March 31, 2025

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A privatized USPS and... poultry smuggling?

Tariffs continue to dominate the headlines as we wrap up the first quarter of 2025. The volatility can be exhausting but we're determined to press on.

In this edition of The Sidekick, we explore how companies are using tariff engineering to tweak their products, the debate over privatizing the USPS, how private label shopping brands are adjusting to shifting consumer habits, the rise of poultry smuggling, and more.

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Let's dive into Issue #015!

How companies are adapting to avoid tariffs.

Have you purchased a pair of Converse All-Star sneakers recently? If you thought you were buying athletic shoes, you’d be wrong - you’ve actually bought a pair of slippers.

Here’s why.

As new tariffs on imports from countries like China, Canada, and Mexico take effect, many companies are getting creative to dodge these extra costs. One of the most interesting strategies emerging is called "tariff engineering," where businesses tweak their products to fit into different tariff categories.

With shoppers and companies feeling the pinch from rising prices, businesses that once thrived on name-brand loyalty are now exploring how to adjust their products to avoid hefty tariffs. This is especially relevant as the government imposes flat tariffs that apply across various categories, prompting companies to rethink their product classifications.

Tariff engineering involves redesigning products or reclassifying them to fit into categories with lower duty rates.

For example, Converse All-Star sneakers have been re-engineered with a fuzzy felt layer on the sole, allowing them to be classified as slippers instead of athletic shoes, which attracts a much lower tariff rate of 6% compared to 20%. 

Similarly, Columbia Sportswear adds pockets to certain shirts to avoid higher tariff classifications for blouses, effectively lowering the duty rate from 26.9% to 16%. Such modifications can be as straightforward as relabeling or require more significant alterations in product design.

Another notable case involved the Ford Transit Connect, which was classified as a passenger vehicle to benefit from a lower tariff rate. After being caught, Ford faced legal challenges but demonstrated how companies can manipulate classifications to save on costs.

Watch This Space

Perhaps the government will act to close this particular loophole, but for now, tariff engineering offers a legal way for companies to mitigate costs and stay competitive.

Keep a close eye on this proposal.

Procurement and supply professionals should be keeping a close eye on the proposal to privatize the USPS. 

The proposal aims to shift USPS towards a privatized model similar to UPS and FedEx, which could have major implications for businesses everywhere. Here’s why you should care and how you can prepare.

The idea of privatizing USPS is all about making it more financially sustainable and efficient. However, this could lead to significant changes that directly impact your shipping and logistics.

One big worry? Higher shipping costs.

Right now, USPS offers great rates, especially for small and medium-sized businesses that rely on affordable shipping. If USPS goes private, we might see price hikes as it shifts to a profit-driven model. That could hit businesses in less populated areas particularly hard, making shipping more expensive and less reliable.

Plus, privatization might mean fewer delivery days. USPS is currently required to deliver to everyone, everywhere. But if it becomes a private entity, the focus could shift to profitability, which might lead to reduced service frequency.

Imagine trying to manage your inventory and meet customer expectations with delayed deliveries—definitely not ideal!

So, what can businesses do to navigate these potential challenges? One smart move is to look into a group purchasing organization (GPOs) like Una. We help businesses to pool their purchasing power, which means better rates with shipping carriers like UPS and FedEx.

By banding together, we can negotiate contracts that help offset any price increases that may come with USPS privatization.

GPOs also offer access to a variety of logistics suppliers. If USPS cuts back on service, you’ll have alternatives ready to go, ensuring your operations stay smooth and your customers remain happy.

Join now by signing up here (for free).

Keeping a pulse on the industry.

Private Label Brands Adjusting to Shopper Changes

Even private-label brands are facing tough times as inflation continues to squeeze consumers. TreeHouse Foods, which makes store-brand products for big retailers like Walmart and Target, is feeling the pinch.

After a period where shoppers opted for cheaper options, many are now cutting back on even those, thanks to rising prices on essentials like coffee and eggs.

TreeHouse's sales growth has slowed down significantly, with unit sales only up 0.6% recently, compared to 4.5% the year before.

To tackle this slowdown, they’re rolling out a few strategies to keep profits healthy:

1. Cutting costs: TreeHouse is aiming to slash supply-chain costs by $250 million by 2027. They’re working closely with suppliers to reduce prices on ingredients and packaging and are automating some production processes to boost efficiency.
   
2. Streamlining Products: The company is taking a hard look at its product lineup to make sure they’re offering what shoppers really want while keeping costs down. This includes adjusting prices and packaging sizes.
   
3. Smart acquisitions: TreeHouse is also expanding in some areas, like their recent $205 million buy of Harris Tea, while pulling back from less profitable segments, such as ready-to-drink beverages.
4. Improving efficiency: After dealing with production hiccups in their facilities, TreeHouse is focused on making operations smoother to help boost sales.

The Workplace Innovation Black Hole

Organizations always claim they want their people to be more innovative, but the reality tells a different story.

A recent report from Eagle Hill Consulting reveals a major disconnect: over 75% of employees regularly chat with their colleagues about ways to work more efficiently, and 66% even share those ideas with their companies.

Yet, more than half say their organizations don’t incentivize this sharing, and 41% feel like their input is rarely sought.

So, what gives? Companies often say they’re open to new ideas, but 63% of workers report that there’s no clear process for submitting suggestions—almost a quarter say there’s no process at all!

And with 42% of employees feeling they lack the power to make changes, it’s no wonder that many see these claims as empty rhetoric.

If organizations truly want to foster innovation, they need to put their money where their mouth is. Creating a genuine culture where employees feel comfortable sharing their thoughts—and knowing those ideas will be taken seriously—could unlock a goldmine of creativity.

But until then, it seems like the talk about innovation is just that—talk.

Is that an egg in your pocket? 

U.S. border agents are seizing more illegal eggs than fentanyl coming over the border from Canada. Amid rising prices and concerns over avian flu, poultry smuggling has surged.

Since October, U.S. Customs and Border Protection (CBP) reported 3,768 seizures of bird and poultry products, compared to just 352 fentanyl seizures in the same timeframe.

Speaking of egg prices, Una’s Vice President and General Manager, Kris Lance, joined podcast host Kelly Barner on The Sourcing Hero to discuss the factors that have contributed to the high and rising cost of eggs over the last few years.

They touched on whether we are starting to see signs that those costs - and prices - are on their way back down, and why procurement and supply chain professionals are uniquely positioned to be rational about supply shocks and the impact they have on consumers.

Listen to the full episode here.

Veritiv earns award for sustainability performance.

Veritiv has achieved a Silver Medal from EcoVadis, scoring 73 and placing in the 93rd percentile globally. This recognition showcases Veritiv's commitment to integrating sustainability into growth while minimizing its environmental impact.

The EcoVadis assessment covers 21 sustainability criteria across Environment, Labor & Human Rights, Ethics, and Sustainable Procurement. With over 130,000 companies rated, a score of 55 is sought by many Fortune 500 clients, making Veritiv's achievement notable.

CEO Sal Abbate highlighted the importance of sustainability leadership in the packaging sector. Veritiv, serving more than half of the Fortune 500, aims to positively impact communities through innovative solutions developed in its Sustainable Design Lab.

The company offers over 43,000 sustainable products, including Post-Consumer Recycled (PCR) content, and collaborates with global suppliers to minimize waste. EcoVadis ratings provide an evidence-based analysis and a roadmap for ongoing sustainability improvements.

Una has partnered with Veritiv to provide savings on packaging, JanSan and hygiene products, services and solutions.

Sign up and save with Veritiv and Una here.

🌟 New resources from Una

• Managing Maverick Spend: A Comprehensive Guide
• Is Your Category Management Strategy Due for an Overhaul?
• Bridging the Global Manufacturing Gap
• Why Procurement and Supply Chain Teams are Flocking to Agentic AI
• Six Types of Cost Savings in Procurement

🎙️ New From The Sourcing Hero Podcast

• Episode 205 featuring Richard Beaumont
• Episode 206 featuring Celia SGAR
• Episode 207 featuring Priya Kumari
• Episode 208 featuring Kris Lance

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