What Are You Doing to Manage Supply Costs?

As a prairie CEO, how are you and your executive team proactively managing supply costs and supplier relationships during this trade war?

Supply costs for resale or manufacturing are an obvious and significant issue for some companies (and we’ll get to that in a minute). But every Canadian company will experience increased overhead costs as a result of Canadian tariffs. So every company should be watching pricing on their overhead supplies. 

Office furniture, office equipment, printers, copies, computers, telephones, monitors, sign plates, white boards and other office items from the US are subject to Canadian tariffs. 

Ensure that all members of your executive team have their team members keep an eye on prices of any general office or business products they purchase and pick lower priced alternatives from their retailers, or switch suppliers as needed.

For products, parts or materials you source from the US for resale or manufacturing have tariffs already imposed on them, find out what your suppliers are expecting in terms of price increases and when. And know what your contracts with suppliers say about price increases and which party will pay a tariff.

In some cases, it may be possible to reduce or eliminate Canadian tariffs that have already been imposed or are imminent. You may be able to have a Canadian trade lawyer work with your US supplier to change the customs class the supplier’s product falls into so that it won’t be subject to tariffs.

If the tariff on the US product is inevitable, looking for alternative suppliers, where possible, may be a wise strategy. While suppliers in other markets may be an option, consider alternative Canadian providers, given both the extra supply they may have while facing US tariffs on their products, as well the growing buy-Canadian sentiment. 

Manage changes in suppliers carefully to ensure as seamless an experience as possible for customers and to maintain good relationships should you want to go back to these suppliers in the future.

If it’s not possible to change suppliers, and the supplier confirms a price increase, as usual, have them put it in writing. Negotiate a locked-in price even for a short period, so there is some level of certainty for a time, after which the situation can be re-evaluated.

Stay in touch with suppliers to understand how their business is doing, and ideally their cash flow, such that you can be aware of any risks of them not being able to secure or produce the materials or you need. You may want to check your suppliers’ creditworthiness to gauge their cash flow health.

If tariffs have yet to hit your suppliers’ products, know what countries your suppliers buy from in order to be aware of potential risks. Then ask suppliers to forewarn you of price increases as much as possible.

Finally, research alternative suppliers to have as a back-up just in case things change with your suppliers.

The key message here is: be proactive. Your bottom line, customers and employees will thank you for it.

For other ways to navigate these challenging times with confidence, get the free complete Trade-War Success Guide for Small to Mid-Size Companies below.

Access Your Trade War Success Guide

If you are a prairie CEO who wants to grow a thriving company through these turbulent times, more quickly, more easily and with less stress and headache, please contact me here.

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