The tariff landscape can be complex and change rapidly, making it important for businesses to:

• Stay abreast of potential changes
• Develop adaptive supply chain strategies
• Analyze total landed costs
• Explore multiple mitigation approaches

The current tariff environment is particularly uncertain increasing the need for business leaders to develop, review, and implement mitigation strategies that can support and sustain companies through change and uncertainty.

Successfully navigating uncertain trade conditions can benefit from insights into two effective mitigation strategies:

• Diversify manufacturing locations
• Plan long-term for supply chain resilience

Diversify Manufacturing Locations

Manufacturing diversification is one approach that can help reduce tariff exposure. Having a presence in more than one physical area provides options and opportunities that can mitigate tariff responsibilities.

It’s recommended that companies start with a comprehensive landed-cost study for a thorough assessment of local conditions.

This evaluation should account for both immediate operational requirements and long-term growth potential.

Initial Assessment

The initial assessment for determining diversification opportunities should include:

• Existing supply chain infrastructure
• Available skill sets
• Total landed costs in potential new locations

Quality Control in a Diversified Supply Chain

If you diversify your manufacturing, quality control can present unique challenges in a multilocation manufacturing strategy.

Successfully maintaining consistent quality standards across diverse manufacturing locations requires a comprehensive approach that goes beyond traditional quality assurance methods.

Establish Dedicated Quality Control Teams

Establish a quality control team in each manufacturing location, staffed with both local experts and experienced personnel from existing operations. These teams should implement standardized testing protocols to support consistency across all manufacturing sites while accounting for local variations in processes and materials.

Conduct Regular Audits Across Facilities

Conduct regular quality audits at all facilities and share results across the organization to identify best practices and areas for improvement. This tactic helps maintain consistent quality standards while allowing for continuous improvement based on diverse operational experiences.

Document

Documentation also plays a crucial role in quality control by establishing set protocols and expectations across locations and teams.

Detailed records to maintain include:

• Manufacturing processes and specifications
• Quality control procedures and results
• Supplier qualifications and performance
• Employee training and certification
• Corrective actions and improvements

Plan Long-Term for Supply-Chain Resilience

Truly resilient supply chains require a strategic approach that looks beyond immediate tariff concerns to build a successful long-term plan.

This planning should encompass the following key areas.

Regional Manufacturing Hubs

Consider developing regional manufacturing capabilities to serve specific market areas. Each hub should maintain some redundant capabilities to protect business continuity when disruptions strike.

This strategy can reduce transportation costs and delivery times while providing flexibility to adapt to changing trade conditions.

Supplier Development

Long-term success often requires investing in supplier relationships across multiple regions. Work with suppliers to develop their capabilities, improve quality, and increase efficiency. This collaborative approach helps build a resilient supply network while potentially reducing costs through improved processes and innovation.

Technology Integration

Modern supply chains require robust technological infrastructure to maintain visibility and control across multiple locations.

Consider investing in systems that provide:

• Real-time visibility into inventory and production
• Predictive analytics for demand planning
• Automated quality control monitoring
• Integrated supplier management
• Risk monitoring and alert systems
• Workforce development

Workforce Development Programs

A successful long-term strategy includes comprehensive workforce development programs focused on building both technical skills and cross-cultural communication capabilities.

Consider developing training programs to:

• Create consistent operational knowledge across locations
• Build cultural awareness and communication skills
• Develop local leadership capabilities
• Establish knowledge sharing networks
• Support continuous learning and improvement
• Facilitate risk management and adaptation

Risk Management Strategies

Long-term planning includes robust risk management strategies, including regular risk assessments that can inform contingency plans. Results from these assessments can accelerate response times and help maintain readiness for potential disruptions.

Regularly assess the following potential risks:

• Political and regulatory changes
• Currency fluctuations
• Natural disasters
• Supply chain disruptions
• Market shifts

Build Price Escalation Clauses into Contracts

Price escalation clauses are designed to allow for fluctuations in costs. Including them in contracts can:

• Enhance the stability and sustainability of contractual relationships,
• Allow contracts to remain relevant in dynamic markets, ensuring that the terms reflect current economic realities rather than outdated conditions.
• Offer flexibility to adapt to changing market conditions without the need for renegotiating the entire contract.
• Help manage the risk associated with fluctuating costs.

We’re Here to Help

To learn more about tariff-related business strategies that can benefit your business, contact your Moss Adams professional.

Additional Resources

• Manufacturing and Consumer Products Practice
• Organizational Planning & Strategy Services
• Strategic Planning Services