With the recent news about tariffs in the United States creating a ripple effect – and the possibility that there may be more to come – it’s important to understand how these tariffs could impact you and your organization. This blog isn’t about politics or economics, it’s about something more practical. The goal is always to encourage you to analyze the data as the tariffs are implemented, rather than looking back when it may be too late. 

A quick lesson on tariffs 

Simply put, tariffs are imposed on imported goods. They make the value of imports higher, which theoretically would make the price of local products more attractive. For example, if a Widget costs R$1.00 to produce in country X, but costs R$1.50 to produce in your country of residence, a tariff of R$1.00 will be imposed on the cost of the imported product, thus costing R$1.00. Thus making the local option more attractive. Of course, there are several factors that influence the consumer's purchasing decision, such as quality and brand, for example. But let's leave that discussion to politicians and economists. 

Why you need to monitor the impact of tariffs 

With tariffs directly impacting supply and demand, we may find ourselves in a situation where we either need to increase our production to meet growing local demand, or on the other hand, track a drop in demand to adjust production and become more competitive. Waiting and seeing could put us in a difficult situation. 

Step 1 – Be proactive: start modeling “what if” scenarios with Simul8

 Sooner or later someone will ask you about the impact of tariffs on your business. At first, simply saying “we’re evaluating” may be enough, but eventually you’ll need to quantify your risks and develop contingency plans. Harness the power of discrete event simulation to simulate supply chain disruptions. These types of analyses will help you find opportunities for improvement anyway, just as many other Simul8 users have applied in their logistics and supply chain operations. 

Step 2 – Use Minitab to identify changes 

When COVID hit, we wrote a lot about the bullwhip effect in the supply chain, ways to improve efficiency, and how to counteract its effects on the supply chain. Unfortunately, many of us didn’t see a pandemic coming, so we had to react without warning. With tariffs, we had a wake-up call. We know things will change, but we don’t know how much they will change or who will be most impacted. Minitab offers training and consulting services, as well as resources like this eBook, to help you anticipate and prepare for changes in your supply chain: https://info.minitab.com/en/resources/ebook/bullwhip-effect-in-supply-chain 

Start monitoring changes in real time now! 

For some tariffs, the impact may not be immediate. But as they work their way through the supply chain, we know these changes are coming, so being ahead of them can be a huge advantage. For others, tariffs may directly impact products or opportunities to gain market share, and applying real-time statistical analysis can lead to significant savings or growth. Even if you’re using Minitab today, you can take advantage of the power of Minitab Connect or Real Time SPC that allows you to generate real-time dashboards and alerts so you can react to changes as they happen rather than after they happen.

Official Source: Minitab

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