U.S. Tariffs: An Opportunity to Strengthen Your Supply Chain

The past few years have reminded us of the intricate and often fragile nature of global supply chains. Events ranging from the pandemic to trade tensions have exposed vulnerabilities, prompting businesses worldwide to reconsider how they source and manufacture products.

This period of disruption, while challenging, presents a significant opportunity: the chance to build stronger, more resilient supply chains for the future.

THREE KEY MOVES TO SHORTEN SUPPLY LINES

To enhance control, improve response times, and reduce the complexities of distant international networks, many manufacturers have explored shortening supply lines through nearshoring, friendshoring and reshoring.

Nearshoring involves moving production to nearby countries, while friendshoring prioritizes sourcing from politically and economically allied countries for greater stability and trust. Reshoring, on the other hand, focuses on domestic production, bringing manufacturing back to a company's home country.

Having explored these initial responses to global supply chain pressures, let's now consider the fundamental task of rebuilding the very foundation of our operations: the supplier network.

KEY ELEMENTS FOR REBUILDING YOUR SUPPLIER NETWORK

Re-establishing a strong supplier base closer to home requires careful consideration of several important factors:

The geography of your suppliers: The location of your suppliers has a direct impact on transportation costs, delivery speed, and potential disruptions. Being geographically closer can lead to better communication, more efficient logistics, and a quicker response when issues arise.

Access to a skilled and reliable workforce: For industries like construction, where stricter immigration policies may further amplify the trend of increasing skilled worker shortages due to retirements, evaluating your suppliers' talent strategies is a prudent step. Another option could be to prioritize suppliers who are actively integrating automation and robotics, which can help them mitigate labour shortages, ensure more consistent production, and ultimately provide a more reliable and high-quality supply chain for your business.

A new collaborative mindset with suppliers: Local production isn't a simple rerun of overseas manufacturing, where the lowest bidder in a competitive labour market often won. Instead, it demands lean principles—cutting waste and optimizing processes. Here, partnering with strategic suppliers on shared goals delivers more long-term value than simply choosing the lowest bid.

However, while bringing your supplier base closer offers numerous advantages, it's also crucial to acknowledge the potential limitations of focusing solely on domestic sources.

THE LIMITS OF DOMESTIC SOURCING

The idea of bringing all your production home might seem like the safest route, but relying exclusively on domestic sources also has its limitations and potential drawbacks:

The risk of overwhelming domestic capacity: If many local companies decide to reshore simultaneously, domestic suppliers could face a sudden surge in demand that they may not have the capacity to meet. This could lead to bottlenecks, longer lead times, and potentially higher costs.

Geographic concentration risks: Concentrating all your sourcing and production within a single country exposes your entire supply chain to localized risks, such as natural disasters, transportation disruptions, or even specific labour issues within that area.

Remoteness to end customers: Depending on the location of your suppliers relative to your end customers, you might face challenges in working on prototypes in iterations, especially for complex products. This distance can also force you to keep higher quantities in stock to serve those distant markets.

RESILIENCE THROUGH DIVERSIFICATION

True supply chain resilience demands looking beyond the borders of a single nation, a point underscored by BDC's emphasis on lessening reliance on singular points of failure—be they individual suppliers, specific markets, or entire geographic regions.

Therefore, strategically diversifying your sourcing and production across a mix of reliable locations offers the most robust path forward. This includes a blend of domestic suppliers, trusted partners in nearby countries (leveraging the stability of the USMCA region, even as the region remains subject to occasional trade policy adjustments), and carefully selected international suppliers for specific needs.

By diversifying your supply chain, you’ll be able to:

• Reduce your dependence on any single source or region, mitigating potential risks.
• Access a broader range of capabilities and potentially more competitive pricing.
• Create a more agile and adaptable supply network that can better withstand unexpected challenges.

Ultimately, the decisions you make now will determine your ability to navigate the complexities of the global market.

CONCLUSION

Whether you're looking to bring your production closer to home or within trusted borders, this moment is your chance to build a truly resilient supply chain – one that not only weathers current disruptions but also sets you up for lasting success.

The key is to move beyond a singular focus on cost and embrace a more holistic view of supply chain health and long-term stability.

ABOUT VICONE

At Vicone, what we do best is design, produce and optimize rubber parts. We have been supporting our customers since 2004, from concept to volume production.

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