Tariffs can drive up costs and disrupt supply chains, but sourcing professionals can stay ahead by focusing on these key strategies:
- Diversify Suppliers: Spread sourcing across regions like India and Vietnam to reduce risks and costs.
- Leverage AI Tools: Use platforms like Find My Factory to quickly find alternative suppliers, optimize costs, and manage risks.
- Monitor Trade Policies: Stay updated with tools like the USITC HTS Search to track tariff changes in real time.
- Build Resilience: Develop contingency plans, negotiate flexible contracts, and maintain a multi-supplier network.
- Collaborate Internally: Work closely with legal and finance teams to ensure compliance and minimize penalties.
Quick Overview of Solutions:
| Strategy | Benefits |
|---|---|
| Diversify Suppliers | Reduces reliance on single-country policies and ensures supply continuity. |
| Use AI Tools | Speeds up supplier discovery and identifies cost-saving opportunities. |
| Monitor Trade Policies | Avoids unexpected costs and ensures compliance with tariff regulations. |
| Build Multi-Supplier Network | Balances risks and maintains production during disruptions. |
| Collaborate with Teams | Improves compliance and financial accuracy. |
Start by planning ahead and using technology to adapt quickly to tariff changes. Staying informed and proactive can save costs and keep operations running smoothly.
Tariffs, Trade Wars & Supply Chains - How Can Procurement Prepare?
AI Tools for Finding Suppliers
How AI Improves Supplier Search
AI is transforming how sourcing professionals find and evaluate suppliers. Mark Baptista, Senior Partner at McKinsey, highlights this shift:
"The development of AI-based supplier discovery tools is fundamentally changing the speed at which it is possible to find the right suppliers and optimize a company's supply base".
Modern AI platforms can process millions of supplier profiles in minutes, pulling insights from structured and unstructured data. These tools are particularly effective in:
| Capability | Business Impact |
|---|---|
| Pattern Analysis | Tracks supplier trends and performance across global markets |
| Risk Assessment | Identifies potential supply chain disruptions early |
| Cost Optimization | Recommends alternative suppliers to offset tariff costs |
| Compliance Monitoring | Ensures suppliers meet legal and ESG requirements |
These capabilities align directly with agile sourcing strategies, offering faster and more informed decision-making.
Find My Factory: AI Sourcing Platform
Find My Factory is a cutting-edge AI platform designed for supplier discovery. It offers five distinct AI-powered search methods and is priced at $649 per month for the Starter plan. This plan includes unlimited searches and features a secure, private database for sensitive supplier data. Its rapid search capabilities are particularly useful for managing tariff-driven cost challenges.
Madhav Durbha, Group VP of CPG & Manufacturing at RELEX Solutions, explains:
"AI-driven forecasting tools analyze historical trade patterns, economic indicators, and geopolitical events, to help businesses adjust to tariff-driven cost pressures by identifying alternative suppliers or reducing inefficiencies".
Steps to Implement AI Search Tools
To make the most of AI tools for supplier discovery, follow these steps:
1. Assessment Phase
Identify inefficiencies in your current supplier discovery process and evaluate the impact of tariffs. Use historical data to find patterns that could help mitigate these challenges.
2. Tool Selection
Choose an AI platform that meets your needs. Look for features such as:
- Automated workflows for supplier evaluation
- Real-time tariff impact analysis
- Integration with existing ERP systems
- Strong data security protocols
- Regular updates and reliable vendor support
3. Implementation Strategy
Start with a small pilot project focused on a procurement category significantly affected by tariffs. For example, automate processes like supplier onboarding or contract management. Gradually expand the tool’s use based on feedback and performance data. Fairmarkit, which connects with over 3 million suppliers, demonstrates how a targeted pilot can deliver actionable insights.
Alex Saric, a Smart Procurement Expert at Ivalua, underscores the importance of visibility in supply chains:
"Supply chain visibility at every level means businesses are better equipped to develop informed contingency plans and make accurate decisions, whatever policy shifts come their way".
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Building a Multi-Supplier Network
Spreading Suppliers Across Regions
Diversifying supplier locations is key to maintaining quality and reducing risks. Experts suggest keeping any single supplier's share of total business volume to around 30–40% to balance risk effectively.
Balancing Supplier Costs and Risks
Fritz Gilbert, a Board Member and author, offers a hands-on approach to managing costs and risks:
"Conduct an efficient cross-functional Sales & Operations Planning (S&OP) monthly meeting, complete with charts and a concise list of major challenges/decisions. Ensure participation from Senior Management. Folks may disagree with the outcome, but they'll be much less aggressive if they've been involved in the process. The biggest cost/risk challenge I faced was minimizing inventory, maximizing inventory turns, while at the same time achieving superior delivery performance."
