BEYOND THE BUZZ
7 Supply Chain Tactics and Their Trade-o s By J.C. Renshaw Head of Supply Chain Consulting, North America, Savills
Leveraging third-party logistics providers (3PLs) 3PLs o er warehousing, transportation, and fulfillment services that can scale quickly. UPSIDE: Allows companies to stay nimble—avoiding major capital commitments while meeting demand. Quick way to add capacity and tap into logistics expertise without signing a long- term warehouse lease. TRADE OFFS: Short-term or overflow 3PL arrangements can be more expensive than traditional warehousing, and costs can rise quickly in tight markets. Shifting sourcing and production Moving production closer to end markets— UPSIDE: Reduces dependency on Asia and shortens lead times. Diversifying suppliers improves flexibility, enhances disaster recovery options, and strengthens negotiating power. Can lower inventory costs, boost supply chain performance, and qualify for government incentives. TRADE OFFS: Decentralizing production can erode economies of scale, raise costs, and introduce quality control issues. Managing multiple sites often requires added headcount, slows operations during audits, and increases exposure to inconsistent regulations. through investments in domestic manufacturing or nearshoring. Rerouting to lower-duty ports Routing goods through a third country—a tactic known as transshipment. UPSIDE: O ers a way to avoid tari s without changing suppliers or building new facilities. Companies can continue producing in lower-cost countries like China while routing goods through places like Vietnam or Mexico to reduce duties.
TRADE OFFS: Increasingly risky—many pass-through nations are now under heightened scrutiny, and U.S. Customs is ramping up audits, inspections, and stricter enforcement of origin rules. Violations can trigger penalties under the False Claims Act or Section 301 and 232 tari s. Consult with trade experts to develop compliant strategies. Reclassifying and redesigning products Modifying a product just enough to shift it into a lower-duty classification, also known as tari engineering. UPSIDE: Reduced import duties, which can significantly lower costs over time. E ective when design tweaks can be made without compromising product performance, branding, or customer experience. TRADE OFFS: Design changes may compromise product quality or performance, potentially damaging brand reputation. They may also add manufacturing complexity and cost. Additionally, tari classifications and rates can shift, and missteps in documentation or compliance can carry legal and financial consequences. Automation and technology Increasing investments in automation and eciency-enhancing technologies. UPSIDE: Automation and densification technologies ease pressure on space- constrained facilities. TRADE OFFS: Automation can require moderate to significant upfront investment. Companies must vet technologies for cost justification, reliability, and long-term value. n
While long-term resilience remains a critical objective, companies are leaning on a set of short-term tactics to navigate
on-again, o -again tari policies and disruptions: Front-loading Stockpiling—especially containerized imports—or pulling freight forward. UPSIDE: Can shore up supply and reduce the risk of inventory shortages. Companies can also bring in goods before higher tari rates take e ect. TRADE OFFS: Works only if a company has—or can secure—excess storage capacity. Risks: overstocking and holding too much inventory for too long, including goods that may become obsolete. Shipping rates can spike when many companies front-load at once. Bonded warehouses and FTZs Turning to bonded warehouses and Foreign-Trade Zones (FTZs) to hedge against both potential tari increases and decreases. UPSIDE: If tari s are expected to decline in the near future, bonded warehouses can be a smart strategy for importers of finished goods. For manufacturers, FTZs o er greater flexibility. Companies operating in FTZs can avoid tari s on raw materials and choose to apply either the tari rate in e ect at the time of entry or at the time of withdrawal. TRADE OFFS: Both come with costs—not just fees, but also the time and e ort required to comply with government oversight. Capacity is limited as well, making access competitive.
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July 2025 • Inbound Logistics 31
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