It simply means reducing or optimizing water usage for a purpose. This can be seen as water footprint. Water footprint helps us to determine the water usage in various sectors, manufacturing, products and services rendered. This is demand side management. As an example we use 140 liters of water for a cup of coffee, 184 liters of water for 1 kg of tomato, 1000 liters of water for a liter of milk, and 20,000 liters of water to produce a laptop. These are big numbers for small products. By reducing these values, the industry can be environmentally friendly and reduce dependency on water too much.
Water audit or Life Cycle Assessment is a good tool to implement to ensure the management makes sound policies to reduce water footprint.