Manufacturers Turn to AI to Manage Tariff-Era Supply Chains

U.S. manufacturers have started using artificial intelligence to maintain lean inventory levels because of unpredictable trade tariffs and supply disruptions. The Minneapolis-based lawnmower manufacturer Toro Company has restored its pre-pandemic inventory levels despite ongoing market instability.

The AI system at Toro analyzes tariff information and steel market data and geopolitical news to generate daily analytical reports. The company utilizes generative AI to generate purchasing recommendations which include both quantity and supplier selection choices.

The global uncertainty will drive supply chain software spending on AI technology from its current $2.7 billion to reach $55 billion by 2029 according to Gartner. The major suppliers of AI solutions include SAP, Oracle, Microsoft and Panasonic’s Blue Yonder.

The AI system enables managers to review and modify production plans and material reallocations in real time through its proposed adjustments. Most businesses currently test generative AI but full-scale implementation requires significant expenses that include IT system upgrades and data integration costs reaching tens of millions of dollars.

Consultants emphasize that AI systems provide exceptional value during current times because they can quickly adjust to new policy changes. According to McKinsey's Matt Jochim the system provides instant access to the most suitable options. The technology enables businesses to maintain operational efficiency while maintaining their ability to respond quickly during trade disputes.