• keeps both parties accountable to the agreed Key Performance Indicators (KPIs) or Service Level Agreements (SLAs).
• without monitoring, you’re managing on assumptions — not evidence
• regular reports provide clear data on performance, costs, and outcomes
• enables managers to make informed decisions about renewals, extensions, variations, or corrective actions
• creates an auditable trail showing how performance was managed and value was achieved
• confirms that payments are linked to actual performance and outcomes
• encourages suppliers to focus on continuous improvement and efficiency
• regular reporting and performance reviews create open communication channels.
• encourages collaboration, transparency, and shared problem-solving
• builds trust and helps maintain a positive working relationship — even when issues arise
• demonstrates that the organisation is managing contracts responsibly, in line with policy and statutory requirements (e.g. procurement regulations, public spending controls)
• provides assurance to senior management  that contracts are being managed effectively
• enables tracking of trends over time — spotting patterns in performance data and identifying opportunities for improvement
• encourages innovation and better value through lessons learned and supplier feedback

 The following templates are available for you to use, these can be found at the bottom of this page:

• A Supplier Performance Review Template,  
• Meeting Agenda and Minutes Template
• Balanced Scorecard

Please note that the proportionate level CSM required should have been agreed between the Procurement Team and the Supplier and should set out in the Contract Handover documentation.  If in doubt, please contact your Procurement Team for clarification.

Suggested Responsibilities/Considerations

• when permitted,
• process to follow - all changes must follow formal change control procedures
• procurement must be involved in significant amendments

A Contract Variation Request Form can be found at the bottom of this page

Why it is Important

• A variation, extension, or amendment changes the terms of a legally binding agreement
• proper management ensures changes are authorised, documented, and compliant with procurement and governance rules
• prevents disputes or claims later about what was or wasn’t agreed
• without a formal process, even small changes can invalidate parts of the contract or create ambiguity
• public sector organisations must show that all contract changes are fair, transparent, and traceable
• clear records of variations support audit, governance, and reporting requirements.
• demonstrates accountability for decision-making and use of public funds
• A structured variation process creates documented evidence of:
• what changed and why
• who approved it;
• when it was implemented
• the impact on cost, scope, and delivery.
• this is vital for governance, risk management, and lessons learned.

 A Contract Variation Request Form is available for you to use and can be found at the bottom of this page, if required. 

Suggested Responsibilities/Considerations

• escalate issues early to procurement or legal
• follow dispute resolution procedures set out in the contract

Why it is Important

• ensures staff know what to do when things go wrong
• avoids delay or avoidance of necessary action
• every contract sets out obligations, rights, and remedies for both parties
• having a clear dispute resolution and termination process ensures the organisation can enforce those rights lawfully if things go wrong
• prevents informal, inconsistent, or unlawful actions that could lead to legal claims, damages, or reputational harm
• proper procedures protect both the buyer and supplier — ensuring fairness and due process
• disputes or terminations are moments of high risk

An Exit Strategy Document is available for you to use, these can be found at the bottom of this page.

Suggested Responsibilities/Considerations

• conduct post-contract review
• capture lessons learned
• conduct lessons-learned workshops after contract closure, if applicable
• share good practice and case studies across teams
• the contract Exit Strategy should have been agreed during the Tender Stage by the Procurement Team

Why it is Important

• helps the organisation learn
• improves future contract management
• helps embed good practice
• ensures that both the supplier and the organisation have completed all deliverables, payments, and reporting

A conflict of interest arises when personal, financial, or other interests could compromise (or appear to compromise) the impartial performance of duties in managing or overseeing a contract.

In contract management, this can happen at any stage — from tendering and evaluation to awarding, monitoring, or renewing contracts. Listed below are some of the typed of conflict that can occur:

1. Actual Conflict

A real and existing conflict between personal interest and professional duty.
 Example: A contract manager awards a contract to a company owned by their spouse.

2. Perceived (or Apparent) Conflict

When it looks like someone’s personal interests could influence their decisions — even if they don’t.
 Example: A procurement officer socialises regularly with a bidder, creating suspicion of bias.

3. Potential Conflict

A situation where personal interests could conflict with official duties in the future.
 Example: An employee involved in a tender process later plans to seek employment with one of the bidding companies

 Examples of “Conflict of Interest” in Contract Management 

Consequences of Conflict of Interest

• unfair or biased contract awards

• legal or regulatory penalties

• damage to organisational reputation

• financial losses due to poor value for money

• internal disciplinary action or termination

Prevention and Management Strategies

Disclosure - Require all employees, evaluators, and consultants to declare any personal or financial interests.

