Raise prices or invest in the supply chain?

Hello, and welcome to this week’s edition of Straight Talk. Inside, we discuss:

• Addressing tariff concerns
• Uptick in M&A?
• Visibility-as-a-Service
• Understanding complex trade dynamics

If this was forwarded to you and you wish to receive it each Sunday morning in your email, please go here to sign up for SCMR newsletters.

Holistic approach to tariffs

Last week in this space, I wrote about tariffs and the Trump administration’s early propensity to use them as leverage to gain compliance from foreign countries. (you can read it here). Within hours of that newsletter hitting inboxes, Donald Trump took to Truth Social to announce a 25% tariff on the country of Colombia for refusing to accept deportees on a U.S. military aircraft. While that was settled and no tariffs were levied, it did prove the point of last week’s newsletter, which I had titled, “Tariff turmoil. What do you do?”

Someone (and I neglected to save this post and have been unable to locate it again, so apologies fo that) on LinkedIn shared their thoughts, which boiled down to this: Don’t worry about the tariffs, just plan on raising your prices accordingly.

Well, that is one approach, but I thought I’d follow up this week with a broader discussion that tries to answer my question from last week: what do you do? To do that, I sought the counsel of Carla DeSantis, operations transformation partner at PwC. Her advice is a bit more nuanced. Let me explain.

?

Consider the long term

The big takeaway from the conversation was that while tariffs are front of mind, successful businesses should not make critical supply chain or value chain decisions based solely on the impact of tariffs.

“We can still go back to [the question of whether] he is playing a negotiation plan or is it about immigrants. I think it goes beyond that. I think he wants [reshoring],” DeSantis told me. “If you are trying to make those choices tied to cost of manufacturing or cost of supply, I think you are telling only part of the story. And I think that is where clients get [tied up] and don’t think it through.”

DeSantis said that while decisions based on short-term impacts such as tariffs should play a role in a firm’s supply chain decision-making, if that is the only consideration, then the business is setting itself up to fail. “You have seen the potential of tariffs exceeding profitability and revenue, so you can’t ignore it, but you need to think long-term for your business,” she said. “You have to be in a position to justify that from a business standpoint and not a tariff mitigation standpoint.”

?

Alternative thinking

DeSantis urged companies to think holistically, with tariffs just one of the data points. Disruptions have become more common in recent years, so reacting to only a single data point is counterproductive. In fact, DeSantis noted that sitting and waiting to just raise prices (as the LinkedIn poster suggested) is an option, but if you choose that route, “you will miss the opportunity to create a solution that you don’t have to wait to implement.” That solution, she said, may very well help you mitigate the impacts of other disruptions and set up the business for increased revenue and profit down the road (even if there is short-term pain from increased investment).

“You have seen the potential of tariffs exceeding profitability and revenue, so you can’t ignore it, but you need to think long-term for your business. You have to be in a position to justify that from a business standpoint and not a tariff mitigation standpoint.”

That is a viewpoint that Gartner Supply Chain experts share. In an analysis released last week, Gartner noted the potential impact of tariffs and suggested strategies for turning them into opportunities. “Enterprises should recognize tariff volatility as a multiyear, dynamic event,” said?Suzie Petrusic, senior director analyst in?Gartner’s Supply Chain practice. “Chief supply chain officers (CSCOs) who recognize this reality should continually evaluate opportunities to invest in strengthening their operations and attract outside investments from geopolitical actors and ecosystem partners.”

Brian Whitlock, senior research director in?Gartner’s Supply Chain practice, said that long-term winners are those that use this time to “reinvent or reinvigorate their business strategies, developing new capabilities that drive competitive advantage.” He added that in “almost all cases, this will require material business investment and should be a focal point of current scenario planning.”

DeSantis said that companies should be assessing where they are most vulnerable, both geographically and from a supplier standpoint, and should consider “scenario optionality.” This would include scenario optionality for their partners as well, because a supply chain is only as strong as its weakest link.

