The $47 Billion Cost Recovery Play

How Procurement Chiefs Are Clawing Back Crisis-Era Price Increases

Procurement leaders across industries face the same brutal squeeze. Material costs surged during recent crises and never came back down. Suppliers justify inflated prices with outdated indexes. Meanwhile, customers resist pass-throughs and demand budgets stay flat. The result? Margins evaporate while procurement teams firefight instead of strategize.

A new report from Roland Berger, “Rebound: A Playbook for Short-Term Recovery from Inflated Material Costs,” lays out a battle plan for fighting back. It reveals that many crisis-era price increases no longer align with current market conditions for energy, materials, and logistics. More importantly, the report provides a tactical roadmap for the next 90 to 180 days that can deliver 5-10% reductions in material costs across multiple categories. The strategy centers on what the firm calls “Rebound,” the short-term recovery track that funds longer-term resilience efforts.

The Procurement Paradox Nobody Talks About

Procurement organizations sit in the middle of a vise. Tier 1 suppliers face upward pressure from their own supply base. OEMs and customers push back hard on any price increase, demanding extensive data and linking negotiations to new business. The same dynamics play out across value chains: chemicals suppliers squeezed between raw materials and consumer packaged goods companies, component manufacturers caught between their suppliers and industrial OEMs.

The pressure intensifies from an uncomfortable reality. Even as spot markets normalize, supplier tactics continue and claim volumes remain elevated. Companies that handle this challenge with ad-hoc, personality-driven responses watch value leak away quarter after quarter.

Only structured, prioritized handling stops the bleeding. Organizations need to compete by reintroducing competitive pressure, compress by removing unmerited increases and inefficiencies, and pass through by ensuring unavoidable cost increases travel downstream to customers.

Ten Levers That Deliver Results in 90 Days

Roland Berger identifies ten specific actions procurement leaders can execute over three to six months. Three stand out for their innovation and impact.

Rigorous Pass-Through Management

Claims remain high across industries. OEMs and customers strengthened their defenses by demanding extensive documentation, linking negotiations to new business, and enforcing stricter contract terms. Suppliers escalate faster, resorting to line-stop threats or legal action.

The solution requires moving from ad-hoc claims handling to structured systems. Organizations need clear segmentation of claims, standardized validation processes, and empowered decision rights. The objective? Net-zero material cost impact by balancing strong defense on the buy side with systematic pass-through on the sell side.

An effective system includes four components. A prioritization funnel stops teams from wasting time on low-impact requests with weak evidence. An escalation ladder implements pre-agreed steps from commercial teams through senior executives to legal action, mirroring this approach for both customer and supplier negotiations. Negotiation playbooks ensure a standardized “single truth” storyline per relationship. A central cockpit tracks real-time KPIs including defense rates, pass-through percentages, cycle times, and cash effects.

The numbers prove the approach works. Benchmarks show leading companies pass more than 70% of justified cost increases to customers while rejecting 35-60% of inbound supplier claims. One global harness supplier achieved 95% pass-through success to OEMs while rejecting 35% of supplier increases. A leading steering system supplier hit 90% pass-through with 40% rejection rates.

Game Theory-Based Awarding

Traditional haggling leaves money on the table. For categories with credible alternatives, organizations can deploy multi-stage, rules-based negotiations or e-auctions with firm commitments to award based on total cost of ownership.

Mechanism design changes everything. By applying game theory, negotiations become transparent and rules-based. Suppliers get incentivized to bid truthfully. Internal teams commit to awarding based on TCO calculations, not just price. This shifts complex evaluation upfront and eliminates post-decision drift.

The process starts with supplier qualification and scope definition. Teams then calibrate TCO scoring across price, logistics, payment terms, service level agreements, and risk factors. Clear communication with suppliers follows, with the entire auction process recorded for replicability.

These methods work best for categories with credible alternatives, non-monopoly situations, or cases balancing price against qualitative factors like service levels, ESG performance, or risk profiles. Even in oligopolies, multi-stage approaches like sealed-bid shortlists followed by dynamic acceptance rounds create competitive tension. When executed well, these processes generate more than 10% incremental savings over traditional negotiations.

