Podcast: How manufacturers can navigate tariffs, trade shocks, and global supply chain risk
Key takeaways
- Act fast and decisively—delayed supply chain responses risk long-term competitiveness.
- Segment markets by product, customer, and region to prioritize supply chain decisions.
- Build agile 30-, 90-, and 180-day plans to handle simultaneous supply and demand shocks.
- Cross-functional “war rooms” with tech, ops, finance, and sales are now essential for resilience.
Suketu Gandhi is partner and global chair for the strategic operations practice at Kearney, a strategy and management consulting firm. Based on years of experience advising companies on successful supply chain strategies, he offers advice on how to deal with the current disruptions as well as best practices for creating an optimal supply chain. Suketu recently spoke with Adrienne Selko, senior editor at EHS Today, about key actions manufacturers can take to improve supply chain resilience.
Below is an edited excerpt from the podcast:
MH&L: If we can—and this is up to you—can we start with a general overview of where we are in terms of the world, the supply chain, and the tariffs? And we’ll just do that for a few minutes, because that could take all day, right? Then we’ll get into the report, which, of course, will address how we’re dealing with the situation. But I think from the initial breadth of the tariffs, and then subsequently the changing and negotiating that’s happening right now, what are you telling your clients about how to process this, how to think of it, how to strategize—or are we kind of still in a wait-and-see mode?
SG: So if you and I had this conversation four weeks ago, I would have said, “Keep calm and carry on.” But then things changed dramatically, and now it’s reached a point where if you don't act quickly and significantly, you’ll end up being a loser in this area. That’s one part.
Second, we're pushing and really talking to our clients—because most of them are large global companies. They work in somewhere between 20 to 100 countries, 150 in some cases—so you cannot focus only on the shiny, bright spotlight right now. You have to think about your global business.
And then the third thing is segment those out by the customers you’re serving and how you're serving them. So really kind of work on that. And the second two points are primarily around act now, really think about the global nature of your business, and third, focus on the customers and how you want to serve them. Because then you at least have clarity on what actions you'd like to take.
So here we are, thinking there are three actions to take. One is: which are the customers, products, and geographies you're going to defend? Why? Because either you're going to increase price or take a margin hit. But you can’t do it across the board.
Let me give you a specific example. A client of mine has 60,000 SKUs and they operate in 26 or 27 countries. They can’t go and fight the battle in every country all the time. So they’ve got to say, “OK, what are the shells that we are going to fight on?” And they are a manufacturer that sells through retailers. How are you going to understand which customer is buying and what their demand picture is right now so you can respond to it?
And in parallel, the second element of defense is: can you start working with your core suppliers on pricing as a joint effort? Not, “Hey, give me 3% off now.” That model is a very hard one because there are a lot of categories where that doesn’t work.
In specific categories—like, let’s say, fancy multi-speed motors, or specific kinds of chips, or you’ve got rare earths—you’re not going to go beat them up and hope that works. So that is the first part of defense.
The second is something you’ll play out over the next three to six months. Because the 90 days will come, then there’ll be implementation of the plan, and all of that. So you’ve got to find a bridge to that.
Then the second one is the risk layer. Now you become significantly involved in executing on the current supply chain and how it’s organized. But how do I reconfigure? Working with my suppliers—maybe I serve Europe differently, Asia differently. Most large multinationals, on average, are about 40% North America, 30% Europe, and the last 30% is Asia and the Middle East. So you’ve got to think about that. It's OK to make here and send it. It’s just coming back in. But this way you're prepared for what the reactions may be from other countries. Because what we haven’t seen yet are the reactions from other countries and how they're going to behave through trading blocs. So that's the dealer's part.
And then the last thing is: by then, you'll have had about six months of knowing what's going to happen. So now you start diversifying your supply chain. And that has two elements. One is: rethink your products themselves.
Because when labor is plentiful and you can move everything everywhere in the world, you could live with a bit of—let’s just say—flab. But now, you’ve got to be really lean. What do I put inside my products? What do customers, consumers, or my business partners really care about? So how do I make my product really valid for them?
Second, how do I change my manufacturing processes—either with my own team, contract manufacturers, suppliers—all of that? Really get into the design and manufacturing of the product itself.