How to Address Supply Chain Tariffs Within My ERP System

Tariffs have become a recurring topic in global trade discussions, and their impact is felt across industries. Whether you’re importing raw materials, exporting finished goods, or simply purchasing supplies, tariffs directly influence costs and profitability. For consumers, tariffs can mean higher prices at the checkout counter; for businesses, they introduce added layers of complexity in supply chain management, financial planning, and compliance.

Did you know that according to The Budget Lab, the average tariff rate will be 16.4% even after consumption shifts, which is the highest since 1937?

As a business owner, it’s natural to ask: How should I account for these rising tariffs within my ERP system? More specifically, how can you accurately calculate import and export taxes, keep up with shifting trade regulations, and maintain compliance all without slowing down operations? These are critical questions, and fortunately, modern ERP platforms provide tools and configurations that can help streamline tariff management. Let’s go over how you can accurately keep your operations up-to-date on the fast-paced changes of the supply chain and manufacturing industry. 

When it comes to managing tariffs inside your ERP system, the starting point is understanding the product classification codes that customs authorities use worldwide. These codes serve as the foundation for calculating import and export taxes, applying trade regulations, and maintaining compliance in international transactions.
 

HS Code (Harmonized System Code)

The Harmonized System (HS) Code is a globally recognized standard developed by the World Customs Organization (WCO). It classifies products using a six-digit numerical system that is adopted by more than 200 countries. Each code corresponds to a specific product type. This includes items like steel pipes, coffee beans, microchips, etc. By using a common classification, the HS Code streamlines customs procedures and provides consistency across borders, which is essential for businesses that trade internationally. Misclassifying these HS codes can often lead to delays, fines, or unexpected duties, so accuracy is key.

HTS Code (Harmonized Tariff Schedule Code)

While the HS Code provides a universal framework, the Harmonized Tariff Schedule (HTS) Code is specific to the United States. The HTS builds on the HS system by adding four more digits, creating a ten-digit code. The first six digits mirror the international HS Code for global consistency, while the last four digits are unique to U.S. trade law and determine the exact duty rates and tariff treatments applied to imported goods. For example, while two products may share the same six-digit HS Code worldwide, the U.S. HTS Code’s additional digits will dictate the specific tariff rate that applies when those goods enter the U.S. market.

Why These Codes Matter for ERP Systems

Within an ERP system, HS and HTS codes are more than just reference numbers; they’re important data points that drive accurate financial reporting, compliance, and operational efficiency. By storing the correct code at the product level, an ERP can:

• Automatically calculate applicable tariffs and duties.
• Generate compliant customs documentation for international shipments.
• Support Intrastat and other reporting requirements.
• Provide visibility into landed costs, which helps businesses maintain profitability.

Once you understand the role of HS and HTS codes, the next step is determining how tariffs are actually managed within your ERP system. Since tariffs directly impact landed cost, pricing strategies, and compliance requirements, handling them correctly in your ERP is vital to your operations.

In most ERP systems, tariff information is tied directly to product records. This is often maintained within the product master data, where fields such as HS/HTS codes, country of origin, and customs classifications can be stored. Some systems provide designated customs fields or allow for extensions/modules that enable businesses to record additional compliance data. Properly organizing this information ensures that every product moving through your supply chain carries the correct classification, making reporting and duty calculation much more accurate.

For instance, if you’re importing a product from multiple countries, your ERP can differentiate duties and taxes based on each country of origin. Without centralizing this data inside your ERP, you would be left manually adjusting spreadsheets or reconciling costs after shipments are processed. This approach is likely prone to errors and can become very time-consuming.

How Automation Helps With Handling Tariffs

Automation is where ERP systems provide the most value in tariff management. By integrating tariff codes and customs data into your ERP, you can automate the calculation of duties, taxes, and fees at the time of purchase or sales transactions. This reduces manual entry, minimizes human error, and provides real-time visibility into the true landed cost of products.

Let’s go over how some ERPs we frequently utilize help make managing tariffs within your supply chain operations a breeze.

Odoo has continued to evolve its capabilities around international trade, and tariff management is an area where recent versions provide significant advantages.

Odoo Version 18 (Latest Release)

With Odoo 18, businesses gain access to out-of-the-box functionality that makes tariff management much more straightforward. Commodity codes (HS/HTS) and countries of origin can be managed directly within the system, eliminating the need for custom workarounds. This functionality can be enabled in the Intrastat settings under the Accounting module. Once configured, Odoo allows you to:

• Assign HS/HTS codes and origin data to individual products.
• Generate compliant Intrastat reports to track the movement of goods within the EU.
• Support customs reporting requirements with accurate, pre-configured fields.
• Improve landed cost accuracy by incorporating tariff-related data into your accounting workflows.

For businesses operating internationally, this built-in capability reduces complexity and ensures that tariff management is tightly integrated into financial reporting and supply chain processes.

Earlier Versions of Odoo

If you’re running an earlier version of Odoo, you won’t find the same built-in support for commodity codes and tariff data. However, Odoo’s flexibility and strong open-source community provide workarounds. The Odoo Community Association (OCA) maintains modules that extend earlier Odoo versions to include fields for HS/HTS codes, country of origin, and Intrastat reporting. By installing and configuring these OCA modules, businesses can achieve similar functionality to what’s now standard in Odoo 18.

While the OCA approach requires additional setup and technical expertise, it’s a proven path for companies not yet ready to upgrade to the latest Odoo release. Many ERP consultants who specialize in Odoo (like OSI) can help with selecting, configuring, and maintaining these community modules to keep your system compliant and efficient.

In short, the version of Odoo you’re running will determine your best approach to tariff management. If you’re on version 18, enabling Intrastat functionality provides a streamlined, out-of-the-box solution. If you’re on an earlier version, leveraging OCA modules is an effective way to bridge the gap. Either way, Odoo’s flexibility ensures that businesses have a path forward for integrating tariff management into their ERP environment.

Unlike some ERP platforms, IFS does not provide native functionality for managing Harmonized System (HS) or Harmonized Tariff Schedule (HTS) codes. This means that businesses relying on IFS need to take an alternative approach to capturing and applying tariff data. Fortunately, IFS offers flexible fields and extensions that can be configured to support customs compliance and reporting needs.

Using the Customs Statistics Field

One of the most practical workarounds is leveraging the Customs Statistics field within IFS. This value originates from the Warehouse Management, Basic Data, Customs Statistics Number page in the cloud.

Here, businesses can input classification numbers or codes that align with HS/HTS standards. While this field isn’t explicitly designed for tariff management, it can effectively serve as a placeholder for product classification data. Once established, the Customs Statistics field ensures that tariff-related information follows a product through IFS workflows, supporting documentation, and reporting.

Integration with Intrastat Reporting

For organizations operating in the European Union, IFS provides an additional option through the IFS Global Extension. By enabling Intrastat functionality via the Company Localization Control Center, businesses can tie Customs Statistics data to cross-border reporting requirements. This setup allows companies to generate the necessary trade declarations required by EU regulations, even though HS/HTS functionality is not natively built into IFS.

Solutions & Considerations for IFS Users

While these workarounds are effective, they require careful setup and maintenance. Businesses should:

• Ensure Customs Statistics data is consistently applied to all relevant products.
• Regularly review and update codes to reflect changes in tariff schedules or regulations.
• Consider additional integration or customization if tariff management plays a significant role in landed cost calculations.

What’s convenient about IFS is that its system supports a wide range of costing methodologies, and can help users simulate the margