Tariff Madness and ERP – How Modern Systems Protect Businesses from Trade Risks

Types of tariffs at a glance: 

• Fiscal tariffs: Primarily generate government revenue.
• Protective tariffs: Serve to protect the domestic economy.
• Punitive tariffs: Imposed in cases of unfair trade practices or political tensions.
• Anti-dumping duties: Applied to heavily subsidized imports sold below production costs.

Tariffs affect not only production costs but also the competitiveness of companies significantly.

However, there are ways to avoid or minimize tariffs: companies can reduce tariff costs by investing in the target country and using exemption or processing procedures. Entering emerging markets or circumventing tariffs through subsidiaries also provides alternatives. Such strategies, however, often require political support and targeted market analysis.

ERP Systems as Strategic Customs Tools

Modern ERP systems such as Microsoft Dynamics 365 Finance and Operations help companies manage customs data in a structured way and respond flexibly to geopolitical changes. Below are six specific use cases:

1. Transparency and Monitoring
   Customs data and classifications can be centrally managed. Changes in legislation can be identified early, and appropriate measures can be taken. Products can be classified according to customs risks, which facilitates targeted decision-making.

2. Supplier Classification
   Supplier classification can be used specifically to assess customs risks and simulate alternative sources. By incorporating tariffs as a criterion in supplier selection and maintaining the relevant master data, supply chains can be better managed, and tariff costs optimized.

3. Alternative Delivery Routes
   Through alternative transport routes, free ports, or processing procedures, tariff costs can be reduced. Microsoft Dynamics 365 F&O supports this with a flexible multi-tenant concept and diverse production processes.

4. Precise Tariff Calculation
   A realistic pre-calculation of total costs – including tariffs – is possible. This allows offers to be precisely calculated and profit margins safeguarded.

5. Scenario Analysis and Financial Planning
   With ERP-integrated business intelligence tools like Power BI, “what-if” analyses for tariff scenarios can be conducted, e.g., tariff changes on specific product groups. This enables companies to create margin simulations in the ERP system, adjust pricing strategies, and integrate long-term cost developments into financial planning. The simple integration of Microsoft Dynamics 365 Finance and Operations with Power BI enables well-founded analyses and strategic considerations.

6. Compliance and Documentation
   The ERP system allows automatic linking of documents such as invoices, certificates of origin, and commercial invoices. In addition, electronic export declarations can be submitted directly from the ERP via interfaces to customs systems. This makes the tracking and management of customs documents significantly easier.

Tariffs as Risk – But Also as Opportunity

Tariffs pose a business risk – but they can also have positive effects: they protect and promote domestic industry, finance infrastructure, and prevent unfair competition. Companies that modernize their processes gain flexibility and save costs in the long term.

ERP systems like Microsoft Dynamics 365 F&O help meet these challenges – through automation, reduced personnel costs, and efficient use of staff resources.

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