Tariff uncertainty presents a litany of challenges for companies all over the world, impacting their ability to make strategic decisions regarding their operations and supply chains.
These impacts can include increased costs of goods sold (COGS), reduced profits, and supply chain disruptions that make it harder and more expensive to sell goods. Having the right tools, data, and insights is the best defense against such volatility, enabling quick, data-driven decisions.
Best Practices for Overcoming Tariffs
To help companies minimize the negative impact that tariffs can have, Oracle NetSuite shared several best practice suggestions for businesses.
- Understand and track your total landed costs for each product.
- Automate inefficient processes throughout your operations to reduce costs.
- Consider localizing or diversifying suppliers for certain products or those in affected countries.
- Proactively renegotiate contracts with suppliers with better incoterms —internationally recognized rules which define the responsibilities of sellers and buyers.
- Make data driven decisions with NetSuite Explore ordering just-in-case stock for high-risk items.
- Scenario plan to understand different options, such as absorbing or passing on costs, changes to the supply chain, or alternative suppliers.
- Do a pricing analysis to better understand current profit margins.
- Remember it doesn’t have to be all or nothing
Finding Your Best Options to Overcome Tariffs
Alongside these best practices, Oracle NetSuite also provides a suite of tools designed to help companies navigate the complexities introduced by tariffs. Its NetSuite ERP provides companies with real-time visibility into their financial status, inventory levels, and supply chain. This immediate access to information allows businesses to quickly understand the impact if tariffs suddenly increase costs.
Understanding and tracking the total landed costs for each product is a crucial step in minimizing tariff impacts. NetSuite’s ERP also offers a detailed breakdown of the landed costs associated with each import. This breakdown includes tariffs, shipping, and other expenses, giving businesses the necessary details to understand how tariffs affect their expenses and profitability.
NetSuite even offers cost management tools and financial reporting capabilities that allow users to drill down into cost structures. This granular view helps in identifying potential areas to offset tariff hikes and protect profit margins.
Planning for the Unpredictable
Scenario planning is another recommended strategy for understanding different options, such as absorbing costs, passing them on to customers, making changes to the supply chain, or exploring alternative suppliers. NetSuite Planning and Budgeting supports this by letting businesses run what-if scenarios. This can involve modeling the impact of specific tariff increases, like 10% or 25%, to proactively plan responses. The system also helps companies analyze the potential impact of absorbing costs versus passing them on to customers.
Supply chain agility is vital in a volatile trade environment. NetSuite Supply Chain Management provides visibility into the details of item acquisition—what items, how much, from where, and when. This information empowers businesses to make informed decisions about adjusting procurement and supplier relationships to help keep expenses as low as possible while ensuring product availability. NetSuite’s supply chain management software also helps companies identify efficiencies and cost savings within their operations that can help offset the burden of tariffs.
What This Means for ERP Insiders
Know before you go. Leading companies that are best-suited to weather the storm of tariffs rely on informed, data-driven decisions. By providing tools for visibility, detailed cost analysis, scenario planning, and supply chain management, NetSuite enables businesses to develop flexible strategies and build more resilient supply chains, thus minimizing the impact of tariffs and navigating trade uncertainty.
Leverage advanced capabilities. With unprecedented uncertainty in the global economy, companies cannot rely on outdated planning and modeling solutions. NetSuite ERP can help businesses explore different options, such as alternative suppliers or products, which aligns with mitigation strategies like diversifying suppliers or changing product lines.
Prioritize agility. While understanding options is essential in deflecting the effects of tariffs, companies also need the agility to act on their insights. NetSuite Supply Chain Management allows companies to be proactive and make moves that insulate their margins and set them up for success.
