Survey: Tariff Tumult Roils Supply Chains
More than 40% are already seeing a negative impact from tariffs, resulting in rising costs, a new MLC survey shows. Greater resiliency using digital tools is a key mitigation strategy.
KEY TAKEAWAYS:
● Only 17% say their supply chains are “very resilient” today.
● 78% say they are engaged in supply chain process redesign as they bring in new digital tools.
● 90% believe that digital tools are critical in achieving greater resiliency.
Managing complex supply chains has never been easy, but it has gotten a whole lot harder in the first few months of 2025.
Manufacturers say that the Trump Administration’s on-off-on again tariffs have created disruptions and uncertainty, and they have no clear idea when it all may end.
A new supply chain poll by the Manufacturing Leadership Council reveals that 43% of respondents are already experiencing a negative impact in their supply chains because of the tariffs, with nearly 20% saying the impact is significant. Uncertainty reigns for many others, with 45% saying it is too early to assess the impact of the trade measures (Q1).
The most damaging effect from the tariffs, say 65% of respondents, is rising costs, followed by business disruption and growing uncertainty in their business relationships (Q2).
The result of the trade policy tumult is that manufacturers are doubling down on trying to achieve greater resiliency and visibility in their supply chains using digital tools, disciplines that rose to prominence during the COVID pandemic. Nearly 74% of respondents cited increased adoption of supply chain analytics as a key mitigation strategy in the current environment. And nearly 70% said they would be increasing their focus on ways to make their supply chains more resilient using those tools (Q3).
1. More than 40% Say Trump Tariffs Are Having a Negative Impact
Q: What impact are tariffs announced by the Trump Administration having on your company’s supply chain?
2. Rising Cost Is Most Severe Impact of Tariffs
Q: If your company is concerned about the impact of tariffs, what degree of importance would you assign to the following factors? (Percentage selecting 5, the highest level of importance)
3. Digital Tools, Resiliency Are Top Mitigation Strategies
Q: What strategies are you adopting to mitigate future supply chain disruption? (Top three)
Manufacturers will need these tools not only for tariff-related mitigation. Market disruptions seem to have become the new normal. In recent years, cost pressures, demand surges, and component shortages have also adversely affected manufacturers’ supply chains, according to the survey. For those still dealing with them, there is little consensus on when they might ease. More than 40% say they simply don’t know when disruptions will subside (Qs4,5)
4. Rising Costs, Component Shortages Have Been Key Disrupters
Q: Over the last several years, what have been the most impactful types of supply chain disruptions you have encountered? (Ranked on a scale of 1-5, with 5 the highest level of impact)
5. Most Cannot Say When Disruptions May Ease
Q: If you are still experiencing supply chain disruptions, when do you expect the disruptions to subside?
Tracking Resiliency and Integration
Considering all of the forces affecting supply chains, a determined, sustained focus will be necessary to push the resiliency cart further up the hill given that most manufacturers, 76% according to the survey, are only “somewhat” resilient today. But progress is being made. In the new survey, 17% say their supply chains are “very resilient” today. That compares with only 6% saying so in 2023, the last time MLC undertook a supply chain study (Q6).
Central to this effort are three related things – supply chain process redesign, which 78% in the new poll say there are doing; reducing supply chain complexity, underway by 85%; and the increased adoption of digital tools, which 90% believe are critical to building greater resiliency into their supply chain operations (Qs7, 8, 9).
6. Greater Resiliency Is on the Rise
Q: How would you rate your current supply chain’s resiliency?
7. A Strong Majority Redesigning Supply Chains in Light of Digital
Q: As you adopt more digital technologies across your supply chain, are you also taking the opportunity to redesign your supply chain processes?
8. Reducing Complexity is a Key Goal
Q: Are you making specific efforts to reduce supply chain complexity and increase responsiveness and resiliency to disruption?
9. Digital Seen as Playing Significant Role in Achieving Resiliency
Q: Ultimately, how significant an impact will digital technologies have on creating more resilient manufacturing supply chains in the years ahead?
