The Fastest Way to Identify Resin Margin Leakage in a Portfolio Company

Your portfolio company’s resin costs are almost certainly 5–15% higher than they need to be. The biggest challenge with this: margin leakage in procurement doesn’t announce itself with a bullhorn and emergency flares. Instead, it sneaks up on you through contract terms nobody revisited, timing decisions made without market visibility, and information gaps that systematically favor suppliers.

If you want to find those leaks quickly, you need to know where to look.

The Three Places Where Resin Margin Hides

Resin margin leakage tends to concentrate in three areas.

1. Contract Structure

This is often the largest source. Index-plus deals where the delta hasn’t been renegotiated in years tend to drift steadily in the supplier’s favor. What started as a competitive spread quietly grows as markets shift and nobody revisits the math. Missing reopener clauses leave buyers exposed when markets move dramatically, and minimum volume commitments that no longer match actual needs force companies to overbuy or pay penalties.

These structural issues accumulate because contracts get renewed on autopilot. After all, renegotiation feels like unnecessary friction when production is running smoothly, right?

2. Timing

Without forward visibility, procurement teams end up buying at the wrong points in price cycles—purchasing heavily before markets soften or holding back right before spikes. Better forecasting helps, but the real issue is simpler than that.

The asymmetry in how changes flow is particularly costly: supplier increases take effect within weeks, while decreases somehow take months to materialize. That gap represents pure margin leakage, but most companies don’t track it systematically.

3. Information Asymmetry

This is the most fundamental source. Suppliers track feedstock movements daily, monitor industry inventory levels, and watch production outages in real time. Most procurement teams, by contrast, operate with monthly reports that lag reality by weeks. They’re negotiating based on last month’s market against counterparties who know exactly what it looks like today. That gap shows up in every supplier conversation, whether buyers realize it or not.

Running a Quick Diagnostic

The good news is you can identify significant leakage using data the company already has.

Step 1: Pull the last 12 months of resin invoices and compare actual paid prices to published index prices for the same periods. Which index you use matters more than people realize—CDI, ICIS, and IHS often show meaningfully different numbers for identical grades. Make sure you know which specific index your contracts reference before running the analysis.

Step 2: Calculate your effective delta-to-index by grade across the full twelve months. If that delta has crept upward over time without clear justification—a spread that was index-plus-2 three years ago becoming index-plus-5 today—you’ve likely found your first and often largest leak.

Step 3: Examine timing patterns around price changes. When increases hit, how quickly did they flow through to your costs? When prices dropped, how long before you saw relief? Significant asymmetry between fast pass-through of increases and slow pass-through of decreases is one of the most common hidden leaks—and one of the easiest to document once you know to look for it.

Red Flags That Signal Deeper Problems

Certain patterns indicate systemic issues rather than isolated problems:

• Price increases passing through within days while decreases take months.
• Procurement leadership that can’t clearly articulate why they’re paying what they’re paying relative to market.
• No visibility into spot versus contract spreads.
• Supplier relationships that haven’t been competitively tested in years.
• Contracts renewed without serious renegotiation, and non-market adjustments accepted without pushback.

Importantly, none of these patterns mean procurement is failing—they mean the function hasn’t been resourced or empowered to optimize. Most resin buyers do reasonable work with limited information. They simply can’t see what “great” looks like because they lack the benchmarks that make comparison possible.

What Serious Assessment Requires

Here’s the biggest hurdle for most: you can calculate delta-to-index using internal data, but there’s no way to know if that delta is actually competitive without external benchmarks. Is index-plus-3 good or terrible? The honest answer is you can’t tell from your own contracts alone.

For truly meaningful assessment, you need to benchmark against actual buyer-seller transactions—not inflated index averages, but what similar companies with similar volumes actually pay. From that foundation, the path forward becomes much clearer: identify specific contract terms that create exposure, quantify the gap between current and achievable performance, and build a 90-day action plan with explicit EBITDA projections.

Most margin leakage stays invisible until someone knows where to look. But once you see the patterns clearly, the financial case for action becomes impossible to ignore.

Think there’s margin hiding in your resin procurement? Request a ResinSmart demo and find out exactly where you stand—and what closing the gap could mean for your bottom line.