The New Disruption Playbook – Part 4 –

An interception quickly changes a game

4: Product and Process Innovation Plays

We all love the way a dramatic interception can change the flow of a game. In global trade, rethinking how and where products are designed, sourced, and assembled can be equally game-changing. As tariffs become more dynamic and complex, product re-engineering is a powerful lever — not just for cost control, but for compliance and competitive advantage. This isn’t about minor tweaks to reduce a duty rate; it’s about understanding how customs authorities determine origin and how that shapes tariff exposure.

Customs rulings consider assembly location, origin of key components, value added in nearshore or onshore markets, and whether the transformation is substantial enough to change the product’s essential character. Even if final assembly occurs in a low-tariff country, if core components come from high-tariff jurisdictions and minimal transformation occurs, the product may still be treated as originating from the higher-tariff source. This is why re-engineering must be approached strategically, with procurement, engineering, and suppliers working together.

Re-engineering to achieve a more favorable tariff classification — sometimes called tariff engineering — is legitimate but must be done carefully. Authorities will scrutinize whether changes are substantive or cosmetic. Legal and compliance teams should be involved early to avoid misclassification risks. We’re not moving away from globally connected supply chains, but we are being asked to manage them more intelligently. That means involving the right people at the right time.

Procurement plays a critical role in shaping strategies that balance commercial, operational, and regulatory priorities. This includes partnering early with engineering to explore design alternatives, working with suppliers to trace component origins, and assessing tariff exposure. For strategic suppliers, collaborate on redesign; for commodity suppliers, consider alternative sources. Use segmentation frameworks to decide what to nearshore, what to onshore and where to assemble. Model total landed cost — including tariffs, freight, and compliance — to guide decisions. Leverage brokers and 3PLs for early visibility into regulatory shifts.

When guided by the right insights, product re-engineering becomes more than a technical exercise — it becomes a strategic lever for resilience and competitiveness in a volatile world.

Real Play: a global home appliance manufacturer

This client recently decided it would be prudent to review its manufacturing operations, which were all based in one country.

Through criteria-based shortlisting, we reduced the global list of supply markets to a dozen priority countries. From there, we identified circa 50 potential contract manufacturers and component suppliers across the Americas, EMEA, and APAC—representing the most competitive options in each region.

Our report made recommendations for each region, based on the manufacturers’ capabilities, overall product and market alignment, and other pertinent factors that could advantage the business.

In the next installment, Play 5, we will go deeper in terms of strategy and discuss how sourcing and portfolio management might change in the new world of tariffs.

Previously we published:

Play 1 on Diversification
Play 2 on Collaboration
Play 3 on Contracts