10 external costs companies often fail to reassess

This is not about earlier contracts having been poor.

An agreement may have been entirely right when it was signed. The price may have been competitive, the supplier well chosen and the scope well suited to the business.

The need to reassess arises when something around the contract changes: volumes, number of sites, ways of working, usage, technology or the supplier market. An arrangement that was well judged at one point can therefore become wrong without anyone having made a bad decision.

Below are ten external cost categories where the interval between reassessments tends to be longest. For each one, what typically changes over time and what management can concretely check.

10 cost categories that are easy to leave without regular reassessment

1. Transport and freight

Freight cost is rarely driven by price alone. It is shaped by zones, weight brackets, load utilisation, lead-time requirements, surcharges and how often deliveries are made.

When customer structure, stock locations or order sizes change, an arrangement built for a different flow can become more expensive than necessary.

Check what is actually invoiced beyond the base rate, how many deliveries genuinely require the fastest service level, and whether volume is consolidated or spread across several agreements.

2. Waste and recycling

Waste handling is usually charged per container, collection or weight — combined with surcharges and treatment fees that change over time.

Collection frequency and container size are typically set once and then carried forward, even after the business has moved, grown or changed its sorting.

Check fill rates at collection, the number of fractions, whether the same terms apply across all sites, and how any material revenue is settled.

3. Cleaning and facility services

Cleaning contracts are specified in frequency and area. Both change when premises are rebuilt, when space is repurposed or when occupancy patterns shift.

The potential here rarely sits in the hourly rate. More often it sits in the specification: what is cleaned, how often and to what standard.

Check that the agreed specification still describes the premises and the need you actually have, and that additional orders are monitored.

4. Energy

Energy cost has several components: consumption, contract structure, network costs, taxes and levies. They develop differently and are governed by different decisions.

A price discussion without consumption data is therefore incomplete. Load profile, operating hours and metering affect the outcome as much as the contract does.

Check which contract structure you have, how consumption is distributed across the day and the year, and whether all sites are managed together.

5. Telecom

Subscriptions, data plans, add-on services and equipment accumulate over time. People leave, roles change and devices are replaced.

The result is a base where the number of subscriptions no longer matches the number of users, and where services are paid for without being used.

Check active subscriptions against actual users, which add-on services are genuinely used, and how international traffic is handled.

6. Software and IT licences

Software has become one of the hardest external categories to control. Applications are often introduced locally, in smaller teams, and then become permanent.

ERA Group's whitepaper How to Save on Software sets out a practical perspective in three parts: what is agreed on paper, what is actually paid, and how the software is actually used and performs. The report also observes that organisations typically manage more vendors, applications and licences than they have visibility over, and that governance around software purchasing is often weak.

That is ERA Group's methodology and observation, not a model invented by JMF Europe.

Check the number of vendors and applications, how many licences are assigned versus actually used, and who is allowed to approve new purchases.

7. Packaging

Packaging choices are often made around how the product looked when the solution was introduced. Product mix, volumes and transport modes then change.

The cost sits in material, dimensions, waste, handling and how well the packaging uses the available transport volume.

Check whether the dimensions still fit the products, how much air is being shipped, and whether the specification is stricter than genuinely required.

8. Insurance

Insurance programmes are often renewed using the previous year as the starting point. The risk profile of the business may have changed in either direction.

The premium is only part of it. Deductibles, sums insured, exclusions and how claims history is presented affect both cost and cover.

Check that insured values and the business description are accurate, that nothing is double-covered, and that deductible levels are a deliberate choice.

9. Vehicles and fleet

Fleet cost is spread across financing, servicing, tyres, fuel, insurance and administration — often with different suppliers and sometimes in different countries.

ERA Group's material on fleet and mobility management highlights precisely the difficulty of obtaining a consolidated overview when several countries, business units and suppliers are involved, and where local needs meet central requirements. Without that overview, both monitoring and governance become difficult.

Check whether you have a consolidated view of total fleet cost, how the policy is applied locally, and who owns the question at group level.

10. Service and maintenance contracts

Service contracts often renew automatically. Equipment is replaced, used more or less, or taken out of service without the contract being adjusted.

The cost is driven by scope, response times, spare parts handling and what is included versus invoiced separately.

Check that the contract list matches the equipment you actually have, that the service level matches the operational need, and that renewals are actively reviewed.

A recurring factor: indirect suppliers receive less attention

What several of these categories share is that they do not involve core suppliers. Suppliers of indirect goods and services therefore tend to receive less attention in day-to-day management.

ERA Group's whitepaper Becoming Best in Class describes how contracts are normally written with the supplier's interests in mind, why it is worth understanding where in the agreement the supplier earns its margin, and why total cost of ownership and regular market testing are needed for an achieved improvement to last.

The point is not to squeeze suppliers. A strong supplier relationship and firm cost control are not opposites.

Do not start with all ten

The purpose of the list is not to review every category. Most companies have neither the time nor the reason to do so.

The first step is to determine which category or categories are genuinely worth the time — based on size, changes in the business, the absence of a clear owner and how the market has developed.

Read more about deciding which cost category is worth analysing