Consumer goods outlook: The rising need for resilient supply chains

Recent years have seen a dramatic rise in supply chain disruption. According to the Q2 2025 CIPS Pulse Survey, short-term and long-term outlooks for supply chain risk have reached record highs, with procurement professionals rating their concern for such risks at 4.57 out of 7 for Q3—and 5.03 out of 7 for the next year, the highest since tracking began. Key drivers include uncertainty around new U.S. tariff policies and ongoing trade tensions among major economies.

Supply chains in the consumer goods sector are no exception, facing unprecedented disruption driven by escalating geopolitical risks, persistent trade uncertainties and evolving regulatory requirements. To remain competitive and responsive to consumer needs, companies must rapidly adapt their operations to keep up with disruptions in their environment. Leveraging technology and reimagining sourcing are key approaches to succeed in today’s unpredictable global landscape.

From stockpiles to cost hikes

In early 2025, many consumer goods companies stockpiled inventory to mitigate the impact of initial and anticipated tariffs. Notably, older inventory—including some inventory previously deemed obsolete—has now become an important asset to some companies, according to Forbes, enabling some consumer goods companies to maintain inventory at lower pre-tariff costs.

Stockpiling was a helpful tactic early in the tariff saga; however, now that inventory levels are winding down, companies must think of new ways to mitigate their supply chain risk. Further, the cost burden of tariffs is increasingly shifting to American households and businesses.

According to a Firstpost report, consumers are now expected to bear 55% of the total cost of tariffs while U.S. companies absorb 22% and foreign exporters approximately 18%. To keep margins from declining too significantly, companies have taken the brunt of the costs themselves or have been splitting the costs with their vendors. However, with inventory levels declining and operational costs continuing to rise, many businesses must adjust pricing strategies to offset these pressures. Industry projections suggest that organizations will incorporate price increases in the coming months.

Strategies for building middle market resilience

Compared to larger competitors, middle market consumer goods companies often have fewer resources, making them more vulnerable to supply chain disruptions. To remain competitive, these organizations must prioritize proactive risk management and cultivate strategic partnerships that strengthen their resilience. Key considerations include:

• Diversification and local sourcing: Geopolitical tensions such as trade wars, sanctions and regional conflicts are continuing to disrupt established supply channels and are driving up operational costs. Companies must monitor geopolitical risks and events and diversify their sourcing strategies. Reliance on a single country can cause a clog in a supply chain, whether due to higher tariffs, geopolitical disruptions or other factors. Sourcing locally or nearshoring, especially with countries with currencies closely tied to the dollar, can help mitigate import costs and tariffs. Additionally, this can help save significantly on freight costs to get product to the warehouse.
• Technology: Leveraging technology and data analytics is critical for supply chain visibility and responsiveness. By investing in digital solutions, companies gain real-time insights, improve their ability to anticipate risks and enable a swifter response to disruptions. Technological solutions can be costly up front, but they can also result in significant efficiencies and critical information needed to help companies better navigate their landscape.
• Collaboration and communication: Working closely with suppliers and logistics partners is vital for supply chain resilience. Establishing strong partnerships and developing contingency plans help organizations maintain operational continuity and adapt quickly when unexpected disruptions arise.
• Tariff mitigation strategies: Besides understanding their supply chain needs, a company can take proactive measures to reduce the impact of tariffs and increase cash flows, including:
  • Leveraging  bonded warehouses, foreign-trade zones, temporary import bonds and duty drawbacks
  • Using forward contracts to lock in exchange rates for future inventory purchases and remove uncertainty around dollar fluctuations
  • Nearshoring to countries with currencies more closely tied to the dollar, such as Mexico
  • Prioritizing higher-margin and faster-moving inventory to improve cash flow

The takeaway

The economic environment is continuously evolving, and consumer goods companies must thoroughly understand their supply chains and have robust plans in place to prepare for a variety of disruptive events. By embedding resilience into every aspect of their operations, organizations can turn supply chain challenges into opportunities for growth and brand strength.