Today, supply chain disruption is no longer the exception — it’s the rule. Conditions can pivot in an instant, and nothing exemplifies this state of affairs better than the recent announcement by the Trump administration of tariffs on imports from Canada, Mexico and China.

The resulting uncertainty around the amount and timing of the tariffs places procurement and supply chain functions in a challenging position. Businesses need to model an extensive range of potential tariff scenarios, construct new short- and long-term strategies, and carefully analyze the numerous downstream impacts that each enforcement scenario could have on global supply chains. It’s a daunting task that demands significant resources.

A Plan of Action

Organizations need a multi-pronged strategy to address supply chain disruption at scale, one that includes the following six key actions:

Evaluate supplier exposure and identify alternatives. The first step when faced with a disruptive event is to assess the likely extent of its impact on suppliers across geographies, and the associated cost of sourcing from them. Only then can alternative suppliers be identified to optimize the total cost of ownership.

Taking the evolving U.S. tariff situation as an example, some organizations may prioritize sourcing from U.S.-based suppliers to avoid tariffs altogether. While domestic suppliers may charge higher prices, the absence of tariffs could make up for the cost increase. Additionally, nearshoring strategies — such as shifting procurement to neighboring countries with favorable trade agreements — can help in reducing geopolitical risk while maintaining cost efficiency.

Continuously monitor the scenario. When a tariff is imposed, it can trigger a wave of retaliatory and protectionist responses. Even before potential tariffs on European Union steel and aluminum were announced by the Trump administration in early February, the E.U. condemned any future U.S. tariff hikes, threatening retaliatory measures against American motorcycles, agricultural products and bourbon, among others.

Teams must regularly conduct holistic risk assessments and scenario planning to evaluate the likely impact of tariffs and other potential disruptions on their procurement strategies. Continuous tracking can be facilitated through the help of digitally enabled end-to-end risk monitoring, using generative artificial intelligence to process large datasets and provide rapid, contextualized analyses for decision-making. 

Prepare for cost increases. It’s highly unlikely that businesses will navigate the current volatility around tariffs without encountering cost increases in some capacity. Secondary effects, such as rising energy costs, will be difficult to avoid in the short term. 

At this stage, procurement leaders must align with their organization’s chief financial officer to implement strategies such as spending freezes and caps, which can help to maintain business continuity and profitability amid escalating costs.

Supplier consolidation can also drive efficiencies by negotiating volume-based discounts, while diversification of sourcing can prevent over-reliance on high-risk suppliers.

Turn to technology to develop contingency plans. It’s important to model how tariffs might impact export-dependent suppliers. GenAI-powered procurement technology platforms can be a powerful ally, helping to quickly map out supplier impacts and model knock-on cost shifts. 

Armed with tech-enabled pattern analysis of cost fluctuations, currency volatility and alternative sourcing routes, companies can renegotiate terms to protect against sharp price increases, while safeguarding suppliers against steep drops in demand. 

For businesses already invested in traditional AI, the integration of procurement data into GenAI platforms can accurately predict the impact of tariffs, and suggest mitigation strategies. For organizations that have yet to embark on their GenAI journey, now is the time to take action to avoid falling behind in an increasingly data-driven landscape.

Optimize inventory management. To ensure short-term operational continuity, organizations should conduct a detailed review of their safety stock levels of critical raw materials and finished goods. By deploying AI-based demand-forecasting, they can refine their inventory strategies, ensuring that safety stock is optimized without excessive overstocking.

An increase in safety stock for products with high tariffs can help mitigate short-term supply risks. However, a strategic approach — such as just-in-time inventory in low-risk regions, and buffer stock for high-risk categories — can balance resilience with cost efficiency.

Explore new supplier payment strategies. In addition to identifying cost-saving opportunities, organizations can work with suppliers to create payment strategies that help absorb the financial shock of rising prices. 

For example, structured payment terms — such as extended payment cycles or dynamic discounting — can provide financial relief while ensuring continued operations. Alternatively, supplier financing programs or revenue-sharing models can help mitigate cash flow constraints while strengthening supplier relationships.

In addition to tackling immediate challenges such as higher tariffs, businesses need to zoom out and find ways to build supply chain agility and long-term resilience.

The Long-Term Perspective

Disruption is an ongoing challenge, placing the responsibility on procurement and supply chain leaders to ensure that their organizations can respond swiftly — or, ideally, proactively — to emerging risks.

To enhance responsiveness, companies must continuously monitor the landscape for potential threats, assess their projected impact, develop strategic responses, and implement them with agility. That requires a seamless integration of digital technologies and human expertise, working together to drive informed and adaptive decision-making.

The key to building resilient, adaptive procurement and supply chain strategies is harnessing technologies such as GenAI in ways that augment human intelligence and empower people to take the right actions at the right time.

AI is far more efficient than humans at scanning data, detecting patterns, and delivering valuable and timely procurement intelligence. The same is true for modelling the impacts of disruption and market changes. 

By continuously analyzing geopolitical developments, trade policies, and supply chain trends, AI-driven platforms can deliver highly contextualized insights that enable organizations to anticipate disruptions before they occur. This proactive intelligence allows businesses to adjust procurement strategies swiftly — whether by shifting supplier relationships, optimizing inventory, or renegotiating contracts.

For the modern procurement leader, working in harmony with traditional and generative AI means translating these insights into action. Complex supplier and contract decisions, nuanced negotiations, and strategic development are best driven by experienced human experts.

At the same time, businesses also need to ensure they’re set up for AI success. The availability of high-quality, unbiased and scalable data is critical to ensuring that AI-driven insights are reliable and aligned with business objectives.

While the challenges facing procurement and supply chain leaders are increasingly complex, the fundamental solution is clear: Create an environment in which AI and human expertise complement and enhance one another. By strategically integrating AI to handle data-driven insights while enabling professionals to focus on high-value decision-making, organizations can build more resilient, adaptive and disruption-ready procurement and supply chain functions.

Mita Gupta is executive vice president and business unit head with WNS Procurement.