Spend aggregation gives way to new approaches in a tariff-driven supply chain

Procurement has always had a clear mandate: aggregate spend, consolidate suppliers, and drive cost savings. And for decades, that strategy worked fine.

Category managers were rewarded for bundling volume, negotiating rebates, and concentrating spend. But that model was built for a relatively stable geopolitical environment, and since COVID, that environment no longer exists.

In a recent discussion with Supply Chain Management Review, Mark Schenecker, VP of direct materials at Coupa, described how the aggregation-first playbook is colliding with tariff volatility, geopolitical fragmentation, and structural uncertainty.

Aggregation made sense — until it didn’t

Procurement’s aggregation era rewarded concentration. If a company could commit 80% to 100% of a category to a single supplier, it unlocked pricing tiers, rebates, and simplified management. As Schenecker put it, “the mantra that came down was aggregate the spend.”

When disruption was sporadic—a hurricane, a port strike, or a supplier bankruptcy—the risk could be managed tactically. COVID exposed the limits of that thinking, though, and tariffs are accelerating it and showing how much vulnerability is embedded in sourcing models.

Tariffs are no longer episodic

Tariffs have shifted from temporary trade tools used by administration to a global trade policy which has introduced many more variables as rates go up and down, sometimes on a weekly basis. Companies can no longer assume tariff baselines will hold, and even when specific measures are rolled back, pricing rarely resets quickly, if at all.

Schenecker noted that suppliers have responded by embedding tariffs into pricing, forcing procurement teams to change how they model cost. “Landed cost now has to have a discrete item,” he said.

That dynamic forces procurement to rethink the landed cost modeling. Instead of treating tariffs as a background assumption, they must now be discrete, visible line items, Schenecker noted. Companies are increasingly maintaining tariff tables alongside finance, tracking country-of-origin exposure in detail, and modeling timing impacts such as whether duties apply at border crossing, receipt, or bonded release.

If 100% of volume is tied to a single geography, and that geography becomes tariff-exposed, the cost and continuity impact is immediate and severe, Schenecker said.

Geographic diversification is the new leverage

The response is not simply adding a second supplier, he pointed out, but adding a second geography.

The traditional dual-source model often kept suppliers within the same region or even the same country. That model is no longer sufficient in a tariff environment. True resilience now requires geographic diversification to mitigate trade and political exposure, but there are trade-offs that must be considered.

“You can’t give 100% of your spend for a product category to one supplier,” Schenecker said. “You’ve got to keep two, three suppliers and you can’t have ’em from the same geography.”

Volume concentration might drive rebate leverage, but resiliency is put at risk in 2026. Procurement leaders are now being forced to balance cost efficiency against structural resilience.

Network design can no longer sit in isolation

The most significant operational implication of this shift may be organizational. Historically, network design lived within supply chain planning. Procurement executed sourcing strategy based on that design and while the two functions coordinated, they operated on different cadences. Schenecker said that separation is no longer optimal.

“We built for cost. We didn’t build it for resiliency,” he said of the old model.

Now, sourcing optimization, supplier selection, contract strategy, and network configuration are becoming interdependent variables in a continuous model. This integration enables companies to model scenarios more dynamically.

The visibility gaps exposed

Another underappreciated outcome of tariff volatility has been the exposure of data gaps. Many organizations lacked detailed country-of-origin data at the material level, Schenecker said. Supplier certifications were incomplete. In some cases, tariffs were embedded in blended material costs without discrete visibility.

When trade volatility intensified, procurement teams found themselves reconstructing exposure from fragmented datasets. Schenecker pointed out that without clear origin mapping and supplier-level cost disaggregation, risk modeling becomes guesswork.

From cost leadership to risk leadership

What this shift in strategy is doing is putting procurement front and center. Procurement is moving from cost leadership to risk-adjusted value leadership, Schenecker said. Aggregation is still a tool to be used, but is no longer the default strategy.

Even if specific tariffs are reduced, the precedent of trade policy volatility remains.

“If politicians are going to use tariffs as a weapon … we should just make that assumption,” Schenecker said.

Procurement leaders are now redesigning their playbooks and integrating network design with sourcing strategy, modeling tariffs as permanent variables, and accepting that resilience carries a cost.

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