Tariffs, Tactics, and Transformation: A Conversation on Manufacturing Resilience

Find out how tariffs are impacting the industry and what strategies businesses can implement to navigate through these challenges.

In early March, the U.S. imposed tariffs that have reshaped the global economic landscape. These tariffs continue to show concern across the manufacturing sector as businesses try to understand the potential impact and how they should respond.

This is what TBM Consulting Global Team: Bill Remy, David Pate, Andre Smaal, Alberto Ochoa, and Shang Zheng had to say in on these concerns and how manufacturing leaders should be thinking about navigating these obstacles.

What’s driving companies to rethink their supply chain and operational strategy right now?

Bill Remy, CEO at TBM Consulting Group:

There’s probably as much disruption in the supply chain world as I can recall in a very long time. And part of the disruption clearly is policies like tariffs that are being set by both the U.S. government and in response, other governments. But what I think is just another element of how supply chains are going to need to reshape themselves overall.

They’re finding that the risk of supply is too high in some cases. They’re finding they’re not recognizing all the cost savings they expected in some cases. Just managing the breadth and complexity of their supply chains is proving to be a big challenge for some companies.

I think the tariffs and the responses by governments are the catalyst that’s driving the disruption for sure. But I also think there’s elements of people not stepping back and taking a broader look at their supply chains and their business to understand where product is sourced? How are we bringing it together? And ultimately, how does it connect to serving the customer base and the markets we serve, which is really where you ought to start in most cases. But I think people more frequently start on the other end of where they’re going to source as opposed to how they serve.

The tariffs are just one reason why things are changing. But I think people are recognizing that there’s other reasons to change, like risk and the cost of managing their supply chains.

When does a manufacturing leader know if and when a relocation is necessary for the business?

David Pate, Vice President, TBM United States:

First, manufacturers need to get real data on what their total cost of ownership is and do some analytics around that information. The TCO model is a really good tool to use, and I would not overlook the incentives that may be available in respective regions that you may be relocating to. The second thing that manufacturers need to do in their operations, or their suppliers is to look at the operational improvement opportunities within their production or their suppliers’ production facilities.

Very often, even if a lot of work has been done, there’s additional improvements that can be made. They call continuous improvement a journey instead of a destination for a reason. The other thing that you might want to consider is to diversify your actions. In this very uncertain time, you may want to look at two options instead of just a single option.

Where do you see companies get stuck between strategy and execution?

Andre Smaal, Vice President, TBM Europe:

The biggest gap on that topic of strategy and execution is follow through. Companies often react quickly to external shocks, like the current tariffs, by building a new strategy or a cost-cutting roadmap. Nevertheless, many to all fail. And they fail to execute because they lack the operational discipline to translate plans into consistent daily actions.

The gap between running daily business and changing course is a capability and a capacity gap. They don’t have the people. It takes different skills and thinking to change the course of a company versus running day-to-day business.

And there’s no rhythm cascading from the shop floor to the top floor. And that’s where precision of execution closes this gap. Precision of execution is about building behaviors, standards and routines in an organization to make strategy become action and actions lead to result. Every shift, every line, every day. That’s what enables real change in performance.

What can companies do operationally to offset the impact of tariffs?

Alberto Ochoa, Vice President, TBM Latin America:

You need to know where you could improve, so therefore companies need to diagnose and to understand where they are standing. Companies know they need to improve in productivity, need to improve in the quality of their products or maybe respond faster to changing customer needs. Also reducing operating costs as an alternative or at least sustain performance improvement year over year.

If that is the case, because companies have decided not to move or relocate, we suggest that they diagnose their current situations and make a business case. And you can consider making a dramatic performance improvement that will impact your customer satisfaction, something that your clients can detect easily or make significant improvements to inventory receivables, as an example.
And finally, improve their maintenance, because without the proper maintenance, operational excellence cannot be achieved.

What is one essential piece of advice you could offer to leaders as they begin this journey?

Shang Zheng Vice President, Asia Pacific:

Undertaking a plan to relocation is more than just the moving production lines. It would require detailed planning, well coordination and excellent execution. There are many things needed to be considered, such as new plant selection, plant detail, new layout, operation feasibility to transition plan, production ramp up, supply chain set up and so on. Beyond the operation size, companies also need to consider things like local culture, regulation, compliance requirements and employment laws.

Our team have worked with many manufacturers to help them develop and execute relocation plans across different countries and regions in the past 25 years. Working with a professional partner like TBM, companies may ease the challenge and meeting their goals for long term growth.

What changes are you seeing in how companies stay resilient and agile in a rapidly evolving environment?

Bill Remy:

The way people are approaching how to be more resilient and more agile with their businesses, they’re really using several different ways of looking at the business from a 360 perspective. They’re using data, analytics, AI to understand what’s going on in the business, quickly get to what processes and what other things are challenges for them and could be impacting their performance and ability to deliver to customers in the markets.

They’re also using just general supply chain risk analysis to look at where do they have risks throughout the supply chain because of governmental issues, because of disruptions in transportation, availability of materials, and then thinking about how they can mitigate that.

The other way they’re looking at it from an agility perspective is where do we have longer lead times? What’s driving our total time to deliver products or services to the market and how can we shorten that time? Because as we all know, shorter lead times and more agility can give us the ability to shift as the markets and our customers shift and the ability to shift faster than they do. So, it’s about being resilient in thinking about how we respond to problems, how do we mitigate problems, what are the drivers to our performance in the business and how to take the right actions to make it better. And finally, how do we focus on lead time to become more agile and ability to respond quicker.

We all know that tariffs will impact companies in different ways. Successfully overcoming these challenges requires partnering with experts in supply chain and relocation strategy to maintain production and stay on track with business goals.

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