Rising tariffs and supply chain pressures squeeze MRO pricing strategies

If you're getting nervous watching your stockroom inventory dwindle in the face of rising costs, you're not alone.

Senior executives from two prominent MRO distributors revealed on recent earnings conference calls that tariff pressures from their suppliers are driving additional price increases outside of their normal pricing cycle: 

• MSC Industrial Direct Co Inc. said they were caught off guard this summer—shortly after they had raised their own prices—by a surge of suppliers passing on tariff-related costs. President and COO Martina McIsaac told analysts that "between mid-June […] and the end of August, in those weeks, we took more inflation than we took in nine months post-COVID in 2022. ... It was both the number of increases, the changes in the increases, the changes in supplier behavior, compressed lead times.”  
• After launching normal price cycle increases on some products in May and September, W.W. Grainger Inc. is preparing to launch another round of hikes this month, in part due to the Trump administration’s newer Section 232 tariffs. “There’s been over 1,000 negotiations with our suppliers at this point,” CEO D.G. Macpherson said. “That’s not normal, for the record.”

Since early 2025, the challenge for many manufacturers has been how much capital to tie up in extra spare parts and supplies, hedging against future tariffs and cost increases. But a year later the situation for many MRO teams has changed to managing future costs in the face of rapidly depleting inventory. And for many manufacturers, it is time to consider passing these costs even further onto customers.

“Everyone’s gut feel is starting to bear out in the data," said Dan Cankora, a pricing economist and business consultant at Vendavo. "Yep, we had a good stockpile of inventory. We held onto that. We waited to see what was happening. Now the reality is, if our margins are getting crushed due to higher costs, we’re going to push that through on price.”

Read the full IndustryWeek article here. 

Bridging the skills gap by rethinking the manufacturing tech stack

There's also an argument to be made that current economic climate offers manufacturers a good opportunity to match their processes with their workforce. 

A recent Forbes column by Natan Linder argues that closing the manufacturing skills gap should be approached from more than just the supply side (i.e., training new workers to do existing jobs). His argument extends to the demand side, suggesting that existing manufacturing tech stacks need to start matching reality.

Linder says this looks like the following:

• No-code, easy-to-use operator interfaces, so frontline workers can test and iterate on tools or workflows themselves, leading to tighter  feedback loops and shorter improvement cycles 
• AI for operations, especially generative AI that can help improve job plans and convert existing SOPs into interactive, multilingual apps
• Purpose-built production systems, in the form of composable MES systems to stay nimble in a world of supply chain shocks and shifting demand

The easiest part of Linder’s recipe is the implementation of GenAI into maintenance workflows. Throughout this year I’ve heard plenty of stories of how frontline workers are using GenAI tools to draft and improve job plans. Also, the agentic AI revolution is firmly upon us, as both suppliers and manufacturers develop chatbot tools that are designed to guide data collection in the field and improve the speed of root cause analyses. 

It remains to be seen if industry can pivot to no-code interfaces and composable MES systems. But, given the cost pressures that are likely to continue into 2026, any solution that keeps costs down and retains good workers is likely to be on the table for the foreseeable future. 

Read the full Forbes article here.