Tariffs and trade disputes: Retail and supply chain guidance

Managing your supply chain is tough enough when just dealing with demand and supply variability. Add in macroeconomic and geopolitical uncertainty and things get far more complex. In my meetings with clients over the past several weeks, the challenge of tariffs and modeling has come up consistently as today’s top concern for retail and supply chain leaders. 

The newly introduced tariffs are just the latest example of an external factor putting a strain on your supply chain’s health. Events like natural disasters, health crises, and port strikes all cause disruption and need to be planned for in order to minimize their effect and overcome them with agility and resilience.

Tariffs unpacked: What’s at stake

Tariffs create uncertainty and volatility by increasing costs, disrupting supplier relationships, and forcing companies to rethink pricing strategies. Retail businesses rely on suppliers that source materials and/or manufacture finished products globally. With new tariffs in place, import costs rise, squeezing already tight margins.

Some of the key impacts include:

• Increased costs: Higher import tariffs mean higher landed costs for goods, putting pressure on retailers to absorb the costs or pass them on to consumers. 
• Inventory challenges: Amid volatile tariff policies and the threat of new trade restrictions, retailers face a critical choice: absorb higher costs by stockpiling inventory now or risk future shortages. 
• Pricing pressure: Retailers need to make quick pricing decisions in response to tariff-induced inflation without alienating cost-conscious consumers. 

Without a robust, data-driven way to analyze these factors in real time, your business will struggle to make optimal decisions, leading to either reduced profitability or competitive disadvantages.
 

This calls for data-driven decisions

Traditional supply chain management approaches often rely on historical data and rigid, siloed planning models. However, in a rapidly evolving trade environment, businesses must adopt dynamic, collaborative, AI-infused scenario planning solutions to navigate disruption effectively. 

Ensure your supply chain planning technology fosters informed, data-driven decisions by enabling:

• Scenario modeling: The uncertain nature of supply chain disruption puts a premium on flexibility, usability, and the real-time creation of multiple scenarios to evaluate against one another in order to select the best option. Advanced scenario modeling will help you model different tariff scenarios, assess supplier diversification options, and determine the financial impact of potential strategies before making pivotal decisions. 
• Inventory management: With higher costs and uncertain supply timelines, you must optimize inventory decisions to avoid overstocking or understocking. Tariffs require you to assess your critical material and supplier-part exposure risk based on country of origin. Then, either request alternatives or concessions or seek new supplier options. Supply chain leaders leverage solutions like Anaplan to analyze demand patterns, lead times, and cost fluctuations to recommend the best inventory strategies, ensuring a balance between service levels and margin. 
• Pricing optimization: When tariffs lead to cost increases, retailers face the challenge of pricing their products competitively while maintaining profitability. Advanced pricing models enable you to simulate the impact of price changes across various customer segments, forecast demand shifts, and implement optimal pricing strategies that maximize revenue and margin.

Future-proof your supply chain

The key to navigating disruption lies in agility and data-driven decision-making. Anaplan empowers retail and supply chain leaders to:

• React swiftly to external disruptions by creating and analyzing multiple business scenarios. 
• Quantify the financial impact of supply chain tactics, ensuring every planning decision is tied to profitability and performance.
• Enhance usability with a platform that enables quick scenario execution, so you can act with confidence and speed. 

At Anaplan, we provide our retail and supply chain clients the solutions and expertise they need to proactively mitigate risk and manage disruptive events. Anaplan for Supply Chain provides you with:

• The ability to create multiple supply chain scenarios in real time, allowing you to select the most strategic response 
• A clear understanding of how decisions will affect your revenue, margin, and financial outcomes across your organization 
• An intuitive user interface that allows you to evaluate and execute scenarios quickly and efficiently 

We are in a unique position to provide the capabilities you need to navigate supply chain disruption and enable you with it in weeks and months — not years.