Resilient supply chains require a full understanding of your global footprint.
Data solutions enable advanced operational capabilities, such as predictive analytics.
Businesses can investigate legal strategies to minimize tariff liability.
Shifts in trade and tariff policies underscore the volatility of global business dynamics. Supply chains can be fragile, regulations can be cumbersome and costs can change suddenly. Disruptions can have painful ramifications and cause enduring challenges.
That’s why being agile and resilient is no longer a competitive advantage for consumer businesses—instead, these characteristics are fundamental requirements. Businesses must fully understand their global footprint to build resilient supply chains. When tariffs change, quantifying the financial impact is critical to maintaining profitability and mitigating costs.
Technology is pivotal in establishing this visibility and understanding. To enable advanced operational capabilities like real-time data sharing, predictive analytics and enhanced transparency across the supply chain, businesses must consider what their current solutions are capable of and evaluate the need for enhancing or adopting advanced technologies such as artificial intelligence or the Internet of Things.
These innovations allow businesses to respond quicker to market changes and disruptions, whether they are policy-driven or otherwise. This strategic investment can help consumer products businesses navigate the complexities of global trade and maintain a competitive edge in volatile markets.
With that in mind, here are several ways consumer businesses can build their resilience against tariff increases and other potential disruptions to their global operations.
To navigate our complex global landscape, businesses need a comprehensive understanding of their entire supply chain. This requires meticulously mapping the flow of materials, components and finished goods, with real-time visibility enabled by technology.
This transparency enables businesses to collect data to analyze vendor and geographical relationships, conduct advanced risk assessments considering factors beyond tariffs (such as indirect taxes, global employee strategies, political instability and environmental risks), and ultimately build a more resilient operation. While tariffs are a pressing concern, establishing robust global infrastructure and controls will deliver long-term benefits across the entire enterprise.
Businesses that prioritize identifying their supply chain vulnerabilities will be better equipped to make sound decisions in building resilience into their operations through practices like diversification and localization.
Consumer product businesses can mitigate risk by proactively diversifying their sourcing. This means reducing reliance on single suppliers or countries by actively exploring alternative suppliers in various regions. It can also mean constructing robust, multifaceted networks with redundancy measures in place, such as dual sourcing. This approach can provide businesses with flexible options to procure materials if challenges such as increased tariffs arise.
In addition to easing the impact of tariffs, shifting production closer to target markets by establishing regional manufacturing hubs or localizing parts of your production process can reduce transportation costs and lead times. Meanwhile, localization can enhance responsiveness to local market demands.
Accelerating purchases of goods and materials based on your operational forecasts may be a viable strategy to the extent you can anticipate the implementation of new tariffs. This approach may allow consumer products companies to purchase materials or products at lower prices and reduce the overall impact of tariffs for a period.
Understanding your business’s complete procurement status is critical to executing this strategy effectively, as other indirect costs, such as freight, may increase and offset some of the potential benefits of accelerating your purchases.
Furthermore, an agile supply chain hinges on a flexible and responsive logistics network. This means having the ability to rapidly adapt to changing conditions, reroute shipments and secure alternative transportation options. Diversifying transportation options beyond traditional ocean freight and exploring the use of air freight, rail freight and trucking can create a more resilient and adaptable network.
While some tariffs are far-reaching, businesses should investigate legal strategies to minimize tariff liability. This may entail:
Bonded warehouses provide businesses with a strategic advantage in international trade by offering secure storage for imported goods while deferring customs duties and taxes. These facilities facilitate trade, support supply chain efficiency, enhance market reach, mitigate risks and ensure regulatory compliance. Bonded warehouses also simplify reexports, allowing goods to be reexported without paying taxes or duties in the storage country.
In order to establish a bonded warehouse, businesses must submit an application to customs authorities, meet specific security and operational standards, and obtain the necessary bonds and permits. This emphasizes the importance of understanding the applicable regulatory landscape when establishing supply chains and working with subject matter experts who are accustomed to navigating those processes.
Building enterprise value in today's volatile market demands technological innovation. Embracing technology fosters the transparency and flexibility necessary to not only weather the storm of regulatory changes like evolving tax laws and tariffs, but also to gain a comprehensive understanding of critical business metrics, such as product performance and cost structures. By embracing agility and resilience as core operating principles, consumer products businesses can transform uncertainty into opportunity and build a resilient foundation for success.