Segregation of Duties - Ensure that no single person controls multiple stages of the contract process.

Conflict of Interest Policy - Implement clear rules and guidance on identifying, declaring, and managing conflicts.

Independent Oversight - Use committees or auditors to review high-value or high-risk contracts.

Training and Awareness - Regular training on ethics, procurement law, and conflict management.

Documentation - Keep detailed records of decisions, declarations, and mitigation measures.

Under Maintenance

• Scottish Public Procurement Policy Handbook — applies across wider Scottish public sector.
• Procurement Reform (Scotland) Act 2014 and associated Regulations.
• Scottish Government’s Procurement Strategy (2025-28) which emphasises supplier engagement, contract management, capability building.  

Contract and supplier management is the day-to-day management of a contract after it has been awarded. It focuses on:

• Making sure goods or services are delivered as agreed
• Managing the relationship with the supplier
• Monitoring performance, costs, and risks
• Ensuring public money is spent properly

Non-procurement staff are often:

• The main users of the service
• Closest to delivery and performance issues
• Best placed to spot risks or value-for-money concerns

Your role helps ensure contracts deliver what was paid for.

You are responsible for:

• Using the contract correctly
• Monitoring delivery and performance
• Raising and recording issues
• Managing routine supplier contact
• Ensure goods or services are delivered as agreed
• Check invoices before approval
• You are not expected to be a procurement expert

You are not responsible for:

• Running procurement exercises
• Negotiating new contract terms
• Agreeing price changes or extensions without approval

It helps ensure:

• Proper use of public funds
• High-quality services
• Legal and regulatory compliance
• Transparency and public trust

Non-procurement staff play a key role in achieving these outcomes.

You should have access to:

• The signed contract or call-off agreement
• Specification / statement of requirements
• Pricing and payment terms
• KPIs or service levels

These are usually stored in a contract register, contract handover document, shared drive or contract management system.

You should:

• Communicate professionally and fairly
• Keep discussions focused on contract delivery
• Keep a written record of key conversations and decisions

Avoid informal agreements or commitments outside the contract.

You should:

1. Check what the contract says
2. Raise the issue with the supplier
3. Agree corrective actions and timescales
4. Record the issue and actions taken
5. Escalate if performance does not improve

Do not ignore issues or accept reduced service without approval from your Procurement Team

You should:

1. Raise the issue with the supplier
2. Agree a simple fix or correction
3. Keep a brief record (e.g. email)

If issues repeat or escalate, involve your manager or Procurement.

No — not informally.
Any change to scope, cost, duration, or deliverables must:

• Follow a formal variation process
• Be assessed for value for money and compliance
• Be approved by the appropriate authority

Always involve Procurement if a change is proposed.

You should contact Procurement if:

• A supplier requests changes
• Performance issues persist
• You are unsure what the contract allows
• A contract is nearing expiry
• There are compliance or value-for-money concerns

A contract variation is a formal, approved change to the contract.
It ensures:

• Changes are lawful and transparent
• Risks are assessed
• Audit requirements are met

Verbal or informal changes are not permitted.

Yes, if you are authorised and:

• The invoice matches the contract
• The service or goods have been delivered
• Any variations have been formally approved

If something looks incorrect, you should query it before payment.

You should keep records of:

• Key supplier communications
• Performance reports or reviews
• Issues, risks, and actions
• Variations, extensions, or approvals

Good records support audit, transparency, and accountability.

A conflict of interest arises when personal interests could influence (or appear to influence) decisions.

Examples include:

• Personal relationships with supplier staff
• Gifts or hospitality
• Financial interests

All conflicts must be declared in line with your organisation’s policy.

No.

Contracts can only be extended if:

• An extension option exists in the contract
• The extension is compliant with procurement regulations
• The correct approvals are obtained

Always plan ahead and involve Procurement early.

Yes.

While monitoring may be lighter, you must still:

• Check delivery
• Confirm invoices are correct
• Record issues

Public sector accountability applies to all contracts.

A low-value / low-risk contract is one where:

• The financial value is relatively small
• The service or goods are routine or standard
• There is limited impact if something goes wrong

Even so, public money and public sector rules still apply.