The current geopolitical landscape is forcing more businesses to come to terms with operating supply chains in the age of tariffs. But can automation technology soothe lingering industry inefficiencies at a time when cost reductions have become imperative?
The announcement of US tariffs on a high volume of global trading partners has carried significant ramifications across a variety of industries.
At a time of high volatility and uncertainty, the Trump administration’s bold decision to carry out its ‘Liberation Day’ trade tariffs before subsequently announcing a 90-day delay has pushed many companies with international supply chains into a state of flux.
For businesses that are dependent on imported components and overseas manufacturers, there are plenty of challenges ahead in terms of sustaining operations when costs may become significantly higher.
These concerns will be particularly pressing for businesses that have a supply chain presence in China.
But can emerging automation tools help to transform supply chain management at a time when tariffs are presenting new challenges throughout industries? Let’s explore how innovations can pave the way for sustainability in an increasingly volatile global landscape:
Predictive Analytics
Successful and sustainable supply chains need to be adaptable enough to changing world conditions.
In terms of planning capabilities, automation tools are able to lean on real-time data analytics to map out accurate demand planning and forecasting.
This can empower businesses to make intelligent decisions regarding their supply chains, zooming in on prospective cost-saving decisions pinpointed with the help of emerging data trends.
With the prospect of tariffs making importing more expensive for businesses, it pays to anticipate customer demand in a way that can help to fine-tune order volumes, preventing the cost implications of overspending on stock.
Compliance Visibility
Automation tools can also help businesses to keep on top of the changing supply chain landscape through accurate reporting for greater visibility when it comes to compliance.
Recent flare-ups of trading tensions between the United States and China have underlined the importance of compliance amid a rapidly changing supply chain landscape.
For businesses that don’t have a local company in China, for instance, manufacturing incurs many different fees before it even reaches the US.
If your products are made in China, the local manufacturer handles production and export. Additionally, many goods exported from China don’t face export VAT, and local suppliers can often qualify for tax rebates as a mutually cost-effective supply chain perk.
There are also some possible additional tax advantages when involving Hong Kong companies in your supply chain, helping you to manufacture goods in China for less without a local presence.
Automation tools can actively monitor local tax advantages, VAT considerations, and, of course, tariff implications for possible exemptions while showing the necessary agility to quickly adapt to changing rates and levies.
Holistic Control
With the cost of operating an efficient supply chain rising, it’s becoming increasingly important to maintain a clear level of communication, labor, connectivity, and commitment between all components, including merchants, suppliers, and service providers.
Automation tools can help to improve the quality and frequency of valuable information that’s recorded and updated almost instantaneously. This empowers all areas of the supply chain to gain a holistic overview of the relevant information as and when required to accurately track inventory and communicate to other areas of the chain.
This enhanced supply chain overview allows businesses to quickly overcome bottlenecks that could cause costs to snowball due to delays or disruptions at any point in the production cycle, increasing efficiency at scale.
Solutions Through Digital Twins
Another excellent advantage of modern supply chain automation can be found in the deployment of digital twins to access insights into invaluable cost-saving scenarios throughout chains.
Digital twins are virtual replicas of physical assets, systems, or processes and can empower businesses to simulate their entire supply chain in real-time. As a result, the use of digital twins can pave the way for qualitative insights for the fine-tuning of processes and more intelligent decision-making.
At a time when tariff uncertainty is pushing more businesses to explore the potential of ‘friendshoring,’ which is the practice of relocating one or more component parts of a supply chain to a nation that’s a political ally and thus subject to more lenient tariffs on trade.
Using digital twins, businesses can explore friendshoring opportunities by simulating chain performance to better understand the cost implications of moving operations elsewhere.
Backed by real-time data feeds, the use of digital twins provides businesses with the ability to anticipate possible supply chain issues or disruptions and make more measured decisions to overcome their challenges.
Finding Stability Amid Uncertainty
The supply chain landscape is being tested by the age of tariffs, affecting trade and the ability of businesses to operate efficiently amid widespread uncertainty.
By utilizing automation tools, many businesses can actively mitigate the high costs of supply chain inefficiencies in a bid to combat the impact of tariffs. Advanced tools like digital twins can even help firms to explore friendshoring opportunities to find lower-cost manufacturing overseas.
Although supply chains are set to face plenty of strain over the months ahead, automation could offer a level of much-needed stability amid the chaos. Its successful implementation may yet help affected businesses to survive what’s likely to be a challenging future ahead.
