Navigating Tariff Volatility: Know the Risks Before They Hit
Tariff volatility hits more than just costs—it disrupts suppliers, contracts, and margins.
Part 2 of a 3-Part Series: Navigating Tariff Volatility with ServiceNow Source To Pay, AI, and Automation
This article is the second in a three-part series exploring how companies using ServiceNow Source-to-Pay, enhanced by Outcome Driven Solutions (ODS), can navigate tariff volatility. Each article focuses on a different stage of the response:
- Part 1: Accelerate Tariff Response Times with AI and ServiceNow
- Part 2: Navigating Tariff Volatility: Know the Risks Before They Hit
- Part 3: Accelerate Tariff Response Times with AI and ServiceNow Automation(4/24)
What You'll Learn in This Article:
- How tariff turbulence is impacting sourcing strategies and supplier relationships
- Why traditional, manual responses are too slow to keep up
- How ServiceNow + ODS helps you proactively identify, assess, and respond to risk
1. The Tariff Threat: Immediate, Disruptive, and Costly
President Trump’s administration has triggered a wave of turbulent tariff actions, including across-the-board import duties and targeted increases on goods from key trading partners. The result? A more volatile trade environment, where procurement leaders are caught between cost spikes and supply instability.
These sudden shifts derail sourcing strategies. Contracts become cost liabilities. Supplier relationships are strained. And the speed at which tariffs are implemented gives teams little time to respond. The problem isn’t just that tariffs are changing — it’s how fast the changes are coming.
2. The Manual Response: Slow, Reactive, and Resource-Intensive
In many organizations, tariff-related disruption still triggers manual workflows:
- Reviewing supplier contracts by hand
- Manually mapping supplier countries-of-origin to tariff rates
- Asking finance to run new cost-impact models
- Spinning up cross-functional task forces to respond
This reactive approach ties up resources, delays mitigation, and often results in inconsistent actions across regions and categories. Your team spends more time firefighting than executing.
3. The Automated Response: Proactive, Efficient, and Strategic
There is a better way:
ServiceNow Source-to-Pay provides an automation framework for procurement, supplier, and contract workflows. Outcome Driven Solutions (ODS) builds smart configurations with S2P that unlock AI-driven insights and faster, more proactive responses to tariffs.
Said differently, we leverage 25 years of procurement wisdom to help you leverage ServiceNow as a true decision-support system:
- Supplier Mapping by Region & Risk: Automated classification of suppliers by geography, commodity, and tariff exposure
- Contract Exposure Analysis: Contract terms linked to specific sourcing categories and jurisdictions
- Live Monitoring & Alerts: Real-time detection of changes in duties, trade restrictions, or global commodity pricing
- Predictive Cost Modeling: Simulations of financial impact across sourcing portfolios — before the P&L takes the hit
4. Use Cases: Turning Insight into Action
1 🔍 Supplier Risk Mapping
A global electronics manufacturer used enhanced supplier mapping to diversify their supplier base and shifted $30M in spending to lower-risk partners.
2 📑 Contract Analysis at Scale
A retail chain with 1,200+ supplier contracts used ServiceNow DocIntel to extract rebate clauses and risk triggers. They renegotiated 12 high-risk contracts based on tariff-driven cost changes — saving $3.2M in the next fiscal quarter.
3 💡 Predictive Financial Modeling
Using AI forecasting, an auto supplier simulated a 12% tariff increase on steel-based parts. Based on the model’s recommendations, they pre-purchased $5M of material before tariffs hit. Even factoring in the increased carrying costs (also calculated in ServiceNow), they avoid over $600K in added cost.
4. Strategic Value: Faster Decisions, Lower Risk, Protected Margins
By enabling early insight into tariff risk, companies using ServiceNow + ODS gain:
- Speed to Act: Detect risk and initiate mitigation in days — not weeks
- Reduced Manual Load: Eliminate the need to pull staff off strategic work to run impact models
- Smarter Procurement: Shift sourcing decisions from reactive to proactive
- Operational Resilience: Build a buffer against future tariff volatility
5. Conclusion: Use AI to Be Smarter On the Effects of Tariff Volatility
Tariffs roulette is something we all need to deal with for the foreseeable future. Knowing the impact and your options before they happen can become a competitive advantage. With ServiceNow Source-to-Pay as the foundation and ODS as your automation partner, you can stop reacting to the past — and start predicting the future.
