How Do Tariffs Affect Inbound Logistics?
As tariffs loom, many U.S. companies are increasing domestic manufacturing production and inventory capacity. In turn, every step of the manufacturing supply chain feels the impact like a swirl of dominos falling.
“Businesses must look to dynamic supply chain strategies to address an ever-changing landscape,” according to Industry Week. Some manufacturers are sourcing raw materials differently, and some are ramping up U.S. production. How do tariffs affect your inbound logistics, and do you have a tariff strategy in place today?
Inventory hoarding & warehousing
The inventory problem is two-fold. Reuters reports that retailers are “hoarding” inventory to avoid the threat of higher tariffs in the near future. “Warehouses throughout the United States are at record capacity with Chinese imports of all kinds,” according to the story.
Inventory demands are straining warehousing systems, “and retailers are paying more for storage due to a shortage of warehousing across the country,” reports Reuters.
Stepping up U.S. manufacturing
Another popular tariff strategy is to step up domestic manufacturing. “Tariffs make it more expensive to bring products across the border, which provides an incentive to produce or assemble products in the home country,” according to The American Society of Mechanical Engineers.
Boosting available storage space for raw manufacturing materials is a challenge as companies gear up. Likewise for the entire inbound logistics process. As manufacturing production rises, so do demands for inventory handling, storage capacity for both raw materials and finished goods, square footage for production, and labor.
The case for an inbound logistics partner
With these factors at play, turning to a capable partner can provide solutions. A partner with expertise in inbound logistics can help you with value-added warehousing services as well as inventory management and a robust complement of integrated supply chain management service options.
The right partner can optimize warehouse efficiency with attention to processes, labor, space utilization, and more. Each of these factors feeds into the bottom line for your manufacturing business.
Strong operational processes and capabilities are the backbone of an effective inbound logistics operation and are critical to preventing expensive manufacturing downtime. Inventory management expertise also plays a crucial role. Having the right materials in place, available and calibrated to production flow, is crucial. Robust inventory management capabilities protect your business, your budget, and allow you to scale with production surges or dips.
When selecting an inbound logistics partner, it’s also crucial to explore quality and inspection processes, too. Having the right materials in the right place at the right time is useful only if the materials meet your specifications. As materials arrive, a thorough inbound inspection process should be put in place. Your criteria and a customized QA plan administered through proven processes can prevent downtime and quality errors. This is increasingly important with highly regulated products.
An effective and efficient inbound logistics operation isn't complete without a plant delivery component. Transportation of materials from inventory to production lines needs to be constructed for optimal efficiency, accuracy and precision timing. Learn how one manufacturer reduced inbound materials lead time and slashed production downtime in the FIDELITONE case study on surgical equipment manufacturing.
The role of technology
A cost-effective, efficient and precise inbound materials management operation is shored up by right-fit technology at every stage. Technology assists with accurate forecasting, ordering, warehousing, distribution, and tracking of materials throughout the product flow. Do you have real-time visibility into inventory levels and product movement?
A qualified partner can provide integrated, complementary services to your inbound logistics operation.
- Warehousing, fulfillment and distribution for finished goods
- Kitting, sequencing, and labeling of products
- Vendor management solutions
- Vendor managed inventory capabilities
As you devise your strategy for responding to tariffs, talk to us at FIDELITONE. We’re here to help. Contact us today!