Just in time? Manufacturers turn to AI to weather US tariff storm
Manufacturers like US lawnmower maker The Toro Company are not panicking at the prospect of US President Donald Trump's global trade tariffs. Despite five years of dramatic supply disruptions, from the COVID pandemic to today's trade wars, Toro is resisting any temptation to stack its warehouses to the rafters.
'We are at probably pre-pandemic inventory levels,' says its chief supply-chain manager, Kevin Carpenter, looking relaxed in front of a whiteboard at his office in Minneapolis. 'I mean 2019. I think everybody will be at a 2019 level.'
Among US manufacturers, inventories have roller-coasted this year as they rushed to beat Trump's deadlines for tariff hikes, only to see them repeatedly delayed. But since their post-pandemic expansion, inventories have mostly contracted, according to US Institute for Supply Management data.
Instead, 'just in time' inventory management - which aims to increase efficiency and reduce waste by ordering goods only as they are needed - is back. But how can firms run lean inventories even as tariffs fluctuate, export bans come out of the blue, and conflict rages? One of the answers, they say, is artificial intelligence.
Carpenter says he uses AI to digest the daily stream of news that could impact Toro's business, from Trump's latest social media posts to steel prices, into a custom-made podcast that he listens to each morning. His team also uses generative AI to sieve an ocean of data and to suggest when and how many components to buy from whom. It is a boom industry. Spending on software that includes generative AI for supply chains, capable of learning and even performing tasks on its own, could hit $55 billion by 2029, up from $2.7 billion now, according to US research firm Gartner, driven in part by global uncertainties.
'The tool just puts up in front of you: 'I think you can take 100 tons of this product from this plant to transfer it to that plant. And you just hit accept if that makes sense (to you),' McKinsey supply chain consultant Matt Jochim said. The biggest providers of overall supply chain software by revenue are Germany's SAP, US firms Oracle, Coupa and Microsoft and Blue Yonder, a unit of Panasonic, according to Gartner.
Generative AI is in its infancy, with most firms still piloting it spending modest amounts, industry experts say.
Those investments can climb to tens of millions of dollars when deployed at scale, including the use of tools known as AI agents, which make their own decisions and often need costly upgrades to data management and other IT systems, they said.
In commenting for this article, SAP, Oracle, Coupa, Microsoft and Blue Yonder described strong growth for generative AI solutions for supply chains without giving numbers.At US supply chain consultancy GEP, which sells AI tools like this, Trump's tariffs are helping to drive demand. 'The tariff volatility has been big,' says GEP consultant Mukund Acharya, an expert in retail industry supply chains. SAP said the uncertainty was driving technology take-up.
'That's how it was during the financial crisis, Brexit and COVID. And it's what we're seeing now,' Richard Howells, SAP vice president and supply chain specialist, said in a statement.
An AI agent can sift real-time news feeds on changing tariff scenarios, assess contract renewal dates and a myriad of other data points and come up with a suggested plan of action.
But supply chain experts warn of AI hype, saying a lot of money will be wasted on a vain hope that AI can work miracles. 'AI is really a powerful enabler for supply chain resilience, but it's not a silver bullet,' says Minna Aila, communications chief at Finnish crane-maker Konecranes and member of a business board that advises the OECD on issues including supply chain resilience.
'I'm still looking forward to the day when AI can predict terrorist attacks that are at sea, for instance.'
Konecranes' logistics partners are deploying AI on more mundane data, like weather forecasts. The company makes port cranes that are up to 106 meters high when assembled.
When shipping them, AI marries weather forecasts with data like bridge heights to optimize the route. 'To ship those across oceans, you do have to take into consideration weather,' Aila says.
By keeping inventories low, firms can bolster profit margins that are under pressure from rising costs. Every component or finished product sitting on a shelf is capital tied up, incurring finance and storage costs and at risk of obsolescence. McKinsey has been surveying supply-chain executives since the pandemic. Its most recent survey showed that respondents relying on bigger inventory to cushion disruptions fell to 34 percent last year from 60 percent in 2022.
Early responses from its upcoming 2025 survey suggest a similar picture, Jochim said. Gartner supply chain analyst Noha Tohamy says that without AI, companies would be slower to react and be more likely to be drawn into building up inventories.
'When supply chain organizations don't have that visibility and don't really understand the uncertainty, we go for inventory buffering,' Tohamy says.
But AI agents won't put supply chain managers out of work, not yet, consultants say. Humans still need to make strategic and big tactical decisions, leaving AI agents to do more routine tasks like ordering and scheduling production maintenance.
Toro supply chain chief Carpenter says that without AI, supply chain managers might need to run bigger teams as well. Is he worried that AI is coming for his job one day? 'I hope it doesn't take it until my kids get through college!'
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Al Jazeera
4 hours ago
- Al Jazeera
As Trump splits from India, is the US abandoning its pivot to Asia?
