Risk Management

Walmart is taking a technology-driven approach to mitigate weather-related disruptions in its supply chain.

Severe weather can spur potential challenges such as spikes in demand for household essentials, or reduced fulfillment center capacity. The retail giant works to position inventory in the best possible location to keep stores stocked and deliveries to customers on time despite the disruptions, Indira Uppuluri, SVP of supply chain technology, said in an interview with Supply Chain Dive.

To fulfill that mission, employees use predictive artificial intelligence and machine learning models that factor in historical weather patterns and real-time data to see how the company's network may respond to weather-related hurdles before they occur. The insights from those tools help planners find opportunities to reposition inventory, tweak transit times or reroute shipments to unaffected locations before severe weather hits, per a June 24 company blog post.

"We bring a lot of signals together to simulate what it would mean for us and what the impact to our stores and customers is going to be," Uppuluri said, adding that transportation capacity and employee availability are other considerations the company weighs.

Walmart factors in customer demand signals ahead of a weather event, as well. For example, heavy rainstorms may drive heightened umbrella purchases, influencing where Walmart directs inventory to, Uppuluri said.

Storms aren't the only severe weather Walmart has to consider throughout its transportation network. Wildfires can be an obstacle for the company's supply chain in areas like California and Colorado, sparking disruptions such as highway closures. Walmart considers how to change its drivers' routes ahead of time, Uppuluri said. If a fire emerges on short notice, the company's transportation center sends out alerts to affected drivers on what actions they need to take to ensure safety, she added.

"There's one thing about getting all of these items and orders to our customers and to the stores," Uppuluri said. "There's also the other aspect of safety for us."

In response to severe weather, rerouting inventory to unaffected distribution centers is one common tactic Walmart uses to keep products flowing to stores. For online orders to consumers, the retailer's "intelligent fulfillment engine" helps determine the best approach. Paths are recalculated via AI to maintain service levels during weather events, the blog post said. For shipments already in transit, the company uses smart tracking systems to identify potential delays and communicate to customers about delivery changes.

The company's weather preparedness efforts extend beyond the U.S. Jeff McIntosh, Walmart Canada's director of transportation, used AI-powered coding tools to roll out a storm rerouting agent, per a July 24 blog post from Walmart. The agent cross-references 10-day forecasts with real-time highway and ferry closures, carrier data and other signals, helping the company's supply chain team act earlier.

"That visibility is especially valuable in remote regions, where a ferry cancellation can disrupt one of the few available routes for getting products to stores and communities," the blog post said.

Technology is helping Walmart in areas beyond mitigating weather disruptions, with employees using AI-powered models and agents to understand how the company's resources are being used and potential optimization opportunities. As a result, Walmart can learn how to improve its supply chain for the long haul, not just eliminate short-term hurdles, Uppuluri said.

"As we run through these simulations, sometimes we realize maybe we can run our network slightly differently," Uppuluri said. "Maybe we can configure it differently."

Dive Brief:

• General Mills plans to overhaul its aging supply chain, COO Dana McNabb said on a July 1 earnings call.
• The supply chain redesign is critical because the company's current network was built for a lower-volume era, McNabb told investors, noting that the revamp is still in the early stages.
• "We've seen that we need faster innovation, more packaging flexibility," McNabb said. "And so it's really about thinking, how do we reimagine the supply chain for the future so we can get that profitable growth."

Dive Insight:

General Mills' upcoming supply chain revamp is a piece of the company's plans to restore profitable organic sales growth through $3 billion in cumulative cost savings by 2030. About $2 billion in savings will include a more targeted focus on products and trends. 

The network overhaul will contribute to the additional $1 billion in savings the company expects to achieve by improving business processes and identifying new ways of working with technology and operating models, according to McNabb.

"These savings are critical to help offset inflation, to fund our growth investments, and support stronger earnings and cash flow over time," Chairman and CEO Jeffrey Harmening said in the call. The company expects to save $750 million in the current fiscal year, which started May 26.

General Mills's supply chain restructuring comes amid personnel changes. The company promoted McNabb to COO in June, giving her oversight of innovation and the supply chain. The company also added transformation to Chief Digital and Technology Officer Jaime Montemayor's title earlier this year.

Supply chains are shifting across the consumer packaged goods sector as less predictable consumers pressure demand planning, Jeremy Tancredi, a partner in West Monroe's supply chain practice, said in an email to Supply Chain Dive.

"To stay in sync with the ever-changing market, CPG companies need to rethink their entire supply chain to enable faster decision-making and improve flexibility," Tancredi said.

Packaging agility — a key goal in General Mills’ supply chain modernization — has also become more important to CPGs to support omnichannel distribution, Tancredi said.

“Packaging increasingly needs to be optimized for multiple logistics models and channel-specific assortments to help minimize costs,” Tancredi said.