Of course, digitization and integration are required steps in creating a foundation for greater resiliency.
On the digital front, manufacturers are reporting progress, with 26% in the new poll saying that most or all of their supply chain functions have been digitized, up from 13% in 2023. A steady 66% say that some functions have been digitized at this point in time (Q10).
10. Strong Aspirations for Full Supply Chain Integration
Q: To what extent are your supply chain functions integrated today and to what extent do you expect them to be integrated in two years’ time?
Over the next two years, digital aspirations are strong across functional supply chain areas.
Asked to mark the extent of digitization in eight functional areas today and in two years’ time, survey respondents in each case indicated they want to double and even triple the extent of digitization in their supply chain operations.
For example, only 9.7% say that their demand forecasting process is fully digitized currently. Within two years, though, more than 30% aspire to fully digitize this important process. In manufacturing operations, much the same dynamic is in evidence. Today, 11.9% of respondents say their manufacturing operations are fully digitized, but by 2027, 28.5% expect to be able to claim that achievement. (Qs11,12)
11. Internal Chains Have Become Increasingly Digitized
Q: Which description best characterizes the digital maturity of your internal supply chain functions today (plan, source, make, deliver)?
12. Operations Leads in Digitization but Many Functions Slated for Growth in Next 2 Years
Q: To what extent have you digitized the following supply chain functions today and what do you expect the extent will be in two years’ time? (Ranked on a scale of 1-5 where 1 indicates all manual, and 5 indicates all digital)
Much the same pattern emerges when survey respondents were asked about the technologies they are deploying to manage their supply chains today and by 2027. Only two technologies – standard supply chain management software and cyber tools – show declines in the next two years, while the rest show, in some cases, very substantial increases.
For example, 54.7% said they are currently using predictive analytics software in their supply chain operations, but by 2027, almost 81% expect to be doing so. Intentions with artificial intelligence and machine learning are even stronger, with 35.7% today rising to 85.7% over the next two years. And more than 80% believe that AI will have a significant impact on their supply chain operations over the next few years (Qs13,14).
13. Increasing Reliance on Technologies Foreseen in Next 2 Years
Q: What technologies are you currently using to digitize your supply chain and what do you expect to be using in two years’ time?
14. Significant Role Foreseen for AI
Q: Looking ahead over the next few years, how significant an impact will AI have on your supply chain?
Opportunities and Challenges
Given the recent experience with the pandemic and the current situation with trade and tariffs, it is not hard to understand why manufacturers are putting so much emphasis on agility, visibility, and resiliency of their supply chains. They have to be able to react quickly to market changes and pivot when necessary. Overwhelming majorities of survey respondents say their top goals are greater responsiveness in decision-making, increased resiliency, cost reduction, and the ability to deliver an improved customer experience (Q15).
15. Agility, Resiliency, Cost Are Top Business Goals
Q: How important are the following business goals associated with your digital supply chain transformation? (Rated high in importance)
But reaching these goals requires streamlined processes and systems that can provide accurate data — and herein lies one of the challenges many manufacturers face.
Many companies are still fairly early on in sharing data with partners in their supply networks. Less than one quarter of survey respondents say that data is “extensively” shared with network partners. About one third share data partially across their networks (Q16).
A key reason this is the case, the survey suggests, is a lack of common data platforms in their networks. A strong majority, 59.5%, say the lack of common data platforms is a major challenge in being able to implement an end-to-end digital supply chain strategy (Q17).
If manufacturers need any additional motivation to make progress on this front and achieve the agility and resiliency they desperately need in these turbulent times, they’ve got it now.
16. Data Sharing is Still in its Infancy
Q: To what extent is data routinely shared between any or all of your supply chain partners?
17. Primary Digital Constraint is Lack of Common Data Platforms
Q: What are your company’s primary challenges in implementing an end-to-end digital supply chain strategy? (Top 3)
About the author:
David R. Brousell is the Founder, Vice President and Executive Director, Manufacturing Leadership Council