With recent news about tariffs in the United States creating a ripple effect—and the possibility of more to come—it’s important to understand how they might impact you and your organization. This blog isn’t about politics or economic theory; it’s about something more practical. The goal is to encourage you to analyze data as tariffs are implemented, rather than looking back after the fact when it may be too late.
A Quick Lesson on Tariffs
Simply put, tariffs are a tax on imported goods. This makes imports more expensive and, in theory, could make domestically produced goods more competitive. For example, if widgets cost $1 to produce in Country A but $1.50 in your home country, a $1 tariff raises the price of the imported widget to $2—making the domestic option suddenly cheaper. Of course, many factors influence purchasing decisions, including quality and brand, but I’ll leave that debate to the politicians and economists.
Why You Need to Monitor the Impact of Tariffs
With tariffs potentially impacting supply and demand, you may find yourself needing to ramp up production to meet rising demand—or, on the other hand, tracking a decline in demand to adjust production or improve competitiveness. Waiting to see what happens could put you in a difficult position.
Step 1: Get Proactive: Start Modeling What-If Scenarios with Simul8
Sooner or later, someone will ask about the impact of tariffs on your business. At first, saying “we’re evaluating” might be enough, but eventually, you’ll need to quantify the risks and develop contingency plans. Harness the power of discrete event simulation to simulate supply chain disruptions. Running this type of analysis will likely help you find improvement opportunities anyway, just like so many others have applied it to their logistics and supply chain operations.
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Step 2: Use Minitab to Identify Changes
When Covid hit, we did a lot of writing about the bullwhip effect on supply chain and ways to improve efficiency and counteract supply chain effect. Unfortunately, most of us didn’t see the pandemic coming, so we had to react in real time. With tariffs, we’ve been given a heads-up. We know things will change—we just don’t know by how much or who will be impacted the most. Minitab has services like training and consulting and resources like this helpful eBook to help you predict and prepare for changes in the supply chain.
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Act Now to Monitor Changes in Real-Time
For some, tariffs may not have an immediate impact. But as they work through the supply chain, changes will happen, so staying ahead of them can be a real advantage. For others, where tariffs directly tax products or open opportunities to gain market share, applying statistical analysis in real time can lead to significant savings or growth. Even if you are using Minitab today, leveraging the power of Minitab Connect or Real-Time SPC enables you to set-up real-time dashboards and alerts to react to changes as they’re happening, as opposed to after the fact.
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