Procurement in an Era of Uncertainty: Leveraging Agility to Overcome Tariff Barriers

The imposition of tariffs on global trade has become a significant challenge for procurement teams across industries. These trade barriers can raise costs, disrupt supply chains, and inject uncertainty into the market. However, with agile procurement strategies, businesses can mitigate these risks and keep their operations resilient in the face of uncertainty. In this blog post, we’ll explore how agility can help businesses navigate tariff barriers, with real-world examples from Nike, Apple, and logistics companies adapting to tariffs on food imports.

The Impact of Tariffs on Procurement

Tariffs are not just numbers on a political agenda—they have a direct and immediate impact on businesses worldwide. For procurement teams, the imposition of tariffs means increased costs for raw materials, delays in product delivery, and the need to find new suppliers in different regions. Companies that rely heavily on global supply chains are particularly vulnerable, as changes in tariff laws can drastically alter their cost structures.

For example, the trade war between the U.S. and China has led to tariffs on key manufacturing components, creating massive cost increases for companies like Whirlpool and Nike. Similarly, industries like food logistics, which face tariffs on imports from neighbouring countries like Canada and Mexico, also see substantial ripple effects through the supply chain, affecting everything from raw materials to final product costs.

The Need for Agility in Procurement

In response to these uncertainties, procurement teams must adopt agile methods that allow for flexibility and quick adaptation to tariff changes.

Agility in procurement means developing the ability to respond to sudden disruptions with speed and efficiency. This approach focuses on continuous improvement, rapid sourcing of alternative suppliers, and shifting production and logistics networks when needed.

Unlike traditional procurement methods, which often rely on long-term, rigid contracts, agile procurement enables companies to pivot quickly when external conditions, such as tariffs, change. This proactive approach allows companies to minimise risks and maintain supply chain fluidity.

How Agile Methods Mitigate Risks from Tariffs

Agile procurement offers businesses a framework to not just survive, but thrive under tariff pressures. Let’s explore the strategies that have helped companies like Nike, Apple, and logistics professionals stay competitive.

1. Diversification of Supplier Base

Nike, for example, mitigated tariff risk by diversifying its manufacturing locations. Rather than relying solely on China, the company shifted production to Vietnam, Indonesia, and other regions. This diversification allowed Nike to avoid the steep tariffs imposed on Chinese-made goods and maintain cost control. Similarly, logistics businesses like third-party logistics (3PL) providers can optimise their operations by identifying alternative routes or consolidating shipments to minimise tariff impacts.

2. Reshoring Production and Local Sourcing

Whirlpool, in response to tariff hikes, reshored some production to the U.S. By increasing its manufacturing capacity locally, the company reduced its reliance on imported components, many of which were affected by tariffs. Apple, too, has considered shifting more production to India and Vietnam to lower the risk of supply chain disruptions due to U.S.-China tariffs. For logistics companies, reshoring or establishing local warehouses (as seen with some companies in the U.S.) provides similar benefits in terms of reducing delays and mitigating tariff impacts on international goods.

3. Optimising Logistics and Warehousing

Logistics professionals, like those managing food imports affected by new tariffs, can implement agile strategies by optimising shipping routes and consolidating shipments. Strategic warehouse locations, such as those in South Bend, IN, or Fontana, CA, allow companies to reduce lead times and shipping costs, helping mitigate the financial impact of tariffs. For procurement teams, partnering with logistics providers that offer flexible, cost-effective solutions ensures that products are delivered on time and at competitive prices, despite tariff challenges.

4. Risk Management and Transparent Communication

An agile procurement strategy requires open lines of communication across all stakeholders—whether suppliers, logistics partners, or policymakers. By staying connected with suppliers in different regions and maintaining a proactive approach to negotiating tariffs and exemptions, businesses can better manage uncertainty. Transparency, particularly with customers, is also crucial in maintaining trust while navigating price adjustments caused by tariffs.

Real-World Examples: How Agility Helps Overcome Tariff Barriers

1. Nike's Strategy

Nike has faced numerous tariff challenges over the years, but by diversifying its manufacturing footprint and sourcing materials from non-China regions, it has maintained flexibility and kept costs under control. Their agile approach to supplier diversification helped them remain competitive, even as tariffs increased.

2. Apple's Response

Apple, another giant in global procurement, shifted production outside of China to reduce its exposure to U.S.-China tariffs. By leveraging its extensive supply chain network and working with local suppliers, Apple has been able to maintain production levels while mitigating tariff costs.

3. Logistics in Action

The logistics industry, especially companies managing food imports, has faced tariffs that disrupt the smooth flow of goods. However, by optimising routes, consolidating shipments, and establishing strategic warehouses, logistics companies have been able to adapt to tariff changes and continue delivering products efficiently.

Conclusion

The imposition of tariffs can feel like an overwhelming challenge for procurement teams, but agility is the key to navigating this uncertainty. By diversifying suppliers, reshoring production, optimising logistics, and maintaining open communication, businesses can mitigate the impact of tariffs and maintain competitive advantages. The experiences of Nike, Apple, and logistics providers show that with the right strategies, businesses can stay resilient and even thrive in the face of tariff disruptions.

The key takeaway is that agility isn’t just about reacting to tariffs—it’s about proactively preparing for them. In an increasingly volatile global market, agile procurement is essential for future-proofing your supply chain.