When evaluating suppliers, consider factors like the depth of the partnership, cost-effectiveness, risk balance, adaptability, and quality control.
Example: U.S. Company's Supplier Mix
Apple's supply chain strategy provides a clear example of how a diversified supplier network can address challenges like tariffs and global disruptions. Here's what they did:
-
Geographic Expansion
Apple built supplier relationships in India and Vietnam, reducing reliance on a single region. This helped the company maintain production even during regional disruptions caused by COVID-19. -
Technology Integration
The company used advanced inventory management systems and data analytics tools to improve supply chain efficiency. These tools allowed Apple to track operations in real time and respond quickly to tariff-related issues. -
Risk Mitigation
By working with multiple suppliers for crucial components, Apple added redundancy to its supply chain. This strategy was especially useful during the pandemic, ensuring product availability despite shutdowns in specific regions.
Apple's approach highlights how a well-thought-out multi-supplier network can help businesses manage costs, adapt to challenges, and maintain consistent production during uncertain times.
Tracking Trade Policy Updates
Tools for Tariff Monitoring
Keeping up with tariff changes is crucial, and digital tools can make the process much easier. For example, the U.S. International Trade Commission's (USITC) HTS Search tool provides up-to-date tariff details. Companies can also benefit from using trade compliance software that connects with their existing systems. A notable case is Umbrex, which integrated USITC data into its ERP system and reduced tariff costs by 15% in just six months.
Here are some key platforms for monitoring tariffs:
| Platform | Primary Function | Key Benefits |
|---|---|---|
| FTA Tariff Tool | Tracks Free Trade Agreement rates | Displays schedules for progressive tariff cuts |
| Global Trade Alert | Monitors global policy changes | Offers early warnings on trade measures |
| USITC HTS Search | Official U.S. tariff database | Provides accurate tariff classifications |
These tools not only deliver real-time updates but also help businesses prepare for potential tariff shifts.
Planning for Tariff Changes
The financial impact of tariff mismanagement can be severe. In August 2024, Wisconsin companies lost over $10 million due to misrepresented Chinese import values. To avoid such losses, businesses need solid contingency plans. Experts advise improving supply chain visibility, leveraging real-time data, and setting up measures to handle unexpected costs or disruptions.
Working with Legal and Finance Teams
Internal collaboration is vital for staying compliant. Recent enforcement actions across industries have led to millions in penalties, underscoring the risks of non-compliance. To avoid these pitfalls, companies should conduct regular customs audits, implement verification protocols, and maintain detailed documentation. Accurate tariff data supports finance teams, while legal departments rely on precise records to ensure compliance.
Managing Tariff Changes
Key Insights for Supply Chain Teams
Handling tariffs in global trade requires quick thinking and strategic planning. Experts emphasize the importance of staying ahead with sourcing strategies to manage tariff shifts effectively. Recent stats and examples highlight how businesses are adapting to these challenges.
For instance, 73% of supply chain leaders have identified weak spots in their operations that need attention. To address these, companies are leaning on AI-powered tools. Take PepsiCo as an example - they’ve teamed up with Veridion’s data platform to boost supplier discovery and manage risks across their sourcing processes. This, along with diversifying where they source from, shows how a mix of strategies can strengthen supply chains.
Real-world examples back this up. In 2019, a U.S. retailer faced a potential $1 billion hit to profits due to increased tariffs on products from China. By putting together a cross-functional team and using targeted strategies, they managed to reduce their exposure by over $350 million [BCG, 2025].
Focus Areas for Future Success
To stay prepared for tariff changes, sourcing teams should concentrate on a few core strategies:
| Strategy | How to Implement | Benefits |
|---|---|---|
| Leverage Technology | Use AI tools to streamline procurement processes | Cuts procurement cycle time by 30% |
| Expand Supplier Base | Apply a China+1 approach, sourcing from Vietnam, India, or Mexico | Lowers tariff risks and boosts resilience |
| Flexible Contracts | Negotiate terms with dynamic pricing options | Adapts better to market and tariff shifts |
“Proactive measures and embracing technology will separate leaders from the rest,” as stated by industry experts. AI, automation, and data insights give procurement teams the tools to face tariff challenges head-on.
Keeping communication open with key suppliers and staying updated on trade policies is critical. Al Mendoza from EY sums it up perfectly:
"Remaining agile is essential."