Cost Volatility Mitigation

Procurement teams struggle to measure risk mitigation but it’s the foundation of what we do. Because we can’t articulate the value in CFO-friendly terms… …millions of pounds never make it onto the Procurement Value Report. And here’s the thing: Risk mitigation isn’t the sole domain of the Risk team. Procurement is the first line of defence against supply chain disruption, supplier failure, and compliance breaches. The value IS measurable, in numbers your CFO will respect. Here are 6 procurement-specific ways to prove it and exactly how to capture each one: 1️⃣ Cost Avoidance from Supplier Disruptions 💡 Example: “Avoided £1.6M in downtime by identifying a critical supplier at risk of insolvency six months early.” ✍ Capture it: Compare projected cost of disruption (lost output, emergency spend) with actual cost after mitigation. 2️⃣ Reduction in Supply Chain Risk Exposure 💡 Example: Supplier risk score drops from 8 → 4, potential impact £2M → exposure cut by £1M. ✍ Capture it: Track supplier risk scores quarterly × estimated financial impact of a disruption. 3️⃣ Avoided Expediting / Spot Buy Costs 💡 Example: “Avoided £400K in emergency air freight and spot buys due to dual sourcing.” ✍ Capture it: Keep a log of all potential emergency orders avoided + standard market rate for those buys. 4️⃣ Mitigation ROI 💡 Example: £1.2M avoided − £150K cost = 700% ROI. ✍ Capture it: Record direct costs of mitigation initiatives vs. the quantified financial impact avoided. 5️⃣ ESG & Regulatory Compliance Impact 💡 Example: “Avoided £850K in fines by enforcing modern slavery and environmental compliance checks.” ✍ Capture it: Record potential fines/sanctions linked to non-compliance and match to supplier audit results. 6️⃣ Scenario-Based Value Modelling 💡 Example: “Mitigation plan X reduces exposure to Supplier Y’s failure from £2.5M to £150K over 12 months.” ✍ Capture it: Build ‘what-if’ models with Finance, showing pre- and post-mitigation exposure. If you’re not tracking this, it’s not on your Procurement Value Report. If it’s not on the report, it’s invisible. If it’s invisible, someone else will take the credit. Use this in your next quarterly value reporting session with your CFO. Repost if this was helpful ♻️ What's the biggest risk to organisations right now? LMK in the comments 👇

How to Think About Tariffs (and Supply Chain Chaos) in 2025 Most people think working in supply chain is about moving goods from point A to point B. That’s only half the story. The other half is risk arbitration: measuring, absorbing, and pricing uncertainty across time, distance, and counterparties. If you’re running finance or ops in a product company, you’re likely already in fire-fighting mode most days. Freight delays, chargebacks, missing credits, etc. The latest round of tariffs adds a different kind of pressure that hits your working capital strategy, not just your margins. A better way to think about tariffs is that they aren’t a line item—they’re volatility. They behave like FX or commodities exposure: unpredictable, external, and able to distort your gross margins without notice. If they’re not modeled with that in mind, they quietly inflate your buffer cash and force you to carry extra inventory. What this means for your financial strategy: 1. Reforecast more frequently. Quarterly modeling isn’t enough when duty rates shift mid-shipment. Monthly (or even weekly) adjustments to landed cost assumptions can help protect gross margin targets. 2. Segment volatility by SKU and supplier. Not all tariff exposure is equal. Use weighted landed cost modeling to understand where variability is highest and treat those SKUs differently in pricing and purchasing. 3. Treat receivables as risk assets. Tariffs are just one layer of noise. Add in ad hoc deductions and inconsistent customer behavior, and treat AR as a portfolio of debt-like instruments. 4. Push for better terms on volatility passthrough. If you can’t eliminate the risk, share it. Revisit contracts to bake in mechanisms for dynamic cost adjustments. Tariffs will come and go, but the bigger theme is this: structural volatility has always been part of supply chains. The companies that model for it, price it, and hedge against it will be the ones that stay liquid and aggressive while others pause.