“Don’t think about this as ‘I need a tariff response plan’ but rather that I need a [supply chain optimization plan],” she said. And thinking long-term is the only way to successfully accomplish this.

?

Invest, invest, invest

Finally, DeSantis noted that while many companies are simply seeking to survive tariffs, the best of breed companies will be investing. That may be in people. It may be in technology. It may in supplier diversification or geographic diversification. Her advice included incorporating technology such as artificial intelligence or machine learning if you haven’t done so and leveraging it to do scenario modeling. Talking to partners, and even pre-vetting potential partners are other strategies that can be incorporated so the business is able to quickly respond to a disruption should it need to. “You figure out what are those moves for you so you have those opportunities should [you need to make a decision],” she said. “There is a lot of volatility in place, so having plans in place [is important].”

One factor that DeSantis addressed is the upfront cost of technology investment. While not a supply chain problem, the “go-to-market” strategy of a business needs to be considered. Saying that there is plenty of sensitivity to price increases right now, companies need to understand that technology investment can help mitigate some costs, such as the impact of tariffs. If investment in technology is able to create new efficiencies, it may not negate the cost of tariffs, but it may help the company hold the line on prices.

Finally, DeSantis pointed to the need to approach any decisions holistically, noting that “understanding where and how your competitors are playing and where they are making moves … is really important. That’s part of the holistic game as well,” she said.

The big takeaway: While tariffs are front of mind, don’t succumb to the pressure of decision-making based on a potentially short-term impact. Instead, focus on long-term resiliency planning and if possible, use this time as an opportunity to invest in technology and processes that will set you up for future success. It may lead to more long-term business that wouldn’t happen if you “just raises prices.”

?A big year for M&A

Benjamin Gordon, CEO of Cambridge Capital, is predicting a big year for M&A activity in the supply chain space in 2025. Writing on X, he shared results from over 320 supply chain CEOs surveyed by Cambridge Capital. More than 70% expect more M&A activity this year, and 64% said they are very likely or somewhat likely to seek out a merger, acquisition or some other transaction this year. Why? “First, we believe that after a three-year freight recession and a two-year capital markets pause, there is tremendous pent-up demand. Second, the mood at BGSA Supply Chain 2025 reflected a surge in what Keynes called ‘animal spirits.’ CEO optimism is a real factor. Third, industry leaders are preparing to take action,” he wrote. For startups in the space, this is good news. Afterall, some startups are designed to grow into large companies, but the majority hope to grow enough to sell. It’s why investors invest. If M&A activity picks up, so too will the number of people looking to get into the industry, and that will drive more innovation.

Visibility-as-a-Service

Many are familiar with Robotics-as-a-Service. It has been a godsend for companies that wanted to install robotics and automation into their warehouses but didn’t have the tens of millions of dollars to do so, or didn’t need a full-scale deployment. RaaS allowed them to install only what they needed, or what they could afford. And enabled them to scale as their business grew. Now, we have the same as-a-Service approaching occurring in the visibility space. Frank Kenney, director of industry solutions at Cleo, joined me on the Talking Supply Chain podcast to discuss VaaS and whether we can really achieve true end-to-end supply chain visibility. You can listen to the conversation here.

What I read this week

Louis Sola, the new head of the Federal Maritime Commission, talked with CNBC about the Panama Canal and concerns President Trump has with its neutrality. … For companies looking to invest in their business, make an acquisition, or in need of a cash infusion, the environment for venture debt financing is improving in 2025. … Jono Liu, vp of global sales and marketing at Dimerco Express Group, joined the In Transit Podcast to discuss the complexities of evolving global trade dynamics. … DoorDash will start delivering items from Home Depot stores, bringing home improvement supplies direct to consumers. … What is resilience? At its core, supply chain resilience refers to the ability of a supply chain to anticipate, prepare for, respond to, and recover from disruptions while maintaining continuous operations.?But it’s more than that.

?

Thank you for reading,

Brian