How to use Automation to Combat Tariff Spikes
There has been a lot of discussions lately of tariff spikes due to evolving conflict between the Trump Administration and foreign countries. While fair trade has been the elephant in the room that no politician has wanted to touch or improve in decades, it has become a reality recently. Tariff spikes deliver multiple hurdles for everybody in the supply chain – from retailers to shippers and carriers. However, there are a few ways that automation or new technology solutions can help supply chain partners combat tariff spikes that are going to occur over the next few years.
Here are a few ways that everyone in the logistics industry can navigate the ebb and flow of the volatile trade seas ahead.
What’s the Biggest Issue that Tariff Spikes Create?
Without question, the biggest problem that tariff spikes (whether it is a lowering or increase in imports or exports) is the impact it has on the overhead expenses throughout the supply chain. Shippers having to pay more for imported raw materials or carriers having to pay more to transport commodities to overseas customers all feel the burn of tariffs in their pocket. In fact, earlier in 2018, the simple threat of rising tariffs on imported steel, aluminum, copper, and other metals caused a dramatic reduction in the production of parts needed for larger manufacturing efforts (especially in defense aerospace, transportation, and manufacturing of major appliances).
Rising or lowering tariffs are combatted by finding creative ways of reducing the cost of goods or operations. In the supply chain – this can be addressed by incorporating changes in warehouse operations through the use of automation.
How to Incorporate Warehouse Automation
The approaching trade war is likely going to cause a rise and fall of tariffs and other trade-related expenses. To prepare for the rollercoaster of activity, smart warehouse managers should be proactive about finding ways to reduce inefficiencies and increase productivity throughout the warehouse. This can be completed by activating a simple audit that analyzes a few important areas of operation – that are applicable to all supply chain partners:
Reviewing costs associated with operations: Automation has significantly reduced the cost of operating any business. Whether it’s the use of software solutions for processing company payroll, communicating with customers, organizing orders, and keeping track of inventory in real-time, automation and technology is a great way to streamline costs. Reviewing areas of your warehouse operation that are dependent on people that could be replaced by automation can significantly reduce overhead costs.
Allocate resources saved through automation: Automation in the warehouse is often blamed for the loss of employees or as a crutch for reducing payroll. However, it can also allow a warehouse manager to allocate those saved resources on company growth. For example, if you integrate a new software as a service (SAAS) for order processing, customer communication or other formerly human-operated programs, instead of laying off that employee – allocate them to sales or another area of growth potential for the company.
Find areas of concern where technology or automation can assist: Many warehouse managers have indicated that integrating warehouse automation programs that assist with inventory control, order processing, and logistics planning have stimulated business growth. To determine what technology is best for your industry, find areas that are costing you money or not operating efficiently – before considering an automated option.
Consider Automation for Packaging
Even if tariff spikes disappear, finding ways to integrate automated technology for warehouse operations including pallet wrapping, loading trucks, and even inventory control will save companies money over time.
The act of automating workflow in a warehouse environment offers multiple long-term benefits including:
• Increasing warehouse space utilization.
• Increases the speed and efficiency of order fulfillment.
• Improves inventory control – and reduces mistakes on order fulfillment.
• Reduces on-site injuries and workers compensation costs.
Speaking of elephants in the room – one item that needs to be addressed is the potential of tariff spikes going away. It is quite possible that tomorrow Trump and other foreign leaders will find a solution that will stabilize the global trade economy. Being proactive about integrating automation throughout the supply chain can prepare shippers, carriers, warehouse operators and others in the supply chain to combat potential hurdles caused by the tariff rollercoaster.