Tariffs’ Impact on Procurement: Can Communication be the Right Solution?

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The recent sequence of tariffs on several goods and products by the US government on China products is raising a furor and call for an early action. The sanctions can cost jobs, raise the prices and disrupt the manufacturing industry.

It is argued that the move will help local manufacturers without causing any disturbance to the trade. What if the local manufacturer hikes up the price?

There must be transparency in communication between the various supply chain units and the procurement teams to ensure minimum impact due to the tariffs. The procurement team must ask themselves a few questions and figure out if it can help combat the tariffs and sanctions.

In-depth knowledge about the supplies:

Identify which material can be affected by tariffs. From where is that material being procured? It is only then, there is possibility to create a backup of suppliers from other regions.

Is storing possible?

When you anticipate an increase, is it possible to hoard up the raw material buying in bulk and negotiating a wholesale costing? This can help you avoid the surcharge but issues of durability, storage, logistics can arise.
Tariffs and sanctions are a big challenge to the procurement consultants. They must collaborate with the various supply chain units and deliver costs savings to their clients.

After all most of the American/European manufacturers are sourcing from India, as India a becoming a leader in manufacturing sector such as automotive, electronic. Most of the procurement consulting companies like GainEdge providing many services including tactical sourcing to reduce product cost upto- 40%.

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