Global supply chains are set to experience significant disruptions and procurement teams will play a crucial role in adapting to these changes. As businesses seek strategies to manage costs and reduce risks, the need for skilled procurement professionals has never been more important. These experts will be at the forefront of navigating the evolving landscape.
The recent announcement from President Trump's tariffs against China are now in place following the discussion on the weekend. The move has sparked fears of a global trade war and concerns about tariffs potentially being imposed on the UK and EU.
So how will this effect the Procurement sector?
The upcoming tariffs proposed by the incoming Trump administration have caused widespread speculation, debate and concern across various industries. Experts and economists agree that these changes could have large consequences, affecting a range of key sectors such as:
- Manufacturing.
- Pharmaceuticals.
- Consumer goods.
- Electronics.
- Automotive.
- Aerospace.
As these policies take shape, businesses and consumers are bracing for the ripple effects that will likely impact everything from production costs to supply chains and pricing. Let’s see how these shifts could affect each of these crucial industries.
Indirect Procurement
IT and electronics - If tariffs are implemented in the Chinese technology industry, it will significantly affect the IT hardware and electronics industry. According to recent estimates, up to 90% of IT hardware spend could be impacted, with potential cost increases of 10-30%.
Transportation & logistics - Logistics, being the backbone of the global supply chain industry, is another sector that should look out for potential disruption. Labour shortages, higher ocean shipping rates, and increased trucking spot rates are expected, which may force companies to reassess their supply chain strategies.
Short-term strategies for Procurement
- Map your vulnerabilities - Identify your major suppliers and conduct a comprehensive vulnerability risk assessment, including second-tier suppliers.
- Speak with suppliers - Communicate with your suppliers to understand the risks and shortages they face in supplying your organisation with the goods and services targeted by the new policies. Ask how they plan on handling the potential shortages or cost increases.
- Collaborate internally - Establish teams with business stakeholders to set up a cohesive plan of action.
The Trump administration’s policies may bring challenges, but they also present opportunities to rethink strategies, build stronger supplier relationships, and embrace innovation. Still, much remains unknown so keeping a close eye on the economic policies of the new administration and collaborating with industry bodies, suppliers, and procurement peers is crucial during these uncertain times.
