{"id":12642,"date":"2025-05-22T07:52:05","date_gmt":"2025-05-22T14:52:05","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=12642"},"modified":"2025-05-22T07:52:05","modified_gmt":"2025-05-22T14:52:05","slug":"offset-tariffs-by-cutting-supply-chain-procurement-costs","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2025\/05\/offset-tariffs-by-cutting-supply-chain-procurement-costs","title":{"rendered":"Offset Tariffs by Cutting Supply Chain & Procurement Costs"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”12643″ img_size=”full”][vc_column_text]In today’s volatile global trade landscape, enterprises face ongoing pressure to optimize their supply chain operations. Rising costs, geopolitical tensions, and tariffs demand a strategic and holistic approach to maintain profitability and competitive advantage.\u00a0<\/span><\/p>\n

There are many ways an organization can cut supply chain costs. While there are no short-term fixes, enterprises should prioritize areas where they can make the quickest gains to reduce costs. Depending on the nature of your business, your trading partners or your location, this could include procurement strategies, demand planning, logistics, and global trade management among others.<\/span><\/p>\n

Mastering Direct Spend Management<\/h2>\n

Procurement teams generally do not report to the chief supply chain officer. Despite this, direct spend is a critical component of supply chain management. For many large enterprises, procurement makes up a large part of a company’s total costs. Strategic management in this area can yield substantial savings and build stronger supplier relationships.\u00a0<\/span><\/p>\n

Direct spend<\/span><\/a> refers to the costs associated with the goods and raw materials that are used in the production of a company’s products. This is often the largest procurement cost for manufacturers. Optimizing this area, even by small percentages, translates to significant savings.<\/span><\/p>\n

Procurement teams should build long-term, collaborative relationships with key direct suppliers. This involves rigorous supplier selection, negotiation of pricing, quality standards, and delivery schedules, fostering trust and consistency.\u00a0<\/span><\/p>\n

When costs rise, companies \u2014 particularly larger ones \u2014 may try and pass the total cost increase onto suppliers. This is a short term strategy, and one that can ultimately damage relationships with key suppliers. Ideally, these relationships should be beneficial for both parties.<\/span><\/p>\n

Having said that, you should also consider developing alternative sourcing strategies. This helps reduce the risk should a key supplier be unable to meet your demand. Even without trade tension, natural disasters, fire and other disruptions can impact your suppliers.<\/span><\/p>\n

Companies should also look for opportunities to consolidate purchasing across different business units. This should allow you to negotiate better pricing and terms with suppliers.<\/span><\/p>\n

Understanding and Minimizing Total Landed Cost<\/h2>\n

Procurement professionals often focus on the unit price This can be misleading. The <\/span>total landed cost<\/span><\/a> includes all expenses until the goods arrive at your manufacturing facility or distribution center. This gives a clearer view of the true cost.<\/span><\/p>\n

This includes, but is not limited to:<\/span><\/p>\n