Other CPG companies that have launched supply chain restructurings or major technology upgrades to cut costs and improve operations include Procter & Gamble, which rolled out its supply chain redesign companywide this year.

Meanwhile, Clorox is shifting its U.S. supply chain and other operations to a new ERP system, and Nestlé is transitioning to SAP S/4HANA in part to use AI to improve efficiency in procurement, supply chain management and order fulfillment.

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Here are seven reasons social audits remain a critical part of responsible business conduct, and how they support effective, evidence‑based risk management.

1. Audits remain the foundation of credible due diligence

Emerging legislations, including the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), Corporate Sustainability Reporting Directive (CSRD), or the U.S. Uyghur Forced Labor Prevention Act (UFLPA), increasingly require due diligence and sustainability reporting to be grounded in verifiable evidence. Social compliance audits provide exactly that.

No risk model or AI tool can replace a trained auditor physically visiting the factory, asking questions, and evaluating what is happening at a moment in time. Social audits provide essential on-site visibility to detect issues such as blocked fire exits, dangerous machinery, and excessive working hour patterns.

2. Social audits enable meaningful worker interviews

Workers are the most important source of truth in any supply chain. Only a human auditor can:

• Build trust in confidential face‑to‑face conversations
• Cross‑check inconsistent answers
• Create space for vulnerable workers to speak safely

Digital questionnaires or online tools cannot replicate this depth of insight, particularly when fear of retaliation or cultural barriers limit disclosure.

3. Audits allow the responsible review of sensitive documents

Many crucial documents, such as wage slips, contracts, migrant worker files, and personal documentation, cannot be legally or ethically uploaded into digital systems. On‑site auditors can review and analyse these materials safely, without creating privacy or data protection risks.

This is essential to comply with legal requirements and respect workers’ personal information.

4. Audits enable the triangulation necessary for a credible assessment

A robust social audit process requires triangulation, combining:

• On‑site observations
• Document reviews
• Worker and management interviews

This holistic method enables auditors to validate findings, identify root causes, and distinguish isolated issues from systemic ones. Triangulation is the core of social auditing and isn’t possible without an auditor present on site.

5. Social audits rely on trained, certified professionals

In an era of increased scrutiny, audit quality matters more than ever. And not all social compliance audits are equal.

For example, amfori BSCI audits rely on APSCA‑certified auditors. They are required to complete mandatory training before their first amfori BSCI audit and undergo refresher training to stay proficient. amfori BSCI auditors are also evaluated through rigorous quality controls, witness audits, and performance checks. This ensures consistency in the methodology, high audit integrity, and a deeper analysis that connects dots across social performance areas rather than checking boxes.

6. Audits support continuous improvement when used within a holistic strategy

Social audits are not meant to be an endpoint. They offer a snapshot of workplace conditions at a specific moment in time, providing insights into what auditors observed during their assessment. Their outcomes also depend on the transparency and accuracy of the information provided by the supplier, as well as their collaboration in the audit process.

And while audits can help companies identify and manage risks, they are not a guarantee of ongoing compliance or safety. Conditions can change after an audit takes place, and audits alone cannot prevent accidents from occurring. Instead, they should be viewed as one tool within a broader, continuous due diligence process.

When embedded into a holistic risk management system, audits help companies:

• Identify major risk areas and gaps in their management system
• Analyse root causes
• Implement corrective and preventive actions
• Verify that improvements have been implemented
• Reduce recurrence of harmful practices

This is how audits become catalysts for lasting change rather than repetitive compliance exercises.

7. Audits facilitate collaboration and shared responsibility

Effective due diligence requires collective action. Through structured audit and collaborative remediation processes, companies, suppliers, auditors and other stakeholders can jointly:

• Identify severe issues
• Collaborate on remediation and systemic solutions
• Share information

This is especially true with shared audit models like amfori BSCI, which enable multiple buyers to access audit reports, reducing duplication and audit fatigue.

Conclusion: Social audits are evolving, not disappearing

While the due diligence landscape is changing rapidly, social compliance audits remain an irreplaceable part of responsible supply chain management. AI and risk models can enhance due diligence, but they cannot replace the visibility that on-site audits deliver, as they can reveal hidden risks and challenge false assumptions by high-level risk tools.

Therefore, for companies with global supply chains, social compliance audits are not optional. They are essential to credible and effective social due diligence, now more than ever, and help companies meet regulatory requirements and avoid penalties, blocked shipments, loss of market access, or reputational damage.

How amfori BSCI can make a real difference for your business

With amfori BSCI, you gain a clear and comparable view of social risks across your supply chain through a standardised, robust and internationally recognised methodology.

amfori BSCI’s social audits, conducted by certified third-party auditors, provide verified data you can trust to make confident sourcing decisions and strengthen supply chain resilience. Through this shared audit model, you reduce duplication, lower costs, and ease the burden on suppliers by leveraging data from 40,000+ annual audits accessible to all amfori member companies.

