The Tariffs are Coming (Maybe) – Planning for Supply Chain Network Change, Opportunity, and Disruption

In the last 3 months, I have been struck by the volume of industry articles that predict major network shifts in 2025. These include the uncertainty of tariffs and counter-tariffs as well as underlying trends towards re-shoring and/or migration from China. This is in addition to the fact that the global supply chain has entered a period of relentless volatility including supplier shortages, regulatory pressures, and unpredictable disruptions.

Supply chain leaders are tasked with planning ahead, but it seems that “ahead” is coming more quickly in 2025. Primary things to plan for are:

• Supplier mix and geographical diversity
• Re-shoring/near-shoring where possible
• Shifting supply away from China
• Reducing overall route complexity and risk

In this new landscape, a strategic roadmap typically viewed yearly or less frequently needs to become a living, dynamic model. Even if the supply chain is not changing this month, the organization needs to know when suppliers, ship-from/ship-to, and carrier needs are changing. Traditional network design methods – based on complicated and brittle tools – are no longer fast enough. By the time companies finalize a response to one change, data is outdated, and circumstances have changed.

The reality of 2025 demands smarter, faster, and more adaptable supply chain strategies. For supply chain leaders, this means adopting a continuously optimized supply chain network that senses change, simulates alternatives, and adapts in real time.

Traditional Methods Are Falling Behind

For decades, companies have approached supply chain strategy through long-term, manual assessments, with a scheduled analysis of the network’s design every one to three years. This approach made sense in an era when supply chains were more predictable.

But today, the world is moving faster toward the unknown.

Take, for example, the threat of rising tariffs and counter-tariffs. Trade regulations are constantly evolving, forcing companies to make sourcing and pricing decisions in real time. While economists agree tariffs increase costs, the broader impact extends beyond price hikes. Tariffs affect supplier viability, transportation strategies, and even customer demand, forcing businesses to continuously rethink their supply chain flows.

The organization that can sense changes, synchronize models, and explore impacts and alternatives in the same day will have a distinct advantage over the competitor who would take a month or two to model a new environment.

Meanwhile, the same challenges and expectations from the last few years persist. Labor shortages, political instability, and natural disasters continue to disrupt supply chains worldwide – leading to stockouts, delays, and lost revenue. Global carbon emissions and sustainability reporting mandates are also reshaping supply chain strategies as new regulations impact transportation routes, supplier selection, and cost structures.

As a short-term solution to these challenges, many businesses are reconfiguring their supplier networks to mitigate risk, shifting from offshoring to nearshoring and multi-sourcing. However, these strategies come with cost trade-offs, new logistics challenges, and shifting compliance requirements. Without a dynamic, continuously optimized model, companies risk making changes that introduce new inefficiencies instead of solving their problems.

Here’s the hard truth: traditional supply chain planning models aren’t built to sense and update the data that underly these multi-dimensional trade-offs.

Long analytical cycle times and rough approximations in data are creating considerable supply chain weaknesses, including:

Continuous Network Optimization Powers Supply Chain Resilience

To keep up with today’s rapidly changing global landscape, supply chain leaders need to adopt a continuous network optimization approach. This strategy ensures that companies can anticipate disruptions, model alternatives, and adjust supply chain flows in real time—rather than scrambling to react when problems arise.

Unlike traditional methods that rely on outdated models and assumptions, continuous network optimization leverages AI-powered analytics, automation, and real-time data to create a supply chain that is:

• Proactive, not reactive. Businesses can predict risks – from tariff changes to supplier failures – before they cause disruptions.
• Agile and adaptive. Sourcing, transportation, and inventory flows can be adjusted based on real-time market conditions.
• Optimized for cost, service, and sustainability. Supply chains can balance cost-efficiency and service-level requirements without compromising regulatory compliance.

The difference between a reactive supply chain and a continuously optimized one comes down to the speed at which changes in environmental data like demand, costs, or tariffs are sensed, processed, and presented to decision-makers. If this can be done autonomously (runs while you are sleeping)actions can be taken without latency.

How to Build Network Resilience with Continuous Optimization

At Logility, we help companies build a continuously optimized supply chain network using AI, automation, and real-time scenario planning. Here’s how:

1. Navigating Tariffs with Dynamic Scenario Planning

Consider a U.S.-based automotive manufacturer sourcing aluminum from Asia. With new tariffs suddenly imposed on raw materials, the cost of production skyrockets. This isn’t just a pricing issue – these tariffs also threaten supplier viability, forcing the company to reassess its supplier contracts and sourcing strategy overnight.

Rather than making rushed supplier changes without analyzing broader implications or waiting until the next planning cycle to absorb increased costs, Logility’s continuous network optimization capabilities can help the manufacturer take immediate action, such as:

• Simulate the impact of tariff changes on sourcing, transportation, and pricing before they happen
• Identify cost-effective alternatives in seconds and adjust supplier agreements dynamically—and explore viable alternatives and adjustment.
• Publish network changes to planning tools and phase change in with quantitative rigor

2. Multi-Sourcing for Greater Network Resilience

Suppose a consumer electronics manufacturer depends on a single-source supplier for semiconductor chips. When an unexpected geopolitical conflict halted exports, the entire supply chain came to a standstill, leading to costly delays and order backlogs.

Most companies would need to scramble to find an alternative supplier, delaying shipments by months and increasing procurement costs. However, the continuous network optimization approach enables a more optimized response, enabling the business to:

• Diversify its supplier base in advance to ensure backup sources are available.
• Monitor risk indicators – such as supplier financial health and geopolitical instability continuously
• Adjust sourcing strategies automatically when disruptions occur to avoid downtime

3. Automated Risk Sensing and Response

Assume a global apparel retailer decided to shift some production from Southeast Asia to Mexico and Central America to shorten its lead times. However, without proper modeling, the move unexpectedly increased logistics costs and bottlenecked supplies as near-shore vendors struggled to meet demand.

The retailer has a choice to make – and the right one can be chosen by applying continuous network optimization tools to:

• Compare cost and service impacts of nearshoring
• Identify supply chain gaps and evaluate supplier readiness
• Optimize transportation and logistics to ensure a cost-effective transition
• Model for anticipated disruptions while having contingency plans for emergent disruptions

4. Phased Execution of Supply Chain Adjustments

Imagine a European pharmaceutical company caught off-guard by a new requirement to accelerate end to end product delivery times. Every decision in a supply chain has a ripple effect – switching suppliers or trade routes can disrupt inventory, forecasting, and fulfillment. However, the company lacked visibility into transportation emissions and supplier sustainability scores, increasing the risk of non-compliance penalties and damaging brand reputation.

By supporting continuous network optimization, Logility solutions can help the company:

• Align distribution, inventory, and supply planning to prevent costly disruptions
• Ensure every network adjustment is coordinated across all business units
• Optimize supply chain flows in real time, without manual intervention
• Adjust supplier selection based on sustainability criteria automatically
• Ensure continuous compliance with evolving regulations, reducing penalties and risks

The Business Impact: Faster, Smarter, and More Resilient Supply Chains

Static supply chain planning is no longer viable. As disruptions, tariffs, and regulations accelerate, businesses must embrace continuous network optimization to stay competitive.

And with Logility solutions, you can too – leading to critical improvements such as:

• 5-20% cost reduction through smarter overall network optimization
• Increased resilience to pivot instantly in response to disruptions
• Enhanced sustainability compliance with better emissions tracking
• Remove latency in decision-making with AI-driven insights, reducing inefficiencies

Now is the time to optimize, adapt, and lead.