Procurement shifts focus to proactive management to stop contract value leakage in 2026

As procurement enters a transformative phase, leaders are adopting new tools and operating models to prevent annual contract value leakage of up to 9%, turning contracts into active financial assets through accountability, continuous assurance, and advanced technology.

Procurement is entering a pivotal phase where efficiency and accountability define success, as Chief Procurement Officers (CPOs) look to reclaim contract value that has routinely slipped through the crack...

s. Following a period marked by inflationary pressures and supply chain turbulence, 2026 is poised to be the year when procurement leadership shifts from reactive savings to proactive management of contract performance, halting a persistent leakage that drains an estimated 9% of contract value annually.

This leakage doesn’t arise from negotiation failures at the outset but from myriad post-signature issues such as rogue spending outside contracts, missed rebates, unclaimed discounts, and unmanaged renewals. The challenge is not new, but what is evolving rapidly are the tools and operating models capable of stemming this financial haemorrhage.

Central to the solution is assigning clear ownership for contract value realisation. World Commerce & Contracting’s research highlights that organisations who manage contracts as financial instruments, treating them like assets with explicit accountability, outperform peers by about 5.4% of contract value. This means moving beyond fragmented responsibility scattered across sourcing, finance, and business units to a model where a dedicated role or function ensures that negotiated savings are actually realised. Such stewardship involves tracking adherence to price terms, fulfilling contractual obligations, and actively pursuing rebates or credits.

Controlling demand at the source is another critical mechanism. Maverick spend, often the seedbed of leakage, emerges when purchases bypass approved channels. Procurement leaders are increasingly establishing policy-led “front doors” for sourcing requests, leveraging guided buying that enforces category rules, budget limits, and supplier policies upfront. This approach aligns with findings from Hackett’s 2025 Key Issues study, which spotlights intake orchestration and catalog management as emerging focus areas to regulate spend before it occurs.

Equally transformative is the shift to continuous commercial assurance. Traditional annual procurement audits, which often come too late to recover lost value, are giving way to regular, even monthly, reviews of pricing, service levels, volume tiers, and rebates. McKinsey’s insights reinforce this approach, showing that continuous reconciliation of contract terms can uncover roughly 4% of spend for recovery negotiations. This preventative stance, sustained by repeated verification, differentiates best-in-class performers from average ones.

Supplier management practices are converging performance and risk considerations into unified, analytics-driven review cycles. Sirion’s analysis underscores the efficacy of such integrated rhythms in recovering up to 9% of contract value by combining supplier performance metrics with financial, environmental, social, and governance (ESG) criteria alongside market risk indicators. This balanced approach, described by BCG as embracing the “cost of resilience” mindset, enables organisations to foster trust with strategic suppliers while safeguarding margins amid ongoing disruptions.

Contract renewals, often overlooked as routine administrative tasks, are being reimagined as value creation opportunities. Leading procurement teams initiate renewal negotiations well in advance, typically 120 days before expiry, armed with comprehensive data on usage, market benchmarks, and service levels. This proactive posture helps prevent the creeping complacency of evergreen contracts which can perpetuate overpayments and expose the business to unchecked risks.

Rebate entitlement management also demands elevated focus. Despite their potential to enhance savings, rebate programmes frequently fail to deliver due to fragmented tracking, complex tier structures, and manual reconciliation processes. With over half of organisations still relying on spreadsheets, the risk of leakage remains high. Procurement functions are moving toward dedicated rebate management services featuring centralised ownership, frequent reconciliations, and transparent dashboards showing earned, booked, and collected rebates, making rebate income a tangible financial asset.

While technology plays an essential enabler role, the decisive factor remains the rhythm of operations and people engagement. Hackett’s data reveals a 9% efficiency gap driven by rising workloads and flat budgets, underscoring that sophisticated software alone can’t drive transformation. Deloitte’s 2025 Global CPO Survey finds that blending technology adoption with talent development delivers superior outcomes. Successful procurement functions embed continuous training, clear communication, and performance metrics into everyday routines, creating disciplined operating cadences that institutionalise accountability and stem leakage.

Innovations also abound in automation and AI-driven contract management. KPMG’s Value Search solution, for instance, employs AI to identify unverified charges and billing errors, avoiding overspend and ensuring savings materialise as intended. Similarly, Celonis offers real-time tools to flag purchase requisitions missing contract references, optimising adherence to negotiated agreements and preventing leakage at the requisition stage.

In manufacturing and other sectors, contract intelligence platforms deploy AI to maintain regular pricing reviews, monitor obligations, and detect anomalies that could result in revenue leakage. These digital mechanisms provide unprecedented visibility and the ability to act promptly, integrating contract management into broader financial and operational frameworks.

In summary, contract value leakage, a stealthy erosion of margins long after deals are signed, is no longer an inevitable cost of doing business. The year ahead signals a major evolution in procurement leadership, combining accountability, process discipline, continuous assurance, integrated supplier oversight, and intelligent technology. Together, these advances promise to reclaim billions in lost value, turning contracts from static documents into active financial assets, and transforming procurement from a back-office function into a strategic growth driver.

Source: Noah Wire Services