Beyond visibility and efficiency, amfori BSCI connects audits to corrective actions, training, and structured follow-up, enabling you to engage suppliers and collaborate with peers to drive continuous improvement and manage social risks efficiently, at scale.

The U.S. is preparing to install new restrictions for foreign importers while establishing higher penalty floors for those noncompliant with customs regulations, according to an executive order signed on June 3 by President Donald Trump.

The order could introduce complications for overseas brands and shippers without an adequate level of supply chain visibility, experts told Supply Chain Dive. For example, importers must provide ownership disclosures, anticipated volumes and production methods, and customs brokers must "conduct greater due diligence of their importers," U.S. Customs and Border Protection said in a news release.

“This Executive Order helps CBP better detect when bad trade actors try to break the rules,” Susan Thomas, executive assistant commissioner for the CBP's Office of Trade, said in the release. “These are major advances in protecting our revenue and increasing supply chain transparency—both critical to ensuring fairness for everyone and safeguarding our nation’s economic and national security.”

The changes, which are set to take effect within 180 days of the order, add to the risks importers face for non-compliance, according to Rathna Sharad, CEO and founder of FlavorCloud, a cross-border shipping platform. 

Here's how the order is poised to shake up importing rules and penalties — and what shippers should do to prepare for the looming overhaul.

Crackdown on foreign importers of record

All importers of record will need to maintain "a minimum level of tangible domestic assets, bonding, or both" to ensure they abide by trade laws, according to the order. This will allow the U.S. to more effectively penalize foreign entities in instances of noncompliance, experts said.

U.S. brands typically act as the importer of record or have an entity such as a customs broker act as the IOR on their behalf, Sharad said. While these businesses are easy to levy penalties against due to their U.S. ties, foreign IORs can be a different matter, with some leveraging shell companies that are difficult to take action against, she added.

The order said future guidance from the Secretary of Homeland Security will prioritize preventing entries that use "shell companies, sham transactions, or artificial corporate or organizational structuring in an attempt to qualify as a U.S. IOR."  

To meet the minimum requirements to qualify as located within the U.S., an entity must have its principal place of business in the country, a physical presence where significant business is conducted and sufficient tangible U.S. assets, per the order. The Secretary of Homeland Security will provide further guidance pertaining to the definition of “located in the United States,” according to the order, although no timeline for such guidance was shared. 

In the lead-up to the new rules, cross-border shippers should evaluate any foreign IOR arrangements currently in place, stress-test their bonding and domestic asset positions against higher minimums, and verify the accuracy of their ownership and supply chain disclosures and documentation, law firm Holland & Knight said in a June 9 alert.

The order also eliminates informal entry capabilities for foreign IORs. Type 11 informal entry generally allows imports below $2,500 to pass through customs in a streamlined manner versus the more rigorous compliance measures attached to formal entries. Type 11 has often been leveraged by low-value importers since the elimination of the de minimis exemption in 2025, according to Izzy Rosenzweig, CEO of Portless, which offers direct e-commerce fulfillment from Asia.

"If you do a shipment of a package to an individual person, almost always now it's under Type 11," Rosenzweig said.

Trump's order is eliminating the ability for foreign IORs to use informal entry partially because such importers bring in "substantially higher volumes of low-value articles" and face lower financial consequences for noncompliance since penalty amounts are correlated to value. Blocking informal entries for foreign IORs puts all importers on equal footing, the order said, noting that the U.S. faces hurdles when attempting to enforce its trade laws against overseas actors.

Sellers outside the U.S. or domestic companies using China-based carriers may have a tougher time maintaining their current import activity under the order's changes, Rosenzweig said.

"I think some of the big carriers in the cross-border space are going to have a very hard time being compliant," Rosenzweig said. "I would say anyone that's using this type of [informal entry] method or these carriers ask some hard questions."

Businesses should ask their carriers about their plans once the order's mandates take effect, including if the listed importer of record will still be able to maintain that status, he added.

Higher penalty floors elevates compliance pressures

For importers — be they foreign or domestic — that CBP deems noncompliant with new regulations, harsher enforcement penalties could be in play following the implementation of Trump's order.

All IORs will be required to maintain "good standing" with CBP within 180 days of the order's publication, a status based on the importer's compliance history, payment of required customs liabilities and other considerations. Those deemed to not be in good standing, such as IORs found to have illegally imported illicit substances like fentanyl, will not be allowed to import into the U.S. or conduct related activities.

The order also says CBP must establish a minimum floor of at least 50% for assessed penalty amounts on noncompliant importers — absent circumstances materially impacting national security — and eliminate mitigation options for repeat offenders, challenging businesses appealing for reduced charges. The Secretary of Homeland Security will revise standards to support that mandate within 90 days of the order's publication date.

