Why tariffs and other disruption demand a bifocal approach to planning

Tariffs don’t just threaten to disrupt the international political order - they ripple through the entire cost structures of every business on the planet. While supply chains are first to feel some of the most disruptive shocks, it’s finance that ends up absorbing a lot of the most significant pains: unexpected margin pressures, cost volatility, and difficult trade offs and decisions around sourcing, pricing and forecasting.

In this kind of environment, the old model of manual, siloed long range planning simply isn’t built to meet this kind of moment. The new wave of global tariffs and retaliatory measures (mainly between the US and China, but there are others players like the EU on the board as well) has injected fresh uncertainty into supply chains that have already weathered COVID-19, geopolitical conflicts, maritime disruptions, industrial actions and inflation spikes in the last few years. Businesses large and small need to stay agile at the tactical level, while not losing sight of the larger strategic financial picture, meaning supply chain and finance leaders need to move as one.

The dilemma for planners: Long-term vision vs short-term reality

Planning for the long-term while responding and adapting rapidly to short-term volatility is an acute tension that supply chain and finance teams are feeling right now. The sudden tariff increase on Chinese goods has thrown off cost calculations, squeezed margins and forced a sudden reshape of sourcing strategies practically overnight. Shipping costs, supplier lead times and the availability of key inputs are all shifting rapidly as the wider political environment changes, leaving little time for planners to react.

However, businesses still need to plan for growth, capacity and cost management across the coming quarters and years - simply reacting isn’t going to cut it. The challenge is in building a planning environment where short-term tactical decisions - like sourcing changes or regional inventory buffers - are made in the context of longer-term financial goals. 

This is where traditional approaches to planning and rigid planning models fall short. Static spreadsheets, disconnected operational and finance tools and planning cycles that adhere strictly to their quarterly cycles cannot deliver the responsiveness that this moment is calling for. 

The future of supply chain finance planning isn’t short-term or long-term - it’s both, dynamically connected, with the ability to zoom into the tactical or out to the strategic on demand.

Proactive moves that teams can make today

In such an environment where margins are under significant pressure and the cost landscape is shifting weekly (if not daily), supply chain and finance teams need to act proactively together. 

Key things to consider:

• Scenario modelling can help you simulate a range of possible tariff environments, from different duty levels, impacted categories or supplier risks - and assess how they will impact forecast accuracy, operational continuity, cost and, ultimately, margins. Fast, collaborative planning is the best way to respond with confidence.
• Volatility affects profitability, and not all SKUs will be equally resilient. Teams need to work together to model how pricing strategies, volume shifts and low-margin products might affect financial performance in different scenarios.
• Businesses are increasingly building up their safety stock to hedge against volatility - but inventory is capital. Localizing your buffers can help improve resilience, but the financial trade-offs need to be modelled and understood carefully. What’s the true cost of tying up cash in particular regions vs the risk of stockouts in others?

In all of this, timing matters. Delayed reactions cost money. Misaligned planning and inaccurate forecasts lead to missed opportunities, damaging missteps or worse.

Synchronized planning is now mission-critical

This kind of complexity is exactly what today’s modern planning platforms should be solving for, but most aren’t built for it. Disconnected tools slow decision making. Supply chain teams manually model impacts in spreadsheets which are then passed to finance for validation because hierarchies can’t be changed easily. By the time numbers are reconciled, the window to act has closed and there’s a new issue on the horizon.

Pigment is designed to bridge this gap, and bring supply chain and financial planning closer together in one shared environment. Meaning:

• Scenario modelling that connects supply chain disruptions directly to margin forecasts and cash flow.
• Real-time financial impact assessments of coursing strategies, pricing shifts and logistics bottlenecks.
• Understanding your most profitable products and customer segments, and connecting these with pricing and promotional strategies that can offset cost pressures.
• Cross-functional collaboration where supply chain and finance speak the same language and utilize the same data.
• Moving faster, together. Forecasting and reforecasting in hours, not days. And reacting in the moment with confidence, while knowing your tactical decisions are aligned with long-term strategies.

Tariffs are the latest piece of the larger pattern of global volatility and ever more complex interdependencies. But with the right planning tools in place, there’s even an opportunity amidst the chaos. 

The businesses that find it are the ones that can adapt quickly without losing strategic focus, and those that connect supply chain planning to financial impacts, turning reaction into readiness.