Supply chain complexity is increasing these days. New tariffs introduce new challenges and variables, and global trade is now more intricate than ever.
Higher prices are part of the equation, and industries can feel their impact in all parts of their supply chain, including transportation, sourcing, and warehousing. As with all new challenges, logistics professionals understand the effect, and they are looking for ways to new solutions to manage the complexities of their work in a single tool.
Mathematical Optimization: A Powerful Ally
Mathematical models present a proven solution for the logistics industry. They can help provide faster solutions and roadmaps to address our current challenges. Leveraging the power of data, mathematical optimization can provide the analytical force needed to make informed decisions.
Here are some ways mathematical optimization can create a positive impact:
- Improved network design. With new challenges and questions rising over the tariff conundrum, mathematical optimization models can help you analyze various factors such as tariff rates, transportation costs, production expenses, and locations to help you improve current supply network design.
- Better inventory management. Tariffs disrupt inventory strategies. Optimization models can factor in tariff costs during demand forecasting and inventory planning, helping determine ideal stock levels to avoid costly stockouts and excess inventory facing duties. Scenario planning prepares you for demand shifts due to tariff-induced price changes.
- Smart Sourcing Decisions: Optimization focuses on the lowest total landed cost, not just the cheapest goods. By considering tariffs, base price, and transportation, algorithms can find the best supplier mix, preventing excessive duty costs.
Introducing and repealing new tariffs certainly adds new challenges to an already complex industry. Now, more than ever, it is important to harness the power of your existing data and make data-driven decisions faster rather than a stare-and-compare scenario, which will take far too long for you and your company.
Conclusion
Mathematical optimization allows you to supercharge decision-making and provide the insights needed to re-evaluate your supply chains, sourcing, and transportation to make informed decisions and minimize the financial impact these tariffs present. Understanding your needs and potential challenges is one step towards a more sustainable problem-solving equation and aids in overcoming challenges in the logistics industry.
Are you ready to explore your options with mathematical optimization? Contact us or schedule a free consultation with our expert PhDs to get started.
Modaai has Operations Research PhDs with over 25 years of modeling and tuning experience. We can tackle your toughest problems. Whether you want us to take over your optimization project completely or supplement your team with training, model design, or model tuning, we can support you.