Key takeaways:
- Tariff uncertainty poses financial and operational risks for global supply chains, impacting margins and competitiveness.
- Oracle Fusion Cloud Applications offer integrated tools to help businesses manage these risks effectively.
- The tools can help businesses anticipate, adapt to, and manage the financial and operational impacts of global trade shifts—from modeling potential tariff scenarios to optimizing sourcing strategies, ensuring trade compliance, and calculating true landed costs.
The rise of global trade—especially low-cost country sourcing and contract manufacturing—has created opportunities for businesses to tap new sources of supply, accelerate time to market, and improve margins. However, it has also created challenges, which include increased exposure to regulatory changes, including tariffs. This can significantly impact a company’s bottom line, making it more difficult to compete, creating administrative burdens, and introducing risk.
However, these challenges are not fundamentally new. Though more pronounced in this current moment, supply chain and enterprise performance pros have been dealing with these issues for decades. And Fusion Apps product development teams have been collaborating with customers to find solutions. This post will help you understand some of the supply-chain focused tools that can help you navigate global trade uncertainty, specifically:
1. Oracle Scenario Modeling in Enterprise Performance Management (EPM): understand the financial impact of likely regulatory changes and develop contingency plans as part of medium- and long-term planning processes.
2. Oracle Supplier Lifecycle Management and Oracle Strategic Sourcing: negotiate medium- to long-term agreements and find the mix of suppliers that offer the best combination of cost, quality, risk, and innovation.
3. Oracle Global Trade Management (GTM): comply with import and export regulations, estimate landed costs of individual shipments, and navigate tariff obligations.
4. Oracle Inventory Management’s landed cost management (LCM) capabilities: provide retrospective accounting for the total cost of acquiring goods, including all the expenses beyond the purchase price, like freight, duties, and insurance.
Note that for the sake of brevity, this article doesn’t cover other, potentially applicable solutions such as Oracle Demand Management, Oracle Product Lifecycle Management, Oracle Fusion Data Intelligence, and more.
1. Understand risk with Scenario Modeling in EPM
Oracle Cloud EPM allows your teams to model “what if” scenarios to understand the impact of potential tariff changes—and the measures likely to mitigate their impact. For example, it can help you determine whether or to what extent disruptions should prompt you to:
- Find new trade routes
- Look for new countries of origin for raw materials, components, and finished goods
- Shift suppliers
If you don’t already use Oracle EPM Scenario Planning, keep in mind that it is designed to function with any combination of ERP, supply chain, or analytics applications. Payback periods vary but can be relatively short if the modeling leads to quick, impactful actions on sourcing or operations.
Learn more about Scenario Modeling in Oracle Cloud EPM.
2. Work with the right suppliers using Oracle Supplier Lifecycle Management and Oracle Strategic Sourcing
When trade profitability is at risk—either through tariffs or some other market changes—it may be advantageous to find new suppliers. Two Oracle tools can help: Supplier Lifecycle Management and Strategic Sourcing.
Oracle Supplier Lifecycle Management consolidates and manages information about suppliers and prospective suppliers. This includes information about their locations, compliance status, and goods and services categories, which gives you visibility into alternate suppliers. And Oracle Strategic Sourcing helps your teams improve negotiations and choose suppliers that offer the best combination of cost, quality, risk, and innovation. With relatively short implementation times (i.e., a couple months), ROI is rapid for Sourcing since it can have an immediate impact on efficiency and effectiveness.
Learn more about Oracle Lifecycle Supplier Management and Oracle Strategic Sourcing.
3. Defer, diminish, or delete tariff obligations with Global Trade Management
GTM’s primary focus is on compliance, providing a centralized tool for automating, monitoring, and documenting cross-border transactions. It addresses a range of regulatory issues, for example, limiting trade of dual-use technologies, screening for restricted parties, and meeting all tariff obligations. (It’s noteworthy that this also applies to intra-company transactions, transferring inventory from an entity in Germany to the U.S., for example.) Centralizing compliance with GTM helps you see opportunities to adjust cross-border transactions in ways that defer, diminish, or even delete (i.e., reduce to zero) tariff obligations. It can track which goods and services trigger duties and when, even in complex scenarios (e.g., across sub-assemblies in product bills-of-material, from multiple countries of origin, across multiple layers in the supply chain, etc.).
Specifically, GTM helps by:
- Classifying goods
- Providing visibility into country of origin
- Qualifying goods against rules of origin and generating certificates of origin
- Managing supplier campaigns (e.g., to collect certificates of origin)
- Screening transactions to determine eligibility for trade programs
- Helping manage landed costs
- Managing the movement of goods through bonded warehouses
- Improving compliance and avoiding fines
- Minimizing delays
Because GTM handles so much trade-related data, it can be a key tool in helping you understand applicable tariff rules, resulting duties, and possible reductions and exemptions.
Learn more about Oracle Global Trade Management.
4. Get accounting right with Landed Cost Management capabilities
Oracle Inventory Management’s LCM capabilities are primarily concerned with calculating the total cost of acquiring goods, including all the expenses beyond the purchase price (e.g., freight, duties, insurance). This detailed breakdown helps you see the true cost of items in inventory, which is essential for accurate accounting, pricing, and profitability analysis.
Learn more about Oracle Inventory Management or get an overview of Landed Cost Management (login required).
How they compare
Clearly the capabilities offered by these solutions are inter-related—but each is aimed at addressing fundamentally different business opportunities. For example, GTM provides data on duties and tariffs that are essential inputs for total cost calculations in LCM. And Sourcing and LCM are related in that the output of LCM (i.e., accurate cost information) can significantly influence sourcing decisions. See the table below for additional detail.
| Scenario Modeling (EPM) | Supplier Lifecycle Management | Strategic Sourcing | Global Trade Management | Landed Cost Management | |
|---|---|---|---|---|---|
| Primary focus | Long-term financial scenario planning and forecasting | Supplier information and performance management | Contract negotiation | Regulatory compliance | Inventory valuation and accounting |
| Major functions | What-if analysis, modeling, financial forecasting, analytics | Supplier collaboration, compliance, vetting | Requirements definition, price discovery, contract award | Cross-border planning, documentation, validation, risk avoidance | Update inventory costs and financials |
| Scope | Simulated cost and revenue projections | Supplier locations, certifications, product/service categories | Medium- to long-term requirements, proposed pricing | Transaction-specific, estimated/simulated landed costs | Post-shipment, item-level accounting for price and non-price factors |
| Cost components | Major cost/revenue drivers, financial assumptions | Risk ratings, audit outcomes | Negotiated pricing, value-added services, non-price factors | Tariffs, duties, compliance, broker fees | Price, freight, insurance, duties, handling, etc. |
| Data sources | General Ledger, ERP, Planning modules | POs, contracts, risk mgmt, quality, supplier portal | Historical costs, TCO data, supplier bids | Transportation, customs, regulations, 3rd parties | Purchasing, Receiving, Payables, Costing, GTM |
| Stakeholders | FP&A, finance execs, strategy teams, supply chain | Procurement, risk, supplier managers | Sourcing/category managers, supplier managers, stakeholders, suppliers | Trade compliance, planners, 3PLs, regulators | Finance, Inventory, analysts |
Conclusion
Disruptions to global trade, including tariffs, may be in the news, but they aren’t new for Fusion Apps. As a customer, you either have access or can relatively quickly get access to a portfolio of tools to help you navigate a quickly changing, complex environment and improve the bottom line.
Additional resources
- 3 Ways to Navigate Global Trade Complexity (PDF download)
- What are Tariffs? What businesses need to know?
- The AI-powered supply chain (webinar)
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- Get ahead of volatility with Fusion SCM
- Take control of your cash flow with AI—see how
- You can speed supplier negotiations with GenAI
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