Navigating Tariff Chaos with Attribute-Based Planning

With increasingly complex global supply chains, organizations need smarter strategies to navigate tariffs, restrictions, and sourcing challenges while staying compliant. Single-level sourcing management is not good enough. For example, Mexican organizations may need to be able to transact and plan to make sure materials purchased from China do not end up in final assemblies that go to customers in the United States. In a complex multi-national supply chain, this problem becomes exceptionally hard to manage without advanced capabilities. 

Organizations need to declare from where materials and sub-assemblies are sourced in addition to the final product country of origin. Moreover, it is not just where the parts came from but also how they got there, what labor practices were deployed, and if ethical and health standards were observed. In many industries, such as pharmaceuticals, medical devices, semiconductors, and food and beverage, restrictions are becoming increasingly complex, and the tax consequences are more significant. Failure to track this data and failure to utilize it in planning can result in, at best, taxes and penalties and, at worst, inability to supply to customers. Organizations need to find ways to be more efficient and agile without compromising on compliance. 

The solution to the problem requires two key capabilities. Organizations need to have detailed execution monitoring that includes track and trace capabilities to know where every part has come from and how they were used during the manufacturing and distribution process. ERP systems can provide some of this information but a more robust execution tracking system with attributes is needed to manage, analyze, and monitor the supply chain. Modern Manufacturing Execution Systems (MES) need to go beyond monitoring only plants and instead manage end-to-end supply chain information. 

Organizations also need to be able to create an end-to-end supply chain plan that considers complex rules and restrictions. This is where Attributes and Attribute-Based Planning (ABP) come into the picture. A Supply Chain Planning system that uses ABP and AI logic can consider sourcing constraints, tariffs, and other considerations even when they are inherited from earlier stages. 

Import/Export Tracking and Tracing in a Manufacturing Execution System.  

Traditional MESs keep track of the product through the manufacturing process while it is being made. The ability to extend your MES capabilities with attributes from the end-to-end supply chain tracking/accountability is what allows you to manage the complexity and provide dynamic, timely information to your planning system. Enterprise Resource Planning (ERP) systems can provide some of this functionality but lack the intelligence, dynamic event-based architecture, and detail that a fully supply chain enabled MES can offer. 

Its capabilities include the following:  

• Tracks the country of origin on purchases and retains that tracking information on inventory after POs are closed. 
• Retains the country of origin of the components as attributes of the intermediate assembly when inventory is consumed by a manufacturing lot or transported 
• Includes a complete designation of country of origin for any sourced parts subject to restrictions or tariffs for finished products 
• The above information and any other desired attributes are directly tied to the Supply Chain Planning module to ensure compliance with country and customer-specific regulations and minimize tariff costs 

Attribute-Based Supply Chain Planning Systems 

A full end-to-end supply chain MES provides the dynamic foundation to provide information on status and compliance. While it contains an understanding of the inventory on hand and where it came from, an organization also needs a forward-looking, optimized, and compliant supply chain plan. The supply chain plan needs to consider the history of where the parts came from and any restrictions the end customers may have on remaining intermediate process steps.   

Traditional planning systems cannot model the multi-tier restrictions and rules. This is where Attribute-Based Supply Chain Planning comes into play ensuring that the plan conforms to the restrictions and minimizes costs. For example, the end customer may have a restriction on the sourcing of a part, which is four levels earlier in the Bill of Materials, due to political considerations. Tariffs may be in play, but only when considering the final destination and purchased materials. A customer may specify that their order must be made with parts from a certain qualified supplier; or that a particular facility must be used when there is a choice. Technical specifications can also be different for various countries and customers. Moreover, there may be a need to ensure that parts from a certain region are not used or sold, because of either sanctions or substandard labor practices. Tariffs, carbon footprint, or any other factor could come into play when planning the product and those rules can change quickly. 

Attribute-Based Planning architecture is designed to address the planning complexity of such requirements. Since these requirements can change quickly, they need to be addressed with data and not hard-coded rules. With ABP a customer’s order requirements and constraints are identified on attributes as data on the demand. They are then matched against the attributes of every process that touches the product or part thereof with full pegging functionality. Using the attributes, the planning system identifies where the parts can come from, which suppliers are qualified, which production processes and equipment must be deployed where and when so that the product is delivered On Time In Full (OTIF). This all needs to work while considering material and capacity constraints, demand priority rules, and other business rules. 

It is quite possible to dynamically manage an end-to-end supply chain even in today’s ever-changing environment. What it takes is a system that can track the needed transactional compliance as attributes and the ability to plan dynamically using those attributes. 

To stay ahead in the increasingly complex world of global supply chains, invest in advanced Attribute-Based Planning and dynamic tracking systems today, ensuring compliance, reducing costs, and meeting customer demands with precision.