For manufacturers, procurement decisions are becoming harder to make as shifting trade policies and geopolitical disruptions complicate the flow of goods and put pressure on profitability. From the metals and plastics used in production to machinery maintenance and IT software, manufacturers depend on a wide range of purchases to keep their businesses running. Procurement brings those needs together through sourcing, supplier negotiations, and purchasing decisions that impact production schedules, cash flow, and profitability. But as costs rise and supply conditions shift, manufacturers face difficult decisions about where to source what they need, when to buy, and how much to spend.
What Is Driving Procurement Challenges?
Tariffs and changing trade policies are making costs harder to predict for manufacturers that purchase imported materials or components. Thomson Reuters’ 2026 Global Trade Report describes rising costs, customs delays, and difficulties maintaining supplier agreements as businesses adjust to tariff volatility.
Conflict in the Middle East adds further pressure through disruptions to energy supplies and transportation. Plastic packaging producers, for example, are contending with higher material, energy, and shipping costs alongside uncertainty surrounding U.S.–Canada tariffs. These overlapping pressures complicate purchasing commitments and make fixed-price agreements more difficult to manage.
For procurement teams, these conditions create a difficult planning environment. Suppliers may revise pricing or delivery expectations, while customers’ purchasing needs continue to change. A sourcing arrangement that worked well previously may warrant another look as conditions evolve.
Financial Impacts Across Your Business
Higher purchasing costs put pressure on margins, particularly when customer contracts or competitive conditions limit price increases. Absorbing higher costs can cut into your company’s profits, even when sales remain steady.
Delivery uncertainty also creates financial trade-offs. Additional inventory may help protect production schedules, but it also ties up cash and increases carrying costs. Purchasing too little leaves a business exposed to shortages, production interruptions, and expedited shipping expenses.
Exploring alternative suppliers comes with its own challenges and considerations. Evaluating a new source takes time, and differences in quality or reliability may affect the expected savings. Manufacturers need a clear understanding of the full cost of a sourcing decision and its implications for operations.
These pressures make coordination between procurement, operations, and finance teams especially important. A shared view of costs and production needs can help your company’s management team assess the available options and make informed decisions.
How to Improve Procurement and Cost Management
Changing trade policies, rising costs, and supply chain disruptions can make it more difficult for manufacturers to manage expenses and maintain profitability. Reviewing product costs, inventory levels, and supplier relationships can help identify opportunities to control costs and improve operational efficiency.
Manufacturers should discuss procurement challenges with operational advisors, as well as opportunities to improve cost management and operational efficiency.
Share this article
Contact Our Manufacturing Industry Professionals
Complete this form to discuss procurement challenges and opportunities to improve cost management and operational efficiency.
By submitting this form, you agree to be contacted by UHY.
Author
CHRISTOPHER SEGER
Partner, UHY LLP Managing Director, UHY Inc.
Christopher Seger has more than 11 years of public accounting experience, Chris provides tax, accounting, and advisory services that help businesses and individuals make informed financial decisions and achieve their long-term objectives. His expertise includes the preparation of individual and corporate tax returns, interim and annual financial statements, financial statement projections, budgeting, and strategic tax planning tailored to each client's unique goals. Chris also advises clients on their day-to-day, monthly, and annual accounting needs, helping them strengthen financial reporting, improve decision-making, and prepare for future growth and ownership transitions. As a Partner, he plays an active role in developing the firm's next generation of professionals by training and mentoring incoming accountants while fostering a collaborative, client-focused culture. Chris has extensive experience serving manufacturers, wholesalers, retailers, and distributors, providing practical guidance that helps business owners better understand their financial performance and position their companies for future acquisitions or succession opportunities. He is actively involved in several community and professional organizations.