Six clauses every procurement team should review during CPI volatility

Crude oil. Freight. Raw materials. Prices are rising across the board, and once again, CPI volatility is reshaping procurement priorities. But it's not just your costs that are changing. Global disruptions trigger terms buried deep in supplier contracts—escalators, surcharges, volume penalties—mechanisms written for “just in case.” Well, that moment is here. So what can procurement leaders do right now? You don’t need a new supplier or a six-month strategy reset. Start with the contracts you already have.

Inside them are both risks and safeguards—terms that could quietly erode your margins or give you leverage to act. This quick-reference checklist highlights six clauses every procurement team should review to stay ahead of CPI-driven risk.

CPI volatility contract clause checklist

1. Price Adjustment Clauses (CPI, PPI, Index-Based Escalators)

What to Look For:

• Mentions of CPI, PPI, or commodity indices (e.g., LME, CRU)
• Escalation formulas or fixed % annual increases
• Frequency and method of review

Why It Matters:
Vague or one-sided language may allow vendors to push pricing beyond reasonable thresholds.

Action:
✅ Ensure indices and review timelines are clearly defined
✅ Check for caps, floors, or required proof for adjustments

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2. Force Majeure / Material Adverse Change (MAC)

What to Look For:

• Inclusion of “economic hardship” or inflation-related events
• Clauses that excuse performance or allow price renegotiation

Why It Matters:
Suppliers may use global disruptions to justify non-performance or cost hikes.

Action:
✅ Clarify whether inflation qualifies as a triggering event
✅ Ensure burden of proof is on the supplier

3. Volume Commitment & Tiered Pricing

What to Look For:

• Volume thresholds tied to specific pricing
• Penalties for underperformance

Why It Matters:
Inflation may affect your ability to meet volume targets, pushing you into higher pricing tiers or penalties.

Action:
✅ Assess if volume targets remain feasible
✅ Explore renegotiation options if cost assumptions have changed

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4. Auto-Renewal Clauses

What to Look For:

• Contracts set to renew without review
• Pricing terms that persist into renewals

Why It Matters:
You may be locked into outdated pricing while market conditions shift rapidly.

Action:
✅ Identify contracts up for renewal in the next 6–12 months
✅ Prioritize high-spend agreements for early renegotiation

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5. Termination & Renegotiation Triggers

What to Look For:

• Early exit rights tied to cost changes or CPI thresholds
• Mutual renegotiation clauses under changed conditions

Why It Matters:
Hidden levers in your favor may allow you to reset terms before cost impacts escalate.

Action:
✅ Flag any clauses that offer exit or adjustment windows
✅ Use as leverage in upcoming supplier conversations

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6. Payment Terms & Surcharges

What to Look For:

• Freight surcharges, currency adjustments, inflation pass-throughs
• Changes to payment cycles tied to cost changes

Why It Matters:
These can lead to unexpected cost creep, especially in long-term supplier relationships.

Action:
✅ Audit for new surcharges added post-signature
✅ Reconfirm agreed payment terms with high-risk suppliers

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Why This Matters Now

CPI volatility isn’t slowing down, and waiting for finance to flag overspend after the fact is a costly mistake.

The most effective procurement teams are acting upstream. They’re proactively scanning contracts, flagging exposure, and renegotiating based on what’s already in writing.

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