§1Contract length
Many buyers use one to three years for pallet supply. Shorter terms suit volatile markets without an index clause; longer terms suit indexed contracts with a good quality record.
§2Let the index do the work
With an index escalator tied to the BLS wood pallet PPI, price follows the market without renegotiation. Then a rebid tests the margin, not the market.
§3Signals it's time
- Reject rate above the SLA for two quarters.
- A supplier's price has drifted away from the index over the contract.
- Your volume or spec has changed materially.
- A new receiver requirement your supplier can't meet.
- The supplier has lost capacity or a plant.
§4Signals to rebid early
- Reject rates rising for several months in a row.
- Price increases that run ahead of the wood pallet index without an explanation tied to your spec.
- A change of ownership or plant at the supplier.
- A large change in your own volume or delivery points.
§5Testing the market without a full rebid
Between full rebids, ask one or two outside suppliers to quote a single delivery point each year. It keeps your price knowledge current and gives the incumbent a reason to stay sharp, without the cost of a full process.
When you do rebid, invite the incumbent on the same terms as everyone else, and share the same information with all bidders.
§6Index clauses and rebids
An index escalator keeps prices moving with the market between rebids, which lets you rebid less often. It doesn't replace a rebid: the index follows the whole industry, not your supplier's efficiency, so prices can drift away from what the market would offer you.
§7Prepare the rebid a quarter ahead
Start collecting the data a rebid needs about three months before it opens: monthly volumes by delivery point, reject rates by supplier, delivery performance, and every price change with its reason. Bidders price more sharply when the RFQ shows real volumes and a buyer who measures performance.