Under current regulations, CBP has broad discretion to cancel or reduce liquidated damage claims, which "often produces mitigation well below 50% of the assessed amount," according to Diaz Trade Law. Establishing a 50% floor would raise the stakes for petitions seeking relief from penalties, meaning timely and thoroughly documented petitions "will matter more than ever," it added.

For years, the CBP's mitigation guidelines have led to penalties being negotiated down to 10% or 25%, André Cruz, senior manager of trade and customs at KPMG US, said in a LinkedIn post. With the higher floor, compliance failures are now much more expensive, he said.

"If your compliance budget was denied last quarter, take this [executive order] to your CFO," Cruz said. "The ROI on compliance just doubled."

The order also calls for the Secretary of Homeland Security to establish heightened import disclosure requirements, including providing information about the supply chain and production methods of imports. The secretary will "enforce all applicable criminal fines and civil penalties in the event of noncompliance with these heightened requirements," the order noted.

Some overseas sellers may shift their focus to non-U.S. markets to avoid the increased regulatory burden, according to Scott Friedman, head of policy at Altana, which provides an artificial intelligence-powered trade platform. However, other countries are also ramping up their supply chain regulations, meaning shippers need to understand their supplier mix and be prepared to provide auditable information for a variety of markets, he said.

"This is just another drop in the bucket towards this idea that full traceability is now table stakes," Friedman said. "It is something you're going to have to do.” 

Dive Brief:

• Burlington Stores’ transportation cost savings initiatives have helped offset higher freight costs driven by elevated diesel rates and fuel surcharges, EVP and CFO Kristin Wolfe said during a Q1 earnings call.
• Wolfe said that the retailer recently locked in ocean and domestic contracts for the next year at “favorable rates.” The company expects contracted rates to help control freight costs in 2026.
• “Our supply chain continues to increase cube utilization of inbound and outbound shipments, including significant loading focus in our distribution centers and taking advantage of consolidation opportunities on the inbound,” Greg Shultz, EVP and chief supply chain officer at Burlington Stores, told Supply Chain Dive in an email.

Dive Insight:

For Burlington, leveraging contracted rates to save on transportation costs is nothing new.

In 2025, Wolfe said it had locked in contracted ocean rates through Q1 of 2026 to reduce the risk of spot market exposure and meet capacity needs. Wolfe told analysts at the time that the company also secured truck and intermodal capacity at “rates we feel very good about.”

The retailer isn’t the only one leveraging its carrier partnerships to help offset rising transportation costs.

Bob’s Discount Furniture told Supply Chain Dive that it was in talks with vendors and ocean freight carriers to mitigate costs stemming from fuel pressures.

The retailers are among many facing fuel pressures driven by the Iran war. The military conflict has led to complications for vessels navigating through the Strait of Hormuz, a major waterway for transporting the global oil supply.

Macy’s is also expecting fuel costs to remain a headwind for the full year, COO and CFO Thomas Edwards told analysts during a Q1 earnings call. American Eagle’s EVP and CFO Mike Mathias said the retailer was also anticipating potential pressure from both ocean and air freight shipping.

Razor USA's once-straightforward import setup for its made-in-China scooters has been upended by Trump-era tariffs, forcing the company to overhaul who pays U.S. customs duties and how the costs are shared across the supply chain.

The designer of personal ride-on vehicles once paid all import duties on its products, which were entirely manufactured in China, according to Bryan Wood, VP of global supply chain. Today, that arrangement has been upended: U.S. customs duties are now folded into the factory price, which also includes production costs, overhead and the supplier’s margin.

The tariff portion of the price ultimately impacts costs for the supplier factories, Razor, retail partners and, ultimately, the consumer, Wood told Supply Chain Dive. The company’s main retail partners are Amazon, Target and Walmart.

"We can't move the retail price that quickly, so it is not one of those things where we can just pass that on to the consumer," Wood said. "So, we eat it, Walmart eats it, the factory eats it, and we try to smooth that out as much as possible."

Razor’s manufacturing suppliers pay the import duty because the levy is calculated on the value of the product as it leaves the factory floor, which is lower than the price Razor pays for the goods, Wood said.

"It's better to apply it to the factory cost," he said.

Razor, a privately held company based in Cerritos, California, has also cut back manufacturing in China. Eighteen months ago, all Razor products were made there. Today, that share is about 75%, with the rest produced in Thailand and Vietnam, Wood said. The company selected those countries to maintain quality control since its China-based manufacturers are willing to operate factories there.

Meanwhile, moving to Mexico or the U.S. wouldn't be an option because that would extend Razor's supply chain, which would cost more money without any benefit, Davis said.

Wood is comfortable with Razor’s tariff strategy today, but since President Donald Trump began imposing global tariffs in 2025, he has learned that nothing is certain.

"Trying to predict what Trump's going to do is impossible, and every time we've tried to do it, we're wrong," Wood said. "So, we just have to triage it as things change."

