The Impending Force of Rising Tariffs - Navigating Their Effects

For more than two years we’ve lived under the threat of new tariffs — with duties that have been levied, threatened and retaliated. Constant political changes, such as Mexican import tariffs announced and then cancelled, have created an environment of uncertainty that challenges even the most resilient supply chains.

Regardless of your strategy, your supply chain will be impacted. In this era of global integration, the measures implemented on a single country or industry will have broad effects on additional countries and sectors. Even before these trade disputes, companies have sought to build more resilient supply chains, by diversifying suppliers and increasing digitization.

While much has been written about the impact of these duties on consumers and manufacturers, it is important to also consider the strategies supply chain executives implement to alleviate the effects of rising tariffs on supply chains. Here are two tactics worth considering for your business:

Buying ahead: The first strategy entails “stocking up” from non-tariffed sources in advance of the duties going into effect. However, this “pull-forward” tactic has ramifications—specifically, after you buy the goods, they need to be stored. At the end of last year, importers bringing goods into the U.S. in advance of impending tariffs caused historic clogging of Southern California’s ports, pushing drayage drivers and warehouse capacities and costs to the limit.

Embracing technology: A digitized supply chain can help anticipate disruptions and ultimately, optimize operations. Real-time analysis of integrated data spanning customers, partners and suppliers will lead to outcomes that better match supply and demand while containing costs. AI and machine learning can also power optimization to minimize costs, maximize capacity, increase agility and anticipate potential tariff impacts while recommending solutions.

To ensure that your supply chain organization is not negatively impacted by these tariff effects, seek strategies that utilize real-time data analysis and AI-powered optimization. In effect, these solutions can support the sourcing and inventory management required to help obviate the impact of tariffs.

Steve Dowse, SVP of Product Management, recently investigated and analyzed these strategies. Visit his article in Industry Today to learn how strategies that utilize real-time data analysis and AI-powered optimization can support the sourcing and inventory management required to help obviate the impact of tariffs.