Preparing for tariffs and other supply chain disruptors.

2025 is shaping up to be a transformative year for the electronics manufacturing services (EMS) industry. Tariffs and cuts in government spending influence many EMS providers' planning sessions, creating considerable uncertainty about how these changes impact individual programs and whether customer sourcing strategies will change. One thing is certain: in times of uncertainty, relationships matter.

As many program managers will likely communicate tariff-driven price increases to their customers this year, it’s essential to enhance that dialogue. Here are key points to focus on:

• Know your facts. Understand the specifics of the tariff impact and when it will come into play for customers.
• Know your mitigation strategy. Be ready to share what steps your team is taking to minimize these cost impacts.
• Anticipate your customers’ questions. Prepare answers and timelines for queries, and be ready to involve relevant subject matter experts as needed.

Internally, creatively strategize ways to offset cost increases. Some options are:

• Identifying alternate components or subassemblies not impacted by the tariffs or options that cost less than current approved suppliers.
• Presenting cost comparisons relative to tariff increases among offshore, nearshore and domestic facilities.
• Discussing options for continuous improvement teams to take cost out of the assembly process.
• Exploring opportunities for lowering overall program cost by increasing value-add to eliminate redundant inventories, shipping legs or redundant production teams.

Make the business case for patience. Tariffs are often temporary, and changing production facilities can be costly and time-consuming. Consequently, radical changes in outsourcing strategy can create more cost than maintaining the current strategy and looking for cost-reduction opportunities to offset the tariffs.

When conveying bad news, remember that service quality can greatly influence a customer's reaction. Customers tend to resist leaving a high-service environment. Therefore, a tariff-driven cost increase in a low service environment may be the straw that breaks the camel’s back when it comes to changing suppliers.

Keep these common pitfalls in mind to avoid negative impacts on customer perception:

• Failure to acknowledge emails. Instead of waiting until you have complete answers, promptly acknowledge customer emails and provide a rough estimate for a follow-up.
• Failure to work toward compromise. If a customer requests something unfeasible, offer them alternative solutions instead of just stating your limitations.
• Failure to give bad news early. Don’t delay in informing customers about cost increases or delivery delays. Be upfront and suggest possible recovery options.
• Failure to ask questions. If there's uncertainty about customer instructions, clarify by organizing a conference call with pertinent team members and the customer.

Be proactive in identifying issues and options for corrective action. Increased change often results in more issues that require quick resolutions. At the same time, look for red flags that indicate the customer may be changing their outsourcing strategy. Is the forecast changing unexpectedly? Are component suppliers indicating your project may be out for bid? Have recent customer interactions suggested that the customer is starting to look elsewhere?

If customers are exploring other options, there may be a window to implement corrective actions to retain them, but once they decide to leave, reversing that decision is often unlikely.

Most program managers don’t intentionally give bad customer service. As the workload increases in times of uncertainty, however, service can slip. Aim to respond to customer emails quickly and always have a plan for rectifying situations if they arise. Let them choose the option they prefer because it puts them in control of the resolution. When customer service and creative solutions are priorities, the uncertainty factor can foster a stronger relationship.

Susan Mucha is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services. She can be reached at smucha@powell-muchaconsulting.com.

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