How to Navigate the Chaos of Trade Disruption with the Cynefin framework, AI and Optimization.

Supply Chain leaders (CSCOs) are responsible for driving strategic growth, fostering innovation within their supply chains, and ensuring long-term value creation. However, many companies are now confronted with challenges such as abrupt tariff increases, supply chain instability, and delays in the delivery of critical components. Recent data from Yale’s budget analysis highlights the growing economic burden of tariffs. With the average tariff rate reaching 22.5%—the highest since 1909—consumers have faced a 2.3% price increase, while 75% of businesses report financial strain due to these trade barriers. These figures underscore the ripple effects tariffs have on both households and the broader economy

These issues are not anomalies but indicators of deeper structural vulnerabilities in global operations. Addressing them requires more than traditional playbooks. It demands strong leadership, adaptive strategies, and the strategic use of advanced technologies including optimization and decision intelligence.

So how did we get here?

For years, globalization made supply chains efficient but brittle. Companies outsourced manufacturing, hollowed out domestic capacity, and grew dependent on long, opaque networks across the globe.

Enter trade wars, pandemics, energy shocks, and geopolitical standoffs. With a single policy shift, you could be staring at:

• 25% or more tariffs on key inputs
• Supplier insolvency in a sanctioned country
• Delays that dramatically reduce quarterly margins

Supply chains globally are under great duress and uncertainty.

What Should CSCO’s Do Now?

Supply Chain leaders can’t rewind history, but they can choose how to lead forward. The Cynefin Framework (Figure 1) gives them the playbook. It helps them recognize the context their organizations are in. Adopting the wrong decision model in the wrong situation makes things worse.

Figure 1. Cynefin Framework

Here’s how to respond:

🟥 If you’re in CHAOS (e.g., surprise tariff, blocked shipments):

Act. Build buffers, reroute shipments, activate emergency playbooks. Speed trumps elegance. Stabilize, then assess.

🟧 If you’re in COMPLEXITY (e.g., redesigning supplier networks):

Probe. Run small pilots. Test nearshoring. Explore new trade partners. Learn what works. Then scale.

🟨 If you’re in COMPLICATION (e.g., reclassifying products or modeling cost):

Analyze. Use expert-led modeling, compliance audits, and financial forecasts to define the best course of action.

🟩 If you’re in CLARITY (e.g., stable tariff classification or bonded zone use):

Standardize. Codify what works. Automate. Monitor for exceptions.

Most companies oscillate between these zones. A CSCO’s job is sense the environment, then lead their team accordingly — decisively in chaos, experimentally in complexity, analytically in complication, and systematically in clarity. This combination of multi-purpose tools to manage the business can also be referred to as orchestration. AI and Optimization are great tools to help CSCO’s orchestrate their supply chains.

 

Figure 2. Supply Chain Orchestration

How AI and Optimization Can Help CSCOs to Orchestrate their supply chains?

AI Helps Companies Sense and Learn

• Detect new patterns (e.g., supplier delays in one region start cascading)
• Forecast disruptions using external signals (weather, policy changes, lead-time spikes)
• Identify anomalies and shifts faster than humans can spot manually

Optimization Helps Companies Respond and Solve

• Determine best-fit supplier mixes under different tariff scenarios
• Recalculate cost-to-serve as conditions change
• Score and compare resilience vs. cost tradeoffs for network redesign
• Reroute shipments in real time to minimize cost or risk

Below are a few practical use cases for orchestrating your supply chains where AI and Optimization in combination can be a potent weapon.

Practical use cases for supply chain orchestration (relevant to the tariffs/trade wars)

 

Use Case in Supply Chain Orchestration	Cynefin Domain	Optimization Focus	How AI Helps
Automated duty classification, spend category assignment, reorder point triggers	Simple	Rule-based automation, standardization, classification	Automates known decisions, monitors compliance, improves accuracy
Total landed cost analysis, tax and tariff forecasting, sourcing optimization	Complicated	Scenario analysis through supply chain design, constraint-based modeling, cost-to-serve optimization	Analyzes structured data, supports expert-driven models, recommends adjustments
Piloting new sourcing hubs, evaluating multi-tier supplier risks, running resilience simulations	Complex	Exploratory modeling, scenario scoring, network design simulations	Detects emergent patterns, simulates diverse responses, learns from feedback
Rerouting cargo to avoid sudden tariffs, reprioritizing shipments, reallocating critical stock during crisis	Chaotic	Real-time rerouting, triage and prioritization under constraints	Synthesizes fast-changing inputs, supports immediate response choices

A CSCO’s Roadmap for Success

Many organizations were caught unprepared as the global operating environment underwent rapid and fundamental shifts. The path forward is not a return to previous norms, but the development of a new kind of leadership capability that is grounded in contextual awareness and adaptive execution – we call this as “The Adaptive Supply chain”.

To rebuild effectively, leaders must:

• Accurately assess the nature of the challenge using frameworks such as Cynefin
• Make decisions that are aligned with the complexity of the context
• Enable their teams with advanced technologies, including AI and optimization, that support scenario-based planning and agile response

This is how organizations regain stability and resilience and become adaptive. Not through excessive planning, but by combining strategic insight with orchestration. We have outlined key strategies for companies to become adaptive through this white paper – “6 strategies for building adaptive supply chains”.

By Nari Viswanathan – Sr. Director, Product Segment Marketing, Coupa

Nari is currently Sr. Director of Product Segment Marketing at Coupa, where he brings products to markets in the areas of Direct Material Procurement and Supply Chain Design and Planning. Over the past 20 years, Nari has held VP and Director of Product Management, Research and Marketing roles at Aberdeen Group, River Logic, Steelwedge and E2open. He has significant experience building products from the ground up and managing the P&L for a product suite. He is a proven B2B marketer with expertise in content marketing, competitive intelligence, and positioning. He has published numerous thought leadership articles, whitepapers, blogs and delivered dozens of webinars during his career. Nari Viswanathan is a six times SDCExec Supply Chain Pro to Know award winner. Nari holds a master’s degree in Manufacturing Systems Engineering at the University of Wisconsin-Madison and a bachelor’s degree in Mechanical Engineering at the Indian Institute of Technology, Chennai.