SAP: How Companies Should Prepare for Global Trade Pressures
In recent months, the US trade tariffs have become the main discussion point for trade issues around the world, but SAP points out they’re merely only one part of negotiation deals.
In a recently published report, SAP explores how changes can affect supply chains around the world, whilst showing how businesses can adapt to make their supply chains stronger.
Building resilience
Companies that anticipate global disruption and supply chain issues within their operations are more likely to adapt to uncertainty.
If a business understands potential pitfalls when designing their supply chains, it is more likely to minimise risk.
Through their use of subsidies, export restrictions, foreign investment policies and regulatory changes, governments around the world are forcing businesses to adapt quickly, as supply chains get disrupted and competitive advantages are consistently changing.
Big-scale policy changes can have a ripple effect across global supply chains, causing major issues if businesses are not prepared.
As writers of the SAP report, Manuel Flubacher and Richard Downs point out, digital regulations within the EU can affect US tech firms.
After US President Donald Trump proposed a 30% tariff on EU exports, President of the European Commission, Ursula von der Leyen, stated: "Imposing 30% tariffs on EU exports would disrupt essential transatlantic supply chains, to the detriment of businesses,, consumers and patients on both sides of the Atlantic.
"At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required."
As writers of the SAP report, Manuel Flubacher and Richard Downs point out, digital regulations within the EU can affect US tech firms.
It is not enough however, in this current geopolitical climate, to react to changes. Companies must be proactive in order to implement solutions before these issues occur.
This will help the businesses to strengthen their operations, open new market opportunities and have better and more efficient decision making.
Supply chain strategy
SAP outlines five key strategies for building resilience.
Plan for changes: Operational uncertainty is caused by shifting trade barriers and companies must have the capacity to adapt quickly to protect their supply chains.
SAP Global Trade Services (GTS) automates and streamlines trade compliance processes, so efficiency is improved, risk is reduced and supply chain processes are accelerated.
SAP Business Network (SBN) helps businesses comply with sustainable and global regulations by ensuring supply chain transparency.
In using these two platforms together, businesses can adapt to changing restrictions and regulations whilst avoiding fines or delays.
Diversify markets: If a company is overly reliant on one market, businesses are more at risk of crumbling if that market shifts.
Through expanding operations around the world, businesses can better adapt to changing conditions.
SAP Integrated Business Planning (SAP IBP) uses AI to identify alternative suppliers and help businesses build greater supply chain resilience.
Monitor geopolitical trends: Political dynamics around the world shape global trade policies, so understanding key relationships is vital for businesses to understand risks and opportunities.
SAP BTP provides real-time insights into macroeconomic trends and updates on policy changes, so companies can quickly adjust strategies based on those insights.
Strengthen supply chain collaboration: Supply chain resilience is grown through collaboration with global partners.
By using a range of SAP platforms, businesses can connect with suppliers to maintain full supply chain transparency, which in turn helps reduce supply chain disruptions.
Trade countermeasures: Trade conflict can cause a mass movement of retaliatory tariffs and currency issues, so businesses must introduce cautionary measures to stay prepared.
SAP programmes can help businesses simulate these disruptions, allowing companies to consider various strategies to remain prepared – companies can adjust sourcing plans or contracts, for example.
Collaboration for the future
Companies need to be prepared for the ever-shifting trade climate, rather than reacting to the events.
Manuel and Richard state: “Instead of reacting defensively, businesses and policymakers should work together to find cooperative solutions.”
This can be done by engaging in policy discussions or strengthening trade partnerships by collaborating.
They continue: “By focusing on long-term cooperation instead of short-term protectionism, businesses can help create a stable and prosperous trade environment.”
Through using modern technology and strategic partnerships, businesses can develop long-lasting and resilient supply chains, even during times of great geopolitical tensions and economic uncertainty.
