According to the 2026 Procurement Agenda and Key Issues Study from the Hackett Group, which surveyed more than 200 procurement specialists, “spend cost reduction” is a top priority, right up there with supply continuity. Among manufacturers in particular, cost is critical, due to the price of materials and the impact of ongoing tariffs. The Association for Manufacturing Technology’s Tariff Impacts on Manufacturing Technology: 2025 Q3 Spot Survey (October 2025), which gathered the views of 80 manufacturing tech executives, finds that 91% reported increased landed costs due to tariffs, 85% said they’ve raised customer prices to offset those costs, and 85% reported margin compression on imported goods.
My own day-to-day interactions with manufacturers confirm these sentiments. Everyone from large manufacturers to small specialty equipment providers is focused on hard savings. Whereas in past years efficiency was on everyone’s lips, in 2026 cost is what matters on the highest level: What to do? How to navigate the situation in a way that embraces the immediate issue without selling yourself short down the line?
Cost Differs Depending on Manufacturing Type
Manufacturer concern around cost should not be a surprise. When it comes to tariffs, no industry is more exposed. If a tire manufacturer is suddenly facing rubber tariffs with Thailand, they can’t download a factory in a country with whom tariffs are magically not an issue, nor can they conjure up a contingent network of suppliers. The good news is that because of all the raw materials and goods they purchase, manufacturers can influence direct cost through negotiation & leveraging quantities through strategic supplier rationalization and indirect cost through intelligent analysis of tail spend.
Understanding the specifics makes the difference between a solution that solves your problem and one that only gives you a momentary respite. Saying “margins are tight” is meaningless unless you understand that cost is not a monolithic concept. What a smartphone screen manufacturer thinks of as cost and what a manufacturer of cooling fans for centrifuges thinks of as cost are two different things.
For the screen manufacturer, cost depends on high-frequency and quantities. A cellphone screen is a mass-market, low-ticket item, so manufacturers struggle with competition among lots of suppliers (all who claim to have the best materials at the lowest price) and the ever-looming problem of volume: How much is too much? How do we forecast demand, so we don’t get caught out with a warehouse full of unsold stock or an empty one with not enough product on-hand?
For the manufacturer of centrifuge cooling fans, the cost issue is inverted. Whereas the screen manufacturer could be dealing with 10,000 suppliers and 1 million purchase orders, the fan manufacturer, like any company in Life Sciences or Heavy Equipment Manufacturing, the challenge is low-volume, high complexity, high-risk.
Specialty manufacturers may only be dealing with 1,500 suppliers and 15,000 purchase orders, but they need to get them right. The right order can either make their year or wreck it. For Life Sciences in particular, the fewer suppliers must be evaluated according to hundreds of criteria, encompassing ISO certification, Good Manufacturing Practice (GMP) compliance, regulatory history, and defect rate, along with operational concerns around production capacity, technical ability, financial stability and ESG. ESG alone can doom a supplier or manufacturer, considering new EU requirements and business continuity issues created by tariffs and climate instability.
Finding the Common Denominator around Manufacturing Cost
Cost, as we have seen, varies according to manufacturing type. At the same time, the underlying challenge remains the same: How to meet the moment in terms of Direct & Indirect Cost, Supplier Performance and Risk, and Inventory & Storage?
Whether you are manufacturing centrifuge fans in Germany or smartphone screens in Taiwan, concerns around cost travel beyond the invoice to include logistics, customs, and staff time. There are also worries about supplier performance. You are forever tracking lead times, quality and reliability to avoid expensive delays. And within your immediate sphere, there are concerns around managing holding costs and avoiding shortfalls.
What started as a temporary change has become a “paradigm shift” (Deloitte). The cost of tariffs among manufacturers is not a monolithic issue, nor is it anything less than a fundamental challenge to how manufacturing is done. Attempts to deal with cost cascade into questions about sustainability, risk and both the present and future of a particular business.
In a recent KPMG survey of 300 executives, 40% of businesses report gross margin declines, while 63% are actively considering reshoring. Where tariffs will be in the short-term is anyone’s guess, but for manufacturers, pain and uncertainty are expected to continue.
Avoiding the Cost Trap at a Time of Manufacturing Uncertainty
In our current environment, manufacturers are often faced with making urgent procurement decisions. Maybe there is a sudden tariff change or a supply chain disruption due to climate change, or maybe the manufacturer is simply working on a budget based on raw materials projections. Either way, the temptation is to treat cost as a one-dimensional concern. This is how manufacturers get caught. The temptation is to choose a point solution for supplier management or tail spend because they offer the best price, rather than something more robust that brings the full force of complexity and the possibilities of data to every decision.
Everyone I talk to–whether they are a customer or not–gets the same advice when it comes to the choosing a procurement suite. Manufacturers are not truly addressing cost unless they deploy a procurement solution like JAGGAER One that digitizes their supply chain, bringing siloed and other legacy ERP elements into the same intelligent workflow.
Done right, this process not only reduces manual administration costs, it automates tracking, consolidates purchases across departments, and helps you secure volume discounts. On the supplier front, a digital workflow also helps you manage supplier onboarding, manage risk and compliance, and make the most informed decision when selecting a supplier.
