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Supply Chain Tariffs & AI: Hidden Costs Revealed

by Sophie Lin - Technology Editor

The 48-Hour Supply Chain: How Process Intelligence is Becoming a Competitive Imperative

Every 48 hours, global businesses face a critical window – the time it takes to react to sudden tariff changes before competitors seize the advantage. This isn’t a hypothetical scenario; it’s the new reality of international trade, and it’s forcing a fundamental shift in how companies approach supply chain management. The companies that thrive won’t be those with the most data, but those who can translate that data into actionable intelligence, fast.

The ERP Paradox: Drowning in Data, Starving for Insight

For decades, enterprises have invested heavily in Enterprise Resource Planning (ERP) systems like SAP, Oracle, and PeopleSoft, creating vast repositories of transactional data. These systems meticulously log every purchase order, shipment, and inventory movement. However, this data often remains siloed, hindering a holistic view of the supply chain. As Manik Sharma, Head of Supply Chain GTM AI at Celonis, points out, traditional ERPs simply weren’t designed for today’s volatile environment. The challenge isn’t a lack of data; it’s the inability to quickly answer critical “what-if” questions – like, “What happens if tariffs increase 25% tomorrow and we need to switch suppliers within days?”

Tariffs as a Stress Test for AI and Supply Chain Resilience

Tariffs, a constant in global trade, have evolved from predictable costs to strategic weapons, fluctuating with unprecedented frequency. This volatility exposes critical weaknesses in existing systems. Autonomous AI agents, touted as the solution to supply chain disruption, are only as effective as the data they receive. An agent acting on stale or fragmented information can easily make million-dollar mistakes when faced with rapidly changing tariff structures. This highlights a crucial point: true supply chain intelligence requires a deep understanding of process flows, not just transactional records.

No AI Without PI: The Rise of Process Intelligence

The key to unlocking the potential of AI in the supply chain lies in process intelligence (PI). Without it, AI operates blindly. PI extracts and connects event data across disparate systems, providing a real-time view of how processes actually execute. This is particularly critical as many companies are still in the midst of complex ERP migrations – an estimated 85-90% of SAP customers are transitioning from ECC to S/4HANA, a move that doesn’t inherently improve visibility. As Kerry Brown, a transformation evangelist at Celonis, emphasizes, organizations need to understand how work flows across their existing systems, not simply upgrade the underlying database.

Digital Twins: Modeling the Unpredictable

Companies like Vinmar International, Florida Crystals, and ASOS are demonstrating the power of PI by creating digital twins of their supply chains. These digital replicas, powered by a Process Intelligence Graph, link orders, shipments, invoices, and payments end-to-end, revealing dependencies that traditional integrations miss. For example, a delay in SAP can instantly reveal its impact on warehouse scheduling and customer delivery commitments. This allows businesses to continuously model “what-if” scenarios, preparing for tariff changes and other disruptions before they occur. Vinmar International, for instance, cut default expedites by over 20% and improved delivery agility by implementing a real-time digital twin of its $3 billion supply chain.

Zero-Copy Integration and the Future of Real-Time Analysis

Recent advancements, like Celonis’ zero-copy integration with Databricks and Microsoft Fabric, are further accelerating this trend. Traditionally, analyzing supply chain data required copying data from source systems into central warehouses, introducing latency. Zero-copy integration allows companies to query billions of records in near real-time, enabling instant modeling when trade policies shift. Enhanced Task Mining adds another layer of insight by capturing manual processes – the spreadsheet gymnastics, email negotiations, and phone calls that often keep supply chains moving during urgent changes – which are invisible to system logs.

Beyond ERP: Composing Workflows for Agility

The good news is that companies don’t need to rip and replace their existing systems. Process intelligence offers a more pragmatic approach: composing workflows from existing systems, deploying AI where it creates value, and adapting continuously. This “Free the Process” movement liberates companies from rigid architectures without requiring wholesale replacement. This approach is particularly relevant given the significant investment already made in existing ERP infrastructure.

As global trade volatility continues to intensify, the ability to model, adapt, and execute quickly will be the defining characteristic of successful supply chains. The next wave of tariffs will hit, and companies won’t have days to respond – they’ll have hours. The question isn’t whether your ERP captures the data; it’s whether your systems can connect the dots fast enough to matter. For further insights into navigating this complex landscape, explore the latest research on supply chain risk management from the Gartner Supply Chain Research.

What steps is your organization taking to build a more resilient and responsive supply chain? Share your thoughts in the comments below!

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