The scaling roadmap matters. Start with external specialist support for flagship strategic awards. Then establish an internal center of excellence. Finally, digitize patterns to expand scope across all awards.

Parametric Should-Costing for Software

Hardware margins keep compressing. Value creation increasingly comes from embedded software and digital content. These components now represent growing shares of overall product cost and critical sources of differentiation. Yet most procurement teams lack structured cost models for software.

Parametric costing provides the answer. This approach translates measurable drivers like input-output counts, software complexity, phase-by-phase development effort, team composition, and compliance requirements into robust should-cost curves. Organizations can develop working models within days.

In most supplier negotiations today, the supplier’s estimate is the only quantified perspective in the room. A transparent, data-backed cost model levels the playing field by reframing conversations from abstract “hours worked” into tangible cost drivers: system architecture choices, testing depth, defect reduction activities.

The model enables constructive trade-off exploration. Teams can evaluate minimum viable product scope versus higher certification levels, or balance accelerated timelines against quality assurance requirements.

Software development costs break down into distinct phases. Requirements analysis and design consume about 15% of total costs. Development including coding and unit tests takes 35-45%. Build, integration, and bug fixing require 15-20%. System validation plus bug fixing adds another 15-20%. Project management rounds out the final 10%.

The levers for impact go beyond coding. Defining minimal viable products focuses effort on core value. Building high-quality modular software architecture enables reuse. Using experienced teams for design and development pays dividends. Best practices like continuous integration reduce defects found in later stages. End-to-end testing strategies account for certification requirements. Offshore outsourcing for specific tasks leverages lower labor costs.

Seven More Tactics for the Arsenal

Beyond the three flagship approaches, seven additional levers complete the Rebound toolkit.

Structured contract rebasing audits adders and surcharges from 2021-2024 including energy costs, expedited freight, and foreign exchange cushions. Teams rebase these to current indexes with downward adjustment clauses, starting with the top 20 suppliers per category and largest 30 contracts by spend.

Rapid supplier rationalization attacks fragmented supplier portfolios. Consolidation increases leverage, reduces administrative complexity, and improves service levels. The key? Maintaining calibrated multi-sourcing on critical items to avoid single-point risk.

AI-assisted tail-spend cleanup detects maverick purchases, small-basket duplications, and specification drift. Switching to catalogs and enforcing procure-to-pay compliance banks quick savings.

Category re-tenders target spend areas that consistently deliver returns: logistics lanes, facility services, MRO, packaging, and indirect categories like media and IT. Transparent incumbency rules and clearly defined switching thresholds capture savings effectively.

Value analysis and value engineering sprints unlock immediate opportunities through practical design and process changes. Material substitution, relaxing gold-plated specifications, re-sequencing testing activities, and bundling service visits all drive impact. These changes tie directly to immediate price adjustments and sometimes retroactive credits.

Short-cycle energy re-contracting treats energy as a financial commodity. Organizations evaluate fixed-price windows, indexed swaps, and near-term power purchase agreements based on consumption profiles and risk appetite. Even with advanced hedging planned for later, capturing favorable pricing windows secures immediate value.

Governance for speed and consistency aligns sales, procurement, and finance through central coordination. Standardized negotiation playbooks and shared decision frameworks drive consistent execution. Clear KPI dashboards track claim defense rates, pass-through percentages, and price-down yield per negotiation wave.

The 90-Day Sprint That Changes Everything

Rapid action defines Rebound success. The exact schedule depends on company size and complexity, but the steps remain constant.

Days 0-10 focus on setup. Create a Rebound project management office with a single scoreboard tracking targeted savings, defense rates, pass-through percentages, cycle times, and cash impact. Define governance including decision rights, escalation paths, and legal review. Build the claim and contract backlog, prioritizing Wave 1 with top suppliers and customer accounts.

Days 10-30 build the playbook and mechanisms. Standardize negotiation approaches for suppliers and customers, incorporating indexes, volumes, service history, alternatives, and TCO scenarios. Select appropriate mechanisms like multi-stage requests for quotation, Dutch or English e-auctions, and sealed bids with acceptance criteria. Commit to award criteria upfront.