Wood’s experience with tariffs has also underscored the need for flexibility, he said. After 25 years of running the same supply chain, Razor was unprepared when Trump imposed tariffs as high as 145% on goods made in China, before those levies were reduced through negotiations.

"Flexibility is what you're looking for," Wood said. "As much flexibility as you can get."

Razor applied for tariff refunds after the Supreme Court ruled in February that many of Trump’s tariffs were illegal. The company has recovered 10% to 15% of the total amount covered by the ruling so far and expects to receive more, Wood said.

"I was expecting a lot of documentation, a lot of pushback from Customs, and it's been very, very straightforward," Wood said, adding, "the software they put up has been shockingly good."

Corporations are devoting additional resources to build ever-more resilient global supply chains to combat changes in health and trade policies as well as geopolitical disruptions they think will occur with increasing regularity, supply chain specialists said.

The Trump administration's May 1 threat to raise tariffs by 25% on European vehicles follows the February start of the Iran war and an April administration proclamation affecting the importation of aluminum and copper. Bain & Company partner Dheera Anand is among those who said companies now must plan for regularly occurring similar shocks and fortify supply chains against them in new ways.

"This isn't one and done. This is the world we live in. And I don't see it settling down anytime soon," Christopher McCarney, KPMG U.S. principal, supply chain and operations, told CFO Dive in an interview. "There's always going to be another event, and the best time to modernize is right now," he said.

Indeed, the “foundational rules for risk management” have been fundamentally altered, with the shakeup of U.S. policy last year just the latest chapter of “perma-crisis” period that has been underway since the COVID-19 pandemic, Richard Chambers, senior advisor at AuditBoard, a provider of audit management software, previously told CFO Dive. 

Big supply chain changes afoot

Sustained supply chain uncertainty has directly impacted corporate management practices. A majority of respondents to a May 1 KPMG survey said their organizations now hold regular C-suite leadership strategic meetings on supply chain developments, and 73% of businesses are planning a comprehensive transformation of their supply chain operating model within the next 36 months. A top transformation priority: risk management and resiliency building, the survey said.

Corporate priorities have changed to incorporate a growing need to build in buffers, which can drive up costs, into supply chains to guard against unforeseen supply-chain shocks, McCarney said. "I think there's a willingness to pay for resilience. I'll put it that way," he said. 

Organizations are also broadening the number and types of workers involved in supply chain risk management.

"There's a joint responsibility for risk management throughout the company," supply chain specialist at Ohio’s Miami University Lisa M. Ellram said in an interview. "The people who are more on the front lines, like in supply chain management, they're the ones who potentially get the early warnings that will allow companies to respond more quickly" to supply-chain disruptions, she said.

"Companies are very much more focused on anticipating, being prepared for risks and anticipating them," Ellram said.

Sumit Dutta, U.S. principal of supply chain and operations at Ernst & Young, said he sees many CFOs working closely with the chief supply chain officer because there is a need to understand the financial impact of events.

Cost is no longer king

Supply chains are complex networks of suppliers, manufacturers, producers, distributors, and retailers requiring companies to satisfy customer demand by adjusting raw material sourcing, manufacturing processes, logistics, and product or services returns and refunds with precision.

Before supply chains were severely disrupted by the COVID-19 pandemic, companies cut costs by constructing lean supply chains, many times embracing just-in-time inventories.

But the pandemic underscored the importance of resiliency and the interdependencies of different links in supply chains. It also heightened the need for broader risk-management analyses of companies' supply-chain practices. In 2022 a Protiviti study found that 45% of CFOs and VPs of finance were starting to move away from efficiency-based supply chain models to revenue assurance models, CFO Dive previously reported. 

The pandemic exposed that there was not enough flexibility built into supply chains to absorb shocks to the system, said Anand, who advises global companies on supply chain transformation.

"You took one block out and everything came falling down because there wasn't enough risk mitigation, resilience, or agility" built into supply chains, she said. "I think the trifecta of cost, cash, and service has now become a four legged stool of cost, cash, service, and resilience," she said.

Just in time? Sometimes. 

Despite the push for resiliency, just-in-time processes haven't been entirely discarded by companies, but they now are scrutinized for their flexibility, the specialists said. Companies now realize some links in supply chains demand redundancies, like multiple vendors or larger inventories. This increases costs, but not doing so risks supply chain disruptions, they said.

"I think companies now recognize that they have to look at cost in sync with how resilient their supply chain is to all these stresses," Dutta said. "Cost has not gone out of the picture. But now people understand it is cost along with resiliency, agility, and sustainability," he said.

 "Use just-in-time for some things but not others. It's a mix. Do it in a disciplined way,"  Duke University Fuqua School of Business professor Jeannette Song agreed in an interview. "It still cuts your cost, but you only apply it to things that have a relatively stable supply," she said.

Anand too characterized the current approach as more nuanced. "There isn't really a one-size-fit-all approach to supply chain management anymore," he said. 

Dive Brief:

• DavidsTea established U.S. fulfillment operations in Chicago in response to challenges stemming from the end of the de minimis exemption, according to an April press release.
• After the exemption was removed last August, the Canada-based company said it faced higher costs and greater complexity in shipping orders from Canada to the United States, such as unpredictable delivery times and delays.
• In late March, the tea company began fulfilling U.S. e-commerce orders with a third-party logistics partner in Chicago, the company said.

Dive Insight:

Beyond mitigating trade challenges, DavidsTea decision to establish fulfillment operations in the U.S. will support long-term growth in the country, Sarah Segal, CEO and chief brand officer at DavidsTea, said during an April earnings call.

“This fulfillment platform in Chicago, which complements our warehouse and logistics operations in Montreal, brings inventory closer to U.S. customers, supports improved service levels and strengthens the company's ability to grow profitably south of the border,” Segal said.

The fulfillment center in Chicago will also bring a curated assortment of SKUs that can be shipped at a lower cost, Segal said.

Last year’s trade conflict between the U.S. and Canada weighed on the company’s cross-border volumes and led a reduction in sales performance, the CEO added. which impacted revenue for DavidsTea, the CEO added. In 2025, e-commerce sales decreased 7.6%, mainly driven by a 18.4% decline in U.S. sales.

With enhanced customer experience, Segal said she expects U.S. sales will gradually recover in the second half of fiscal 2026.

The de minimis exemption allowed imports under $800 to enter the U.S. duty-free prior to its removal. DavidsTea and other retailers like Shein and Temu relied on this benefit to enable cost-effective, cross-border parcel shipping.

AURORA, Colo. — Last year, tariff-fueled price increases for sweets made in China and other Asian countries, plus weaker demand for those products, drove Bazooka Candy Brands to rethink its supplier strategy.

Gone was the playbook of trading higher volume for lower prices from contract manufacturers in a region that accounts for 80% of Bazooka’s U.S. sales, according to Erika Nava, VP of strategic supply and product development. Instead, the candy company and its suppliers agreed to help each other make the best of what Nava called a "perfect storm."

"We approached it as, it's not your fault, it's not my fault," Nava said at an April 28 Institute for Supply Management World 2026 presentation. "We're both victims of this," she added, referring to tariff-induced price hikes. 

Under those circumstances, Bazooka's strategy was to negotiate with its vendors in a way that shared the pain.

For some suppliers, splitting the tariff cost was acceptable, Nava said. For others, margins were too small to absorb that cost, so Bazooka took on a greater share of the tariff hit.

In those situations, Bazooka asked to see the supplier’s cost structure and, in some cases, was given it, providing the candy maker with leverage in future talks.

"That was an unintended great consequence of this agreement," Nava said.

Bazooka also stopped producing some SKUs because they weren’t cost-effective for the company or the suppliers.

Bazooka wanted a deal both sides could live with, knowing it was temporary, Nava said. If tariffs fell, both sides would benefit proportionately. If they went up, then the sides would have to renegotiate the original deal.

Since then, Bazooka has shifted its supplier relationships from a price-versus-volume model to a partnership. That includes plans to refund the portion of the tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act, later deemed illegal by the U.S. Supreme Court, that suppliers paid.

"My nightmare is going to be, how do I calculate how much I'm going to share back to them," Nava told Supply Chain Dive. "I cannot just walk away saying, 'Thank you for your help. See you next crisis.'"

The tariff crisis convinced Nava that building a collaborative relationship with suppliers is good for both sides. Here are Nava’s four lessons learned:

1. Know your suppliers

Learn their decision-making processes, their capabilities and what they’re doing today that may be useful in the future, Nava said. Be sure to get updates on the latter at least twice a year.

"A partnership starts with really asking questions … rather than just dropping demands," Nava said. "That is what makes a difference in suppliers picking up the phone when you need them or going silent. And you don't want that when you are in the middle of a crisis."

2. Track performance relentlessly

Set yearly supplier KPIs, continuous improvement goals and a growth and innovation plan, Nava said. After the metrics are set, have a structured quarterly business review with the most strategic vendors.

3. Map the value chain

Nava advocates monthly or quarterly value stream mapping to identify cost-saving opportunities. VSM maps the flow of materials and information across the supply chain to spot waste, highlight productive activities and pinpoint changes that could boost efficiency.

4. Spotlight supplier wins

Let suppliers know when they go above and beyond to help you, said Nava, who sends thank-you emails to suppliers' executive teams to show appreciation.

"I can tell you next time you need anything, they are going to do whatever it takes for you, because you value their contributions whenever they go above and beyond," Nava said.

A year into the “Liberation Day” tariffs, which ultimately imposed a 10% baseline tariff on nearly all imports before they were struck down, packaging companies and their customers are still waiting for the dust to settle, and in some cases feeling stretched thin on options.

