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and look at them end to end to fully understand both the planned and potential total costs and liabilities. This includes all material, packaging, freight, and other logistics costs, along with all applicable duties, tariffs, and all other applicable taxes. Today, as opposed to just a few months ago, this means that companies importing goods or materials must reevaluate not only their exposure as it relates to current and potential import tariffs, but also plan for additional logistics costs related to transportation and customs delays. Increases in transportation and logistics costs related to tariff disputes must also be considered.
Spend and Risk Exposure by Country
Companies involved in international trade should continually analyze the potential risks of doing business with different countries as part of their ongoing operational planning process. Changes in politics, changes in materials availability, changes in the costs associated with the movement of goods, and issues such as war or natural disasters must be considered. These issues can negatively affect both the flow of goods and the overall costs and profitability of the related transactions. In the current hostile trade environment, companies involved in international trade must take the current trade and tariff disputes into consideration, looking at both their international supply chain and customer markets as well. Those companies should then develop plans to respond to current and potential future changes to costs, market access, and customer demands.
Conclusions
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Companies must understand the costs, challenges, and risks associated with both sourcing and selling internationally. This is even more important in the type of hostile trade environment the global economy is currently facing. This is especially true for the alcohol beverage industry, as our industry typically has more regulations, taxes, and controls than most other industries. Robust processes and procedures should be established that allow companies to plan effectively for changes and react quickly when necessary. Stephen Gould is currently the principal consultant at Consulting Alchemist, Ltd., an international operations, supply chain management, and alcohol beverage consulting services firm. For more information see www.consultingalchemist.com.
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