Dealing with Tariffs: How Event-driven IT Systems Can Help Manufacturers Navigate Turbulent Times

Summary

Recent political uncertainty and volatility in global trading, specifically the Trump administration's rapidly changing tariffs, have thrown a spotlight on global supply chains: how fast can your supply chain react? The current pace of policy U-turns and brinkmanship make it clear that businesses need to move faster than the disruption.
 
There are numerous mitigations, from alternative and diversified sourcing arrangements to third-party or near-shored manufacturing. Among the risks of this are issues over subjective “rules of origin” or in other words the “economic nationality" of goods, where they are considered to have been produced or manufactured, not where they are shipped from. If these mitigations cannot be evaluated, and implemented quickly, they risk being applied too late or perhaps even being counterproductive.
 
George Riddell, managing director of Goyder trade consultancy pinpointed where the issues lie in a recent article in the Financial Times, “It depends on how good their [businesses] supply chain software is and if that data has been updated in real-time.” Supply chain IT systems and data must be up-to-date, fast-acting, agile and flexible. Traditional batch or even API-based approaches often don't provide this level of agility and flexibility. Businesses that have embraced an event-driven integration strategy are able to simulate the effect of policy changes as they occur and support supply chain changes as soon as they need to be applied. 
 
Intelligent meshes of multiple AI Models and Agents adjust sourcing, logistics and compliance strategies in real-time, without disrupting core systems–never too late and never counterproductive.
 
So the question remains: can your supply chain IT support an adaptive supply chain?”
 

1. Integrate all the applications, business processes and partners into your supply chain 

Need to know where your shipment is and whether it will be delayed? Use vessel tracking partners like FourKites or MarineTraffic, or aviation data from FAA's SWIM. Need to know if the right people will be in place? Ensure your people management systems like WorkDay or BambooHR provide up-to-date information. Link production and warehousing updates from your ERP, for instance, SAP ECC or Hana, to your Transportation Management solution such as Oracle OTM. Ensure factories are connected and integrated into this "digital nervous system," so that if production and warehousing need to change quickly it can do so.”

2. Ensure your integration and application environment provides the agility to act fast to changing circumstances

You may need to adopt new business processes quickly. You may need to on-board new partners or geographies in days or even hours. You may need to integrate new systems and services just as fast. 
 
Point-to-point or batch-based integrations are unlikely to provide you with this flexibility. You don't know if future applications you'll need to adopt will be a cloud-based SaaS, a custom-developed microservice,or an edge-based factory floor or warehouse application. Make sure that you can connect to any of these seamlessly and share updates between them in a structured, filtered way by using an Event Mesh.
 

3. The speed of change will likely increase: Process changes in the business as they occur

Batch and ETL won't cut it, even data lake analytics solutions may be too slow. It's no good scheduling a change to a production run tomorrow if it misses that last shipping window. Event-driven integration gives you the agility to change your IT landscape while processing the business events that must be reacted to while they happen.

4. Digital twins will play an increasing role in supply chains

What if I move my production of my super widget to Mexico, Poland or Vietnam? What if I get my packaging from Spain and not Brazil? What if I procure my legal services in Canada and not the USA? What are the costs, tariffs, geographic and political implications? How can these be modeled, and what are the spreads of the risks?
 
To fully simulate this, and bring AI to bear, you need to have accurate modeling, fed by an up-to-date view of the business. Only by integrating the business views from all the relevant systems, as it happens, can this degree of modeling be done.
 

5. Dashboards and visualizations become ever more important

Management teams need to understand what changes are impacting the business, their scope and the likely effects of any mitigation strategies. These dashboards need up-to-date views of the business, fed by changes as they happen.