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tech-driven-strategies-for-tariff-mitigation-in-business-operations

February 27, 2025

“Tariffs” is the word of the year

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“Tariff” is fast becoming the word of the year.

And the treat of tariffs is for sure the most talked about topic in boardrooms all over the world as they become “the hammer” in many geopolitical conversations!

Why?

Because over the past decades we have built often complex supply chains that span continents, delivering goods with incredible speed and competitive prices. However, this complexity also introduces vulnerabilities, and recently, tariffs have emerged as a major disruptor.

The Ripple Effect of Tariffs

When tariffs hit, the impact reverberates throughout the entire supply chain. To make any profit at all, importers need to pass some (if not all) of the increased costs onto customers, often leading to reduced demand. Retailers are then forced to rethink sourcing strategies, re-evaluate supplier relationships, and overhaul inventory management practices. The numbers can be staggering, with some estimates suggesting potential annual cost increases of thousands of dollars for consumers.

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Adding to the challenge, businesses are already facing rising administrative costs (which have risen 14% from 2023-2024), regulatory pressures and the looming uncertainty of future trade policies. Leaders are actively seeking ways to mitigate these overhead expenses. While options like nearshoring or exploring new sourcing routes might seem appealing, they often prove to be short-term fixes with their own set of risks.

Beyond Reactive Measures: Embracing Technology-Driven Resilience

Instead of simply reacting to tariff changes, companies need a more proactive, long-term strategy. This is where technology, particularly advanced supply chain management solutions, comes into play. By harnessing the power of end-to-end data visibility, artificial intelligence (AI), and automation, businesses can transform their supply chains into resilient assets. They can not only withstand disruptions but emerge stronger and more adaptable:

Scenario Planning: Model “what-if” scenarios to test different supply chain strategies before implementation. By developing contingency plans to address potential disruptions through alternate sourcing regions, logistics routes, and pricing models you can minimize tariff exposure.

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Alternative Sourcing Strategies: Because tariffs depend on country of origin, many companies will seek alternative suppliers in regions not impacted. In fact, nearly one-third of businesses are pursuing a dual supply chain approach where they have both global and local options. Business Network collaboration platforms not only help identify potential suppliers at risk but also provide alternative sources of supply and collaborative tools to ensure rapid and precise management of disruptions.
Inventory Optimization: Identifying key products that can be purchased in advance of tariffs to bolster inventory and ensuring that they are positioned in key locations across the supply chain will help minimize the impact of looming tariffs. Studies show that top-performing supply chain organizations are investing in AI and machine learning at twice the rate of their lower-performing peers.
Enhanced Supply Chain Visibility: Real-time tracking of demand fluctuations, inventory levels, and logistical operations, allowing businesses to swiftly adjust their strategies in response to new tariffs or other disruptions. This allows you to diversify suppliers, optimize inventory placement, and adjust logistics to minimize the impact of tariffs.

A Smarter Path Forward

In this volatile trade environment, resilience, agility, and adaptability are no longer optional – they’re essential. By embracing the right technology, businesses can maintain competitiveness and ensure that tariffs don’t dictate their success.