From the COVID-19 pandemic and economic fluctuations to today’s tariffs, supply chains have been constantly stress-tested. Companies worldwide are looking to robotics and software to help their operations be more resilient. Every challenge is an opportunity, noted Infios.
Supply chain, logistics, and warehouse businesses can’t simply react; they need to devise strategies in response to tariffs, Infios noted in a recent blog post. The company, which recently rebranded from Körber Supply Chain Software, provides adaptable supply chain execution software.
“We have four guiding principles: innovation, thinking ahead, adaptable solutions, and growing with you, regardless of industry,” Edward Auriemma, CEO of Infios, told Automated Warehouse at ProMat last month. “We’re bringing transparency, communications, and purposeful innovation to our customers.”
The company, a unit of Körber AG, has about 2,100 employees and 5,000 customers globally. It recently named professional golfer Keegan Bradley as its brand ambassador.
Don Mabry, senior vice president of global trade solutions at Infios, discussed tariffs and how technology can add resilience to supply chains.
Industry braces for customs changes
What are Infios’ customers doing to get ready for tariffs?
Mabry: Our customs and trade-compliance base consists mainly of customs brokerages. These are the service providers that support U.S.-based importers that really represent a majority of industry segments across manufacturing, distributors, wholesalers, retailers, and others.
Infios. Source: LinkedIn
You can imagine across that varied of a base, their needs are very different and complex. They’re helping shippers and importers of record better react to the historic conditions of global trade and the tariff changes that are under way.
The customs brokerages that are on Infios solutions are relying on our ability to adapt to changes in duties or filing requirements with U.S. Customs to ensure compliance with new regulations as they become effective. There are timing and complexity elements.
It’s not like these new tariffs wiping everything clean, and we can are start clean. No, these are stacking. The net effective rate can be in the 10% to 50% range, and it can be overwhelming from a business standpoint.
These reciprocal tariffs can be very complicated, down to an individual item on a tariff schedule that may or may not have a certain rate associated with it. It’s almost impossible to navigate without a very flexible technology that can be brought to bear.
How specific are the new trade rules, and how much time do companies have to prepare?
Mabry: You can prepare as long as you can adapt quickly. Those service providers, as well as those direct importers, that have flexibility in their operating processes and supporting technology are well positioned to adapt or react to these changes.
Specifically, the automotive tariffs that are going into effect were announced about three weeks ago. We have been preparing for them and have customs brokers that are filing auto imports on our platform.
We synchronize in an automated fashion to the harmonized trade system code structures on a regular basis and are ingesting that information from a master international source. This allows succinct application of the tariff code on a line item on a filing.
For example, with recent tariffs that were announced on steel and aluminum, we configured our tool and user guides to provide detailed instructions on how to handle the additional filing requirements. They can maintain both their operational efficiency and compliance with what’s being asked of them.
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Tariff effects will take time
How do you expect the flow of goods globally to be affected by the new tariffs?
Mabry: We’re seeing countries already addressing that by diversifying their trade partnerships. They’re looking to partner with other countries in a similar situation so they can absorb the impact of lessening of demand from the U.S. market because of cost increases.
If there is a relocation of manufacturing, it takes time to build and source a manufacturing facility, so companies are being strategic in reinvesting in nearshoring with the ultimate goal, of course, to maintain competitive pricing. They need both a short-term and a long-term strategy.
For example, automotive suppliers are clearly exploring alternative production sites or suppliers outside of North America, since it has been heavily reliant on cross-border trade among the U.S., Canada, and Mexico. We’re already seeing new trade blocs being formed.
How long might reshoring and adding automation take? We’ve already seen a bit of that with semiconductors, so does it depend on sector?
Mabry: What drove globalization was the ability to source high-quality products for less expense. It didn’t happen overnight, and it took maybe 20 years to become a standard operating practice. I think a similar timeframe would be applicable [to reverse that trend].
Then you have the pressure of organizations within these countries. Will it fluctuate over time? Ultimately, it’s the cost that drives these trends.
Tariffs cause supply chains to shift sourcing
How exactly will tariffs affect supply chain operators?
Mabry: The auto industry is a great example, where the 25% levies are definitely rippling through the global supply chain in a disruptive way. Both their input costs for raw materials and the cost of finished goods will compress their margins.
Manufacturers are going to try to absorb some of these costs rather than affect customer demand, but a lot of businesses will raise prices. Increased cost is definitely going to come into play, as well as this overall rerouting and restructuring, shifting sourcing to locations that might not be affected quite as badly, such as Southeast Asia rather than China.
We have a lot of retailers on our platform that need shipment and order visibility, for example, because they’re very sensitive to cost components and the availability of product they have to purchase or resale here in the states, so that’s a really critical factor.
What has the reaction been by sector or the size of company?
Mabry: Large organizations are able to mitigate these tariff impacts by doing things like renegotiating supplier contracts to get more favorable terms. We’ve already talked about diversifying the supply chain.
We recently saw a major retailer pressing its suppliers for price reductions, particularly in China, but it got pushback from the government. It’s now becoming more of a country versus country thing versus a company trying to build profitable relationships with its supplier base.
Smaller enterprises are working on smaller profit margins and definitely have concerns about their ability to grow and hire people. They have to look into alternative sourcing options and be careful about passing along price increases.
Now’s the time to invest in tech, notes Infios
How is Infios preparing for the tariffs?
Mabry: We are both staffing up and building up technical resources to solve these challenges that are being presented by this more chaotic global trade environment.
We’re continually investing in the technology platform. It’s not one of these where you build it, put it in place, and then run it for six years. You need a platform that is continuing evolving.
A great example is applying machine learning and AI to data extracted from electronic documentation to lower the burden of individuals having to input certain filing information by hand or even by Excel upload.
Instead, that’s being ingested directly off common trade documents like a commercial invoice, packing lists, or bills of lading. The higher accuracy tat we have for what gest submitted via our certified interfaces reduces the load on the receiver. Customs has less to work with because our filings have a high level of accuracy.
So in closing, how can companies navigate this uncertainty?
Mabry: As the global economy gets pressured, you’re going to see a shift from a growth-focused strategy to one that’s a bit more protective. How adaptable can I be?
No doubt, we’re looking to do things like preserve cash, protect the core operation where the [customers’] true value-add is and the competencies they bring to market. Renegotiation of contracts is also very critical for flexibility.
This is an ideal opportunity to optimize your operations. You can look at inventory — is it time to invest in automation that helps reduce recurring costs? Now’s the time to be leaning into innovation, especially if you had taken a backseat around implementation of robotics.
There are these massive amounts of data being produced every second within the supply chain whose value we have only started tapping in a very small way so far. When you think about it across the customs space or the supply chain execution space as a whole, whether it be order management, transportation management, or warehouse management, we have very rich data.
We’re on an active road map to identify and deploy new use cases out of the connections of that data that we’ll be able to bring with the products and services we offer.