📦 Navigating Ongoing Tariffs: Strategies for Resilient Supply Chains The impact of ongoing Section 301 tariffs—particularly those targeting U.S.-China trade—continues to challenge global supply chains, especially in high-complexity industries like MedTech and Pharma. For procurement and operations leaders, the question isn’t if tariffs will affect your cost structure, but how prepared your organization is to respond. Forward-looking companies are adopting a multi-layered approach to mitigate tariff risk: ✅ Geographic diversification – Shifting production and sourcing from China to Vietnam, India, Mexico, or Eastern Europe to reduce tariff exposure. ✅ Tariff engineering – Reclassifying product components or altering designs to fit under lower-duty classifications. ✅ Contract restructuring – Negotiating supplier terms to share or offset tariff-related cost increases. ✅ Nearshoring & FTZs – Leveraging free trade zones, bonded warehouses, and regional production models to defer or avoid duties. ✅ Scenario planning – Embedding tariff impact into total cost models and proactively simulating “what-if” supply scenarios. In today’s climate, tariff mitigation is not a one-time event—it’s a strategic discipline. It demands cross-functional collaboration between sourcing, legal, tax, and logistics teams, paired with agile decision-making and up-to-date market intelligence. 🎯 Whether you're reshaping your supplier footprint or designing a more resilient operating model, it's clear that proactive tariff strategy is a critical lever for cost optimization and risk mitigation. 🔍 Want to learn more? Here are some helpful resources: - USTR Section 301 Updates - PwC Trade Insights - Bloomberg Tariff Tracker Let’s connect—what mitigation strategies are working for your organization?

I’ve been in procurement and involved in cost savings for a long time, and I can’t recall a time when cost volatility was this extreme. Seismic shifts are happening across industries, creating ripple effects that are hard to predict. Here’s what we’re seeing right now across indirect spend: ✅ Steel & aluminum tariffs increasing costs for facilities, maintenance, and equipment ✅ IT hardware & electronics tariffs surging 25%-100% ✅ Labor-based services facing higher costs due to wage inflation & new contractor classification rules ✅ Freight & shipping expenses climbing due to regulations and labor agreements ✅ Infrastructure projects fueling demand (and costs) for materials and labor And with a 10% tariff on all imports looming, uncertainty is the only certainty. This is where procurement, CFO's and functional leaders have to think differently. Cost-cutting alone isn’t the answer—cost control and predictability are. CoreTrust sits at the intersection of scale and strategy, helping businesses navigate these challenges by: 🔹 Creating pricing stability in volatile categories 🔹 Leveraging scale to mitigate supply chain shocks 🔹 Enabling agile sourcing strategies to stay ahead of market shifts For those of us in procurement, finance and supply chain, these challenges aren’t new—but the pace and scale are. Companies that act today to drive cost control will be the ones that emerge stronger tomorrow.

Is your supplier capable of withstanding market unpredictability? In today’s volatile environment, a stable supplier is crucial to ensure seamless operations. From economic shifts to changing regulations, a supplier’s ability to adapt and stay resilient affects your entire supply chain. Here’s how you can assess a supplier’s stability and avoid disruptions. 𝐄𝐯𝐚𝐥𝐮𝐚𝐭𝐞 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐇𝐞𝐚𝐥𝐭𝐡 Reviewing a supplier’s financial stability helps you understand if they can manage cash flow and withstand market shifts. Request financial reports, such as balance sheets and profit statements, and look for signs of financial resilience. A financially stable supplier is better equipped to handle delays, material shortages, or production issues. 𝐂𝐡𝐞𝐜𝐤 𝐟𝐨𝐫 𝐋𝐨𝐧𝐠-𝐓𝐞𝐫𝐦 𝐂𝐨𝐧��𝐫𝐚𝐜𝐭 𝐂𝐨𝐦𝐦𝐢𝐭𝐦𝐞𝐧𝐭𝐬 Strong, clear contracts provide security. Make sure contracts detail commitments, penalties, and timelines. These safeguards offer stability, giving you recourse if the supplier cannot fulfill obligations. 𝐀𝐬𝐬𝐞𝐬𝐬 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐂𝐚𝐩𝐚𝐜𝐢𝐭𝐲 & 𝐅𝐥𝐞𝐱𝐢𝐛𝐢𝐥𝐢𝐭𝐲 Verify that your supplier has the production capacity to handle any increases in demand. Flexibility to scale up or down as needed is essential, especially during peak seasons. Suppliers with adaptive systems are more capable of handling fluctuating demands without compromising quality. 𝐀𝐧𝐚𝐥𝐲𝐳𝐞 𝐒𝐮𝐩𝐩𝐥𝐲 𝐂𝐡𝐚𝐢𝐧 𝐃𝐞𝐩𝐞𝐧𝐝𝐞𝐧𝐜𝐢𝐞𝐬 Understanding your supplier’s own supply chain network is critical. If they depend heavily on certain raw materials or secondary suppliers, this could expose you to risk. Ask questions about their sourcing partners to assess vulnerabilities. 𝐂𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐑𝐢𝐬𝐤 𝐌𝐢𝐭𝐢𝐠𝐚𝐭𝐢𝐨𝐧 𝐰𝐢𝐭𝐡 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 Investing in business interruption insurance can be invaluable. This coverage can protect your operations if a supplier fails, allowing you to maintain continuity with minimal disruptions.