In one recent example of change yet again, the Trump administration reduced tariffs on steel, aluminum and copper derivatives – while keeping the 50% rate for items made nearly entirely of the metals, such as food and beverage cans.

The Iran war in 2026 is adding fuel to the fire, further upending packaging supply chains and raising costs across the industry. 

“These black swan events keep coming at us,” Jason Wong, founder and CEO of custom packaging manufacturer Paking Duck, a U.S.-based company with an entity in China that manufactures paper, plastic, metal and glass packaging, said. “We just don't have time to prepare.”

Packaging suppliers and their customers in the consumer goods industry have made some incremental changes in light of geopolitical risks. Some have sought out domestic suppliers where viable or stockpiled more packaging. But by and large, brands have mostly kept their supply chains the same, swallowing costs or passing on what they can to consumers.

Wong said many of the brands he works with feel they’ve exhausted their options, and they’re just waiting to see what happens next.

What brands have — and haven’t — done to their packaging supply chains

Shubhangini Prakash, founder and CEO of New Jersey-based skincare brand Feather & Bone, made a few changes to her packaging sourcing amid 2025’s changing tariffs. As a small business, she primarily works with distributors that source the packaging. She added some alternate suppliers when prices for certain components went up.

Her company sells a skincare product for pregnant women in a twist tube, similar to deodorant. With tariffs, Prakash said the price of that packaging jumped from about 80 cents to $3 per item. “$3 for a piece of packaging that's plastic is really insane, but that's where we are right now,” she said.

She’s also looked to new sales channels to combat higher packaging costs, including partnering with refilleries to sell products in bulk. Consumers bring their own bottles to stock up on skincare products, which cuts down on packaging costs for Prakash’s business. She acknowledged, though, that refill is a “very small subset of this giant industry,” and certainly doesn’t eliminate her business’ need for single-use packaging.

When the Liberation Day tariffs were announced, Wong said Paking Duck stockpiled packaging and negotiated with some of its raw material suppliers, such as its ink vendor, to bring prices down. 

In addition to cost increases over the last year, Wong also saw tariff uncertainty shake his clients’ confidence. The company lost a few clients who feared additional tariffs and switched to a domestic supplier. Switching all packaging sourcing to the U.S., however, is nearly impossible for consumer goods brands, due to the ways supply chains have been set up, Wong said.

“Manufacturing practices in China have been perfected in the last few decades. You can't just bring that to America and call it a day,” Wong said. He added that anything of comparable quantity or quality in the U.S. will be more expensive, and it’s sometimes still cheaper to import packaging, even with tariffs.

Tom Hammann, owner of CPG consulting firm WTH Solutions, said the gut reaction to tariffs is often to reshore everything. But in reality, specific packaging materials may not be available domestically, and quickly changing packaging requires robust testing before rolling it out. 

Prakash said that similarly, not much packaging is manufactured domestically for the beauty industry. Before the tariffs, she remembers talking to several U.S. manufacturers when searching for a tin, and the suppliers told her the product is only made in China.

Currently, her company is sticking with its existing packaging design. It’s absorbing higher costs and hasn’t raised its prices.

“You're really at a ceiling of how much you can forward this price to the customer before you start to alienate them,” Prakash said.

While tariffs over the last year spurred some immediate cost-cutting measures for brands, CPGs have been examining their packaging supply chains for years. Hammann has seen more volatility in CPG in the last five years compared to the previous 20. Long before tariffs, CPGs cut packaging costs by changing the fluting on corrugated packaging or lightweighting a glass jar.

He’s also seen brands improve their supply chain visibility and map out packaging and other suppliers. Then, if or when a geopolitical risk occurs, “they're able to respond quickly,” Hammann said.

Maneuvering the war landscape

As consumer brands continue to navigate the impacts of tariffs on their packaging, they’re also facing another major geopolitical risk: the Iran war. 

Oil price hikes have impacted petroleum-based plastics, but it’s impractical for many brands to swap out plastic for a different material. A paper bag or metal tin wouldn’t work as an alternative for shampoo packaged in a plastic bottle, Wong said.

Any packaging material change also requires a testing process, which could take longer than the war even lasts.

“You have to test it in the manufacturing plant. You have to make sure it gets through the distribution chain to your consumer or customer,” Hammann said.

Outside of plastic, packaging as a whole is being impacted due to the Middle East conflict prompting higher shipping prices, with Transpacific rates rising nearly 30% between late February and early April. Wong suspects the price hikes on other substrates won’t be as drastic as the increase in petroleum-derived plastic, but oil and shipping costs “will still have a trickle-down effect in how things are being costed out.”

Wong said packaging may be an area where brands specifically focus to save costs, whether they simplify packaging or order more supply ahead of rising prices. 

The war risks are putting consumer brands in a position to “hope for the best, plan for the worst,” Hammann said. Multiple large CPGs report bracing for higher packaging costs.