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For months after Trump threatened tariffs on Indian imports, New Delhi tried to placate the US president, refusing to get drawn into a war of words. That has now changed, with India accusing the US of hypocrisy – pointing out that it still trades with Russia, and that Washington had previously wanted New Delhi to buy Russian crude. 'One thing is clear: Trust in the United States has eroded sharply in recent days, casting a long shadow over the bilateral relationship,' Vaishnav told Al Jazeera. To Praveen Donthi, a senior analyst at the International Crisis Group, the crisis in the relationship also reflects a dramatic turn in the personal equation between Modi and Trump. The state of ties, he said, is 'a result of a clash of personalities between President Trump and Prime Minister Modi'. India has previously faced the threat of US sanctions for its close friendship with Russia, when it decided to buy S-400 missile defence systems from Moscow. But in 2022, under the Biden administration, it secured a waiver from those proposed sanctions. 'Not long ago, India could avoid sanctions despite purchasing S-400 weapon systems from Russia. However, now, India's policy of multi-alignment clashes with President Trump's transactional approach to geopolitics,' said Donthi. To be sure, he pointed out, America's Cold War history of bonhomie with Pakistan has meant that 'a certain distrust of the US is embedded in the Indian strategic firmament'. The Trump administration's recent cosiness with Pakistan, with its army chief visiting the US this year, even getting a rare meeting with the president at the White House, will likely have amplified those concerns in New Delhi. But through ups and downs in India-US ties over the years, a key strategic glue has held them close over the past quarter century: shared worries about the rise of China. 'A certain bipartisan consensus existed in the US regarding India because of its long-term strategic importance, especially in balancing China,' said Donthi. Now, he said, 'the unpredictable Trump presidency disrupted the US's approach of 'strategic altruism' towards India'. It is no longer clear to Asian partners of the US, say experts, whether Washington is as focused on building alliances in their region as it once said it was. Turn from Asia Under the Obama administration in 2011, the US adopted what was known as the 'Rebalance to Asia' policy, aimed at committing more diplomatic, economic and military resources to the Asia Pacific region, increasingly seen as the world's economic and geopolitical centre of gravity. This meant deeper engagement with treaty allies like Japan, South Korea, and Australia, strengthening security ties with emerging partners such as India and Vietnam, and pushing forward trade initiatives like the Trans-Pacific Partnership (TPP). The idea was to shape a regional order that could balance China's rise. During Trump's first term, the economic leg that gave the pivot its weight hollowed out. The US withdrawal from the TPP in early 2017 removed the signature trade pillar, leaving behind a strategy that leaned heavily on military cooperation and less on binding economic partnerships. Yet, he refrained from the bulldozing negotiations that have shaped his approach to tariffs, even with allies like Japan and South Korea, and from the kind of tariffs Trump has imposed now on India. 'There is currently a period of churn and uncertainty, after which clarity will emerge,' Donthi said. 'There might be some cautious rebalancing in the short term from the Asian powers, who will wait for more clarity.' India, which, unlike Japan and South Korea, has never been a treaty ally to the US – or any other country – might already be taking steps towards that rebalancing. Russia-India-China troika? 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Although the RIC met regularly in the years following its creation, there has been a gap in recent times, with the last meeting of RIC leaders in 2019, on the sidelines of the G20 summit in Osaka, Japan. India's Modi faces some 'very difficult choices', said Michael Kugelman, a senior fellow at the Asia Pacific Foundation. 'Clearly, India is not going to turn on Russia, a very special partner. And India does not turn on its friends.' But doubling down on its strategic independence from the US – or multi-alignment, as India describes it – could come with its costs, if Trump decides to add on even more tariffs or sanctions. 'The best outcome for India immediately is the Russians and Ukrainians agree to a ceasefire,' said Kugelman, 'because at the end of the day, Trump is pressuring India as a means of pressuring Russia.' Even as questions rise over Washington's pivot to Asia under Trump, such a rebalance will not be easy for countries like India, say experts. Ultimately, they say, the US will find its longtime partners willing to return to the fold if it decides to reinvest in those relationships. The cost of a rebalance An RIC troika would ultimately be 'more symbolic than substantive', Kugelman said. That's because one of the sides of that triangle is 'quite small and fragile: India-China ties'. While there have been 'notable easing of tensions' in recent months, 'India and China remain strategic competitors,' added Kugelman. After four years of an eyeball-to-eyeball standoff along their Himalayan border, they finally agreed to withdraw troops last year, with Modi and Chinese President Xi Jinping meeting in Kazan. But 'they continue to have a long disputed border', Kugelman said, and trust between the Asian giants remains low. Vaishnav of the Carnegie Endowment agreed. 'There may be opportunistic venues and moments where the countries' interests converge. But I think, beyond defence and energy, Russia has little to offer India,' he said. 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The opposition has accused Modi of not going harder and longer at Pakistan because of pressure from Trump, who has claimed repeatedly that he brokered the ceasefire between New Delhi and Islamabad – a claim India has denied. 'Any further appearance of yielding – this time to the US – could be politically costly. Resisting Trump reinforces Modi's image as a defender of national pride,' added Vaishnav. Many analysts have said they see Trump's tariffs also as the outcome of as-yet unsuccessful India-US trade talks, with New Delhi reluctant to open up the country's agriculture and dairy sectors that are politically sensitive for the Indian government. Almost half of India's population depends on farming for its livelihood. Modi has in recent days said that he won't let the interests of Indian farmers suffer, 'even though I know I will have to pay a personal cost'. 'He is demonstrating defiance to the domestic electorate,' said Donthi, of the International Crisis Group. 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Qatar Tribune
9 hours ago
- Qatar Tribune
Indian exporters eye options to mitigate Trump's tariff salvo
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