The New Disruption Playbook – Part 5 –

Strong teams don’t just react—they reengineer and realign

5: Strategic Sourcing and Category Management Plays

Every strong team has depth in its talent pool and a clear game plan. For procurement and supply chain leaders, this means bringing robust category management skills and a strategic mindset to sourcing decisions.

Traditional sourcing models often prioritize cost, quality, and delivery. Tariffs must be part of that equation, as a dynamic variable—not a static backdrop—and integrate them into your sourcing strategies. This requires:

• Scenario modelling and planning: Incorporate, monitor and manage tariff exposure into total landed cost calculations.
• Supplier segmentation: Align sourcing decisions with relationship strategies—collaborate with strategic partners on mitigation plans and explore alternatives for commodity suppliers.

Tariffs rarely impact all products equally. Some categories may face significant cost pressure, while others remain relatively insulated. This creates an opportunity to:

• Map tariff exposure by product line: Identify which SKUs or components carry the highest risk.
• Link insights to product development: Consider re-engineering products to reduce tariff impact or qualify for more favourable classifications.
• Align with marketing and pricing strategies: Products with higher tariff exposure may require repositioning or margin adjustments.

Product re-engineering isn’t just a technical exercise—it’s a strategic lever. Work with engineering and suppliers to:

• Explore alternative materials or components that shift origin to lower-tariff jurisdictions.
• Validate substantial transformation rules with customs experts to ensure compliance.
• Balance cost, compliance, and customer value in design decisions.

Procurement cannot act in isolation. Success depends on:

• Early engagement with engineering and product teams to influence design choices.
• Partnership with legal and compliance to avoid misclassification risks.
• Coordination with tax, finance and commercial functions to align tariff strategies with pricing and profitability goals.

Actionable Plays

• Build tariff-adjusted sourcing cost models for supplier selection, include risk profiles and sensitivity analysis capability.
• Use portfolio segmentation frameworks to prioritize re-engineering vs. sourcing shifts.
• Model total landed cost scenarios for high-risk categories.
• Develop playbooks for supplier negotiations that include cost-sharing and flexibility clauses.

Operationalise the negotiation playbook into “run-state” spend control: lock a single reconciled baseline, maintain a live deal control sheet (should‑cost + index inputs + concession tracker + governance cadence), and convert negotiated outcomes into enforceable term sheets, compliance controls and SRM routines so savings don’t leak post‑signature.

Real Play: global wine supplier

A global beverage producer reviewed a long‑standing bottling arrangement after energy‑driven volatility materially shifted input costs. Although the relationship with the bottling partner remained constructive, the client wanted an objective fact base on whether commercial rates had adjusted in line with the forward cost position.

We developed bottom‑up should‑cost models across the primary cost blocks (with the largest focus on glass and filling, supported by packaging components) and compared these to prevailing commercial terms. The analysis quantified a material value gap equivalent to ~22% of the annual addressable spend in this relationship. The majority of the gap was concentrated in two “big‑ticket” areas: around two‑thirds of the value gap was attributable to glass economics, with the remaining roughly one‑third linked to filling charges and underlying input assumptions.

Recognising that not all levers are immediately bankable in-year, we translated the headline gap into a prioritised, executable plan and set a credible first‑year capture target (rather than claiming the full gap). This approach enabled execution of a more constructive negotiation anchored in transparent cost drivers, improved forward price governance, and reduced the likelihood of recurrent disputes as energy and inflation conditions continue to move.

In the next part of this series, Play 6, we discuss the often ill-considered risks associated with achieving the capacity you need.

Previously we published:

Play 1 on Diversification
Play 2 on Collaboration
Play 3 on Contracts
Play 4 on Innovation