Food processing company Lamb Weston anticipates the conflict will result in more volatility in packaging, CEO Mike Smith said during an April 1 earnings call. Martin Hug, CFO of chocolatier Lindt & Sprüngli, said March 10 the company foresaw a ripple effect from fuel and logistics costs, “which drive up, in the medium term, packaging material costs.”

Shane Smith, CEO of Smithfield Foods, said March 24 the company was watching “potential headwinds” including “a dynamic geopolitical environment.” He expected impacts on the cost of Smithfield’s resin-based packaging, although it’s “still too early to predict the full impact from the conflict in Iran.” 

How packaging companies, CPGs can be proactive

Hammann cautioned that amid cost-saving measures, brands shouldn’t forget critical lessons learned before – including during the pandemic – about having redundancy in suppliers. “One big event like this … [and] you just unwound all the cost savings you thought you had by going to one supplier,” Hammann said

CPG brands can also revisit playbooks they ran approximately 20 years ago when oil prices were also elevated, he said. The most successful companies, he said, are always assessing risks and planning for volatility.

“They don't wait for a big crisis to go, ‘Oh, I got to do something,’” Hammann said.

It’s important for packaging suppliers to think proactively about what’s happening at their customers’ businesses, he said. Instead of waiting for a phone call from a CPG rejecting a price increase or asking for a discount, the packaging supplier could proactively visit the CPG’s plant, or have a discussion about materials, innovation and cost-saving ideas.

Building this connection gets CPGs and their suppliers out of the commodity mindset, where brands view their packaging vendors as interchangeable.

“Show that you're a real partner,” Hammann said. “That's going to be key to that longer-term relationship.”

Companies that previously relied on the de minimis exemption for cross-border shipments must be even more vigilant about data precision and margin protection following the trade tool’s demise, experts said during Supply Chain Dive’s Jan. 28 event, “How the 2025 Holiday Season Fared & What It Says About 2026.”

The de minimis provision — a federal regulation that previously exempted imports below $800 to enter the U.S. tax and tariff free — was abruptly eliminated in August 2025. Before its demise, the exemption was a key driver in direct-to-consumer e-commerce imports, fueling nearly 1.4 billion import shipments in 2024, with the total value of eligible goods reaching $64.6 billion, according to data from Customs and Border Protection.

The end of the trade tool has had ripple effects throughout the supply chain, impacting air cargo volumes and capacity, peak season planning and profit margins for retailers such as Aritzia.

Here are four best practices panel experts suggested merchants and e-commerce retailers employ to successfully navigate the post-de minimis environment.

1. Gather your data

While the provision enabled low-cost imports to avoid duties, it also meant that goods could come into the country without item-related data, Maia Benson, chief business officer at FlavorCloud, said. This is not the case anymore.

“Get your data in line,” Benson said. For shippers importing in the U.S., this includes 10-digit HS codes, country of origin and “excellent product descriptions.”

“So data, data, data is going to be required of all inbound shippers, small, medium and large,” Benson said.

2. Protect your margins

“The best guidance I can give is [to] protect your margins,” Benson said. 

To do this, she suggested first knowing your margins and then using information that allows shippers to construct pricing strategies based on landed cost data. 

Working with supply chain and logistics partners to bring in inventory, offer storage options and build business cases to justify rightsizing a U.S. footprint for inventory health is also key, according to Benson.

3. Secure a good customs partner

Companies inbounding goods should identify and engage with a trusted customs partner, Darby Meegan, general manager of omnichannel at Flexport, said. This is especially important for brands that are entering the U.S. market through a standard customs flow for the first time.

Beyond the demise of de minimis, tariffs have also changed throughout the last year as President Donald Trump reshapes U.S. trade policy.

Such duties can be line items based on composition, assembly or country of origin, Meegan said. Strong customer partners can work with brands to analyze products and ensure “that you're getting the most out of your inbounding, and you're paying what you owe, and not more.”

Further, brands may review SKU rationalization and target a smaller SKU profile, focusing on a core catalog to help control product costs, Meegan said.

“If you're not already doing it, start doing it and look at it very intently,” he said.

4. Negotiate for optimal rates

Brands should negotiate with partners and providers to procure the best shipping rates, Meegan advised. He further noted companies should examine the cost of their supply chains to identify places where they can “squeeze it,” especially as tariffs threaten to drive up operating costs.

“But if you're densifying your supply chain, if you're working with good partners, and you are accelerating the intelligence behind your supply chain, you're going to see huge dividends,” he said.

Meegan added that problems will continue to evolve, and issues in Q1 are not going to be the same challenges faced in Q3. While inventory and carrying costs will become an issue right now, companies must focus on how they procure goods and import them to the U.S.

“But, ultimately, the dedication and the intensity of which you approach these problems are going to pay dividends,” Meegan said.