The crocodile effect
The saving is agreed on the day the contract is signed. From that day on, it starts to leak. The price you tendered and the price you actually pay drift apart, year by year — and the gap between them looks like a crocodile's open jaws.
Illustrative. The tendered price stays on paper; the paid price drifts through three mechanisms.
Why the jaws open
A tender is a moment. A contract is a period. Most organisations put their effort into the moment and very little into the period, and the market knows it. Three mechanisms do most of the damage.
Index adjustments nobody negotiates. Almost every agreement carries a clause allowing price revision — a raw-material index, a currency basket, "general cost development". The supplier proposes; the buyer, busy with other things, accepts. A 4 % adjustment in year one and 5 % in year two does not feel like a renegotiation. Over a three-year term it has quietly returned a large share of what the tender won. Some adjustments are legitimate. Few are checked against the actual index, and fewer still are negotiated down when the index falls.
Buying outside the agreement. The tendered price only applies to orders placed on the agreement. In most companies a substantial share of purchases never gets there — the requisitioner finds the supplier's web shop easier, a local branch has its own habits, a project buys what it needs where it stands. Every one of those orders is placed at list price, and none of them show up in the savings report, because the savings report measures the agreement, not the spend.
Articles that were never in the tender. Product ranges drift. New articles appear, specifications change, a replacement item takes over from the one that was priced. Each new article arrives without a tendered price and is bought at whatever the supplier quotes. After two years, a meaningful part of the volume under a "tendered" agreement has in fact never been competed.
Why nobody sees it
The effect is invisible for a structural reason: the people who negotiated the agreement measured their result on signing day, and the people who pay the invoices never saw the tender. Savings are reported once, as the difference between old and new price lists. The paid price is reported never, because it would require matching every invoice line to the agreed price at article level — work that no one owns and no standard ERP report delivers.
So the agreement is "in place", the savings are "booked", and the actual price paid rises a few percent a year in a place no report looks. Leadership believes the category is handled. By the time the agreement comes up for renewal, the baseline has quietly moved — and the next tender is celebrated for recovering ground that was never meant to be lost.
Keeping the jaws shut
The remedy is not a better negotiation. It is a different relationship between the contract and the transactions that follow it. Three conditions close the gap.
Every order on the agreement. The negotiated price only matters if the organisation actually buys at it. That requires the agreement to be the easiest way to order — one place, every employee, the agreed article at the agreed price, nothing to look up. Contract loyalty is not a compliance campaign; it is a consequence of the ordering flow.
Every invoice line against the agreed price. When orders, goods receipts and invoices run through one flow, the comparison between tendered and paid price is not a project — it is a by-product. Index adjustments become visible the month they happen. New articles without a price are flagged, not absorbed.
Someone whose job is the period, not the moment. Price adjustments are reviewed against the actual index, with the volume of the whole bloc behind the conversation. Articles that drift in are priced and added. Categories are re-tendered on a rhythm, not when someone remembers.
The question to ask
Not "did we tender this category?" but "what did we pay for it last quarter, per article, against what we agreed?" Most companies cannot answer. Those that can have closed the crocodile's jaws — and they are the ones for whom a tender result is still worth, three years later, what it was worth on signing day.