The global supply chain is facing yet another wave of disruption, and businesses must prepare for the tariff storm. In the latest episode of MetaPod, host Ron Crabtree and guest Jeoff Burris, Founder and Principal of Advanced Purchasing Dynamics, sit down to discuss the looming impact of tariffs on procurement, supply chain strategy, and overall business operations.
The Looming Tariff Storm: What’s at Stake?
Ron kicks off the episode by introducing what he calls the “tariff catastrophe” – a pending wave of tariffs that could reshape potential supply chains and impact businesses across North America. With political shifts and potential retaliatory tariffs on the horizon, companies must reassess their procurement strategies.
Jeoff emphasizes that while this is a major challenge, businesses have been here before. The first wave of tariffs, combined with COVID-19, forced organizations to rethink diversification. However, the work is far from done.
Their conversation highlights four key risks that businesses need to address.
1. Financial Risk
Who will absorb the cost of these tariffs? Will companies be able to pass additional costs to customers, or will they be forced to absorb the financial hit themselves? Understanding spend analytics, including where suppliers and sub-suppliers source materials, is crucial to evaluating financial exposure.
2. Legal Risk
Even if a supplier is the official importer of record, buyers may still be responsible for paying tariffs. Organizations must review supplier contracts carefully to determine where the liability falls. Jeoff shares an example where companies assumed they were protected, only to discover hidden clauses allowing suppliers to pass tariff costs onto them.
3. Supply Chain Disruptions
Tariffs will place added pressure on supply chains, creating bottlenecks and increasing lead times. Companies must assess supplier health, avoid being the “last man standing” with a struggling supplier, and ensure that localized suppliers can handle increased demand.
4. Opportunity Cost
Focusing too much on tariffs and supply chain disruptions can divert attention from strategic initiatives like cost reduction, quality improvement, and process innovation. Many purchasing executives faced this challenge during COVID-19, and failing to balance short-term risk with long-term strategy can hurt competitiveness.
How to Assess and Mitigate Risk in Your Supply Chain
Jeoff shares a structured approach for organizations to diagnose and prepare for tariff impacts:
- Perform Spend Analytics: Companies must map their entire supply chain, down to sub-suppliers, to understand exposure by region, material source, and cost structure.
- Review Contracts and Legal Obligations: Don’t assume your supplier is absorbing tariff costs. Audit existing agreements and involve legal counsel early to avoid unexpected liabilities.
- Evaluate Supplier Stability: Ensure key suppliers aren’t at risk of financial collapse due to tariffs. Overburdening local suppliers too quickly can create new supply chain failures.
- Strengthen Cross-Functional Collaboration: Purchasing leaders must engage engineering, sales, and operations to ensure sourcing decisions align with business strategy. Jeoff shares a critical lesson: talk to your sales team. They understand how to position cost adjustments with customers and executives.
- Leverage AI and Digital Tools: The labor shortage isn’t going away. AI-driven procurement tools can help teams analyze supplier risk, negotiate better contracts, and streamline purchasing processes.
Connect and Learn More
Jeoff leaves listeners with a crucial mindset shift: “Never let a good crisis go to waste.” While tariffs create challenges, they also accelerate innovation. Companies that prepare now will not only mitigate risk but also gain a competitive advantage over those who react too late. If you have further questions or would like to learn more about how to manage tariffs in your organization, you can contact Jeoff via email at jburris@apurchasingd.com or visit apurchasingd.com. You can also get in touch with Ron via email at metapod@metaexperts.com or connect with him on LinkedIn. MetaPod offers a wealth of knowledge and expertise for operational executives and organizations seeking to optimize their operations and supply chains, as well as common challenges such as digital transformation, the forever labor shortage, and doing more with less. Listen and subscribe today for more insightful and engaging discussions on operational excellence, leadership, growth strategies, and organizational transformation.