Days 30-60 execute Wave 1. Run pass-through and defense campaigns simultaneously, escalating according to predefined ladders. Re-tender priority categories including logistics, MRO, and packaging. Launch parametric should-cost analysis on top engineered buys including embedded software.

Days 60-90 bank value and scale. Record gains with Finance, capturing effective dates for price changes and retroactive credits. Prepare Wave 2 by extending mechanisms and raising minimum standards by category. Establish a game theory competence cell with 2-3 experts and a pass-through control center to sustain performance.

The Operating Model Upgrade

Transformation doesn’t require complete overhaul. Four foundational pillars make changes stick.

Central coordination with local execution keeps a small central unit to design mechanisms, track KPIs, and arbitrate while category teams run deals. Decision before discussion sets internal evaluation and decision rules before engaging suppliers in mechanism-based awards. Light tooling with data discipline starts with spreadsheet templates, TCO models, e-auction modules, and standard playbooks while avoiding scattergun AI approaches. Build capability where it counts by training buyers in mechanism design and pass-through storytelling while adding parametric costing specialists.

Three Risks and How to Mitigate Them

Transformative programs deliver value but carry risks requiring active management.

Supplier backlash arises when processes feel like “auction theater.” Mitigation comes from clearly communicating rules, demonstrating genuine commitment, and inviting only qualified suppliers capable of winning.

Customer resistance to pass-through threatens margin recovery. Linking claims to transparent index logic, documented causality, and service-level outcomes helps. Pre-defined escalation ladders maintain trust and manage disputes effectively.

Internal drift where decisions get revisited post-fact undermines mechanism-based initiatives. Enforcing pre-signed criteria, securing leadership sponsorship, and maintaining strict process adherence prevents this risk.

What Success Looks Like

Success in the next quarter shows up in three dimensions.

Commercially, organizations achieve 5-10% price reductions in targeted categories, normalize surcharges, and implement indexed clauses operating symmetrically for increases and decreases.

Process-wise, success means repeatable mechanisms, playbooks, and dashboards supported by a small center of excellence coaching line teams.

Credibility with Finance and the Board comes from transparent KPIs: defense rates, pass-through percentages, e-auction yield, banked savings, and cash timing.

The Bigger Picture

For many industries, rising material inputs and stagnating outputs erode competitiveness and margins. Procurement must shift from reactive firefighting to strategic foresight. This requires balancing short-term recovery through Rebound with long-term transformation through what Roland Berger calls “Prepare.”

The Rebound agenda functions as the funding flywheel for multi-year transformation. Starting with a single wave, rapidly capturing cash, and systematically scaling mechanisms accelerates value while building momentum for longer-term initiatives.

This approach isn’t radical. Leading organizations succeed not by inventing new levers but by applying established ones deeply, consistently, and at scale. The key output? An application matrix measuring sophistication and implementation status rather than a technology roadmap.

Roland Berger plans to publish an in-depth look at the longer-term Prepare strategy in Q4 2025, covering supplier diversification, dynamic pricing and hedging, and contractual pass-through to customers. Those initiatives take longer to bear fruit but improve organizational agility and resilience against future disruptions.

The Bottom Line

Rising material costs aren’t going away. Supplier tactics will persist even as spot markets normalize. Organizations that continue handling this challenge reactively will watch margins shrink quarter after quarter.

The path forward combines immediate action with strategic vision. The 10 Rebound levers deliver measurable results in 90 to 180 days. Structured pass-through management, game theory-based awarding, and parametric should-costing for software provide particularly strong returns. Supporting tactics around contract rebasing, supplier rationalization, AI-assisted cleanup, category re-tenders, value engineering, energy re-contracting, and governance complete the arsenal.

Companies that execute this playbook typically recover 5-10% in material costs across many categories. More importantly, they free up resources for longer-term resilience building while establishing repeatable processes that sustain performance.

The window for action is now. Each quarter spent in reactive mode means more value leakage, more emergency responses, and more ground lost to competitors who moved early.

How is your organization handling inflated material costs? Are you still firefighting supplier claims reactively, or have you implemented structured mechanisms for cost recovery? What’s been your biggest challenge in clawing back crisis-era price increases? Share your experience in the comments below.