Contract Value Leakage:

At ProcureCon Europe in Cologne, I attended a session on Contract Intelligence that raised a simple but important question:

Are we actually receiving what we negotiated?

One figure particularly caught my attention: 11% contract value loss post-agreement.

It resonated with me because, after more than two decades in Procurement and Supply Chain, I have seen how easily value can be created during negotiation — and gradually lost during execution.

We negotiate prices, KPIs, SLAs, warranties, penalties, rebates, delivery expectations, payment terms and risk mechanisms. Then the contract is signed, the savings are recorded, and attention moves to the next sourcing project.

Where does contract value leak?

Sometimes it starts with a crisis.

Raw material, energy or logistics costs increase and a supplier requests a price adjustment. The increase itself may be perfectly legitimate. But was it calculated against the agreed baseline? Was the contractual indexation mechanism followed? Were only the affected cost components adjusted? And when the market normalizes, does the price come back down?

Without transparency and disciplined follow-up, a temporary increase can quietly become the new baseline.

In other cases, the issue isn’t price at all.

You may have negotiated excellent KPIs, service levels, warranties or penalty clauses. But if the functions responsible for managing the supplier do not continuously monitor them, those protections remain on paper.

Then renewal comes around and you discover that the supplier has been missing a KPI for months.

The contractual protection existed. The value didn’t.

Leakage can also be much less visible: an unclaimed rebate, an outdated rate on an invoice, a freight surcharge that continues longer than expected, an agreed discount that was never correctly implemented, or a warranty cost absorbed by the business when it should have been covered by the supplier.

None may look dramatic individually.

Across a large contract portfolio, they can become significant.

Not every contract carries the same risk.

Spend Volume × Complexity of Financial Terms.

Not every contract requires the same level of monitoring. Contract management should not mean applying the same level of control to every supplier and every agreement. It should also mean understanding where leakage is most likely — and where it could hurt the most. I think that is the part we sometimes underestimate in Procurement.

We put enormous effort into negotiating the agreement. Perhaps we need to put equal discipline into protecting its value afterwards.

The question I left the session with was therefore not:

“Did we negotiate a good contract?”

It was:

“How much of the value we negotiate actually reaches the business — and how much quietly disappears after signature?”