You didn't negotiate a price. You negotiated a formula: base rate, index, review cadence, cap. That was three years and two amendments ago. Nobody has checked since whether the invoices still follow it, and the invoice doesn't know the formula exists.
It fails in both directions, but only one direction gets noticed
When the index rises, your supplier applies the increase. Sometimes it lands above the cap. Sometimes it's backdated to a month the review clause doesn't allow. Either way, someone on their side did the arithmetic and sent it.
When the index falls, nothing happens. No one is obliged to volunteer a decrease, and no one does. The formula is symmetric on paper and asymmetric in practice, because only one party has a reason to notice. That asymmetry isn't misconduct. It's just what happens when a clause depends on somebody remembering to look, and only one somebody is paid to.
Nobody can re-read the clause, because the clause isn't in one place
Ask where the governing price terms live and the honest answer is: across an original agreement, two amendments, and a side letter clarifying which of the two amendments still applies. None of it is machine-readable. All of it is ignored by the invoice.
This is the ordinary state of things, not a failure at your company specifically. WorldCC puts contract data at an average of 24 separate systems. Their procurement research attributes one to two percent of lost contract value to unmanaged clauses and overpayment from untracked price adjustments, inside an overall 11 percent gap between what gets signed and what gets realized.
The same blind spot has four other addresses
Once nobody is reconstructing the contract, the leaks aren't limited to the index:
- Tooling and NRE amortization still billed after you passed the agreed unit volume.
- Minimum-order surcharges on orders that met the minimum.
- Freight billed prepaid-and-add when the contract says delivered.
- Scrap and yield allowances charged outside the agreed tolerance.
Each one is arithmetic against a document nobody has open.
The answer isn't in your ERP, which is why a report won't find it
Your ERP knows what you were billed. It doesn't know what you should have been billed, because that number doesn't exist anywhere until someone builds it: take the base rate, apply the correct index value for that month, respect the review cadence, stop at the cap, then layer the amendments in the right order. Only then do you have something to compare the invoice against.
That reconstruction is completely mechanical. Our agents do it every month, for every contract, and surface only the months where the two numbers disagree. And here's the part worth arguing with: a contract review every few years is the wrong cadence for a clause that changes monthly. You're checking annual arithmetic at three-year intervals and calling it governance.
Test one contract this week
You don't need us to find out whether you have this. Take your largest indexed supply agreement. Rebuild the last twelve months of prices by hand, from the original terms plus every amendment, using the published index values for each period. Compare month by month to what you actually paid. Two hours, one spreadsheet.
The instructive bit isn't usually the size of the variance. It's how long it takes you to establish which document currently governs. If that part takes longer than the arithmetic, you've found the real problem, and it isn't your supplier.
The formula was negotiated carefully. It just stopped being read.