How Manufacturers Can Rethink The Supply Chain In A New Era of Risk

The past year has been a wake-up call for American manufacturers. As global tensions, new tariffs and regulatory crackdowns reshape the landscape, supply chain compliance has moved from a back-office concern to a boardroom priority. Yet, despite increased government attention, many manufacturers still feel less equipped than ever to manage these risks, and the reasons are both practical and strategic.

Complexity Is the New Normal

Manufacturers today operate in a world of unprecedented complexity. Sourcing materials from across continents, managing a web of vendors and navigating international payments is the norm, all while trying to keep pace with shifting regulatory priorities. Each link in the supply chain is a potential vulnerability for manufacturers, and visibility is often limited. It’s no surprise that company leadership report feeling underprepared to respond to national security compliance risks, even as they invest in new protocols and technologies.

According to Eversheds Sutherland’s 2025 U.S. National Security Compliance Risk and Readiness Report, 70 percent of manufacturing respondents took steps over the last 12 months to address supply chain security as part of their national security compliance programs, far more than the cross-industry average of 48 percent. Yet, 61 percent of manufacturers who recognize supply chain security as a risk do not feel particularly confident in managing that risk. This gap underscores the challenge: complexity, cross-border operations and limited resources make oversight difficult.

The Cost of Noncompliance Is Rising

Regulators are watching more closely than ever. Recent enforcement actions targeting trade fraud and tariff evasion have sent a clear message: Compliance failures can result in severe financial and reputational damage. For manufacturers, the stakes are especially high. In 2024 alone, global financial regulators imposed an estimated $3.3 billion in penalties for transaction monitoring violations, a 100 percent year-over-year increase. A single misstep, whether in vendor screening, shipment tracking or payment monitoring, can trigger investigations, penalties and supply chain disruptions.

Why the Gap Persists

Despite best intentions, manufacturers struggle to bridge the gap between action and readiness. Part of their challenge is resource allocation. Compliance teams are often under-resourced and stretched thin.  The sheer volume of moving parts makes it difficult to maintain robust oversight. There too is a fundamental strategic flaw: Even when resourced, compliance too often is treated as a reactive cost rather than a proactive investment.

Another barrier is the lack of internal alignment among company legal teams, executives and compliance professionals—there appears to be a lack of understanding about who owns national security compliance. Forty-three percent of executives say the C-Suite is in charge of national security compliance, while only 25 percent of in-house counsel agree. Conversely, 35 percent of legal respondents think compliance oversight falls within their purview, but just 6 percent of executives concur. The lack of clear ownership, cross-functional collaboration and adequate resources creates a crisis waiting to happen.

Strategic Considerations

• Prioritize Transparency: Only 45 percent of manufacturers have strengthened supply chain or third-party due diligence protocols in the past year.  Companies need to invest in systems that provide end-to-end visibility across the supply chain. Robust third-party due diligence and real-time monitoring are no longer optional, they’re essential. 

• Build Resilient Teams with Clear Lines of Responsibility: Compliance isn’t just a legal issue; it’s an operational imperative. Cross-functional teams that bring together legal, operations and executive leadership where roles and responsibilities are clearly defined are best positioned to assess risks and respond quickly.

• Engage the Board: Senior leadership must treat compliance as a strategic priority. Board-level oversight helps ensure that resources and attention are proportional to the scale of risk. The report found that 72 percent of organizations have neglected to increase board or executive oversight of national security compliance.

• Be Proactive: Regular audits, updated incident response plans and ongoing employee training help organizations stay ahead of emerging threats, rather than scrambling to react after the fact.

Looking Ahead

The regulatory environment will only grow more demanding, but it is predictable. Manufacturers who embrace compliance as a driver of resilience and competitive advantage will be better equipped to navigate uncertainty, protect their businesses and seize new opportunities. In this new era, supply chain compliance cannot be about just avoiding penalties.  It needs to be about building trust and agility for operations to thrive.