Tariff changes have become a major concern for C-Level executives across various industries, introducing significant uncertainty into business plans. The pressing question is: what effect will these tariffs have on our business?
To address these concerns, we invite you to join a conversation with Joshua Reiter, Senior Vice President (SVP) of Business Development at Embark, and Mike Sullivan, a Senior Managing Director and Subject Matter Expert. Together, they explore how tariffs might affect businesses, discuss steps to mitigate these impacts, and consider strategies for moving forward. Let’s dive into their insights and guidance on navigating these complex issues.
Tariff Q&A With a Subject Matter Expert
Is There a Playbook for Navigating Tariffs?
Josh Reiter, SVP of Business Development: Alright, let's dive right in with our first question: Is there a playbook? How should companies approach tariffs?
Mike Sullivan, Senior Managing Director: With the daily changes coming from Washington, DC, there is no one-size-fits-all playbook or even an overall guide that can easily be deployed. That said, our most successful clients are ones that have robust FP&A functions that have anticipated a potential tariff, and they are able to re-forecast on the fly the cost impacts that the tariffs are having with dynamic models that can be adjusted easily. Most of these clients have industry-leading EPM tools like Planful, Anaplan, Adaptive, Pigment, and others.
How Can Companies with Basic FP&A Functions Cope?
Mike: Our clients that have only basic FP&A functions are reaching out asking for interim assistance in a variety of areas; with everything from doing a mid-year re-forecast to asking for supply chain investigative assistance. First step includes doing an assessment of all of the places that tariffs will impact a business's operations; this is often numerous business units. Next step is an analysis of the impact tariffs will have on said business units. Then finally, different options or courses of action in order to mitigate and offset those impacts. This process will regularly update and repeat itself as the tariff status quo is very dynamic.
How Should Companies Use Dynamic Modeling?
Josh: Some analysts have estimated upwards of 2.5 million different combinations of tariffs that could affect different businesses. How should companies use dynamic modeling to combat changing dynamics?
Mike: As I mentioned earlier, our clients that have EPM tools such as Anaplan, Adaptive, Planful, or Pigment are able to adapt much more quickly than our clients without. We've had significant interest from clients who previously put off installing these tools due to cost concerns, only to find that relying on Excel and manual forecasting is not sustainable. Short-term, Embark can relieve pressure on client teams by handling the heavy lifting of calculating tariff impacts. Long-term, implementing an EPM tool enables rapid adaptation to commercial challenges.
How to Understand Reciprocal Tariffs?
Josh: Tariffs are increasingly being used as political tools. How should companies use reciprocal modeling to understand which countries are affected, VAT, or deficits in supply chains?
Mike: Potential reciprocal tariffs from other countries will have more of an impact on revenue than cost. In those cases, having the ability to look at your revenue base with pinpoint accuracy can assist in identifying potential low or no margin divisions or offerings that should be examined carefully for discontinuation. Tariffs can make those low margin revenue streams go from positive contribution margin to negative with just a slight drop in top line revenue.
How to Prevent Team Member Burnout Around Tariffs?
Josh: Let's address another critical issue: team member burnout. What are your thoughts on this, Mike?
Mike: We’re on the front lines of the talent war every day, Josh. FP&A talent is incredibly sought after and great talent commands significant salaries. When it doesn’t make sense to have an additional full-time resource, having a firm like Embark that can provide short-term assistance is invaluable. When a full-time resource is needed, having well-defined processes and procedures around forecasting and budgeting makes you a more appealing destination for top talent.
Be warned, we’re already seeing signs of burnout with some of our client teams. More tariffs from other nations, and perhaps more tariffs from the United States in response, are likely to exacerbate this burnout. Team members will constantly have to rebuild models and forecast as the game of political chess progresses. Having some outside help can keep internal stakeholders focused on strategically pushing the business forward, not chasing outside forces. Don’t wait until your star analyst hands in their two-week notice. Grab external help before it’s too late.
Who are the Right Stakeholders for Handling Tariffs?
Josh: How can companies bring in the right people across the organization, like finance, operations, tax, customs, and purchasing?
Mike: It truly is critical to bring in all parties as soon as possible. We are working with a client right now that has done an incredible job putting together a tariff strike team. They brought together internal resources including their CFO, Finance VP, an analyst, and their regional VP with a team of external professionals including Embark to assess and put together strategic options for their sales, pricing, and manufacturing functions. As a result, their response to the impact of tariffs was timely and complete. They feel confident that any tariff changes, while disruptive, will be quickly forecasted and a game plan ready for execution no matter what comes out of Washington.
|
🚨 This blog post will be updated with more tariffs insights as the news and conversations around tariffs develop. Stay tuned! Have any pressing questions you want to talk through with subject matter experts? Reach out to our team for tailored answers and solutions. |
Navigating the Path Forward
Tariffs are a complex and evolving topic that presents significant challenges to businesses worldwide. At Embark, we understand the urgency and complexity they bring to your business operations. Our commitment is to stay on top of these developments, providing you with the latest updates and insights.
If you have any questions or need assistance in navigating these changes, please don't hesitate to reach out. Our team is here to support you in finding the best path forward. Reach out to us for more insights and guidance tailored to your specific needs. Take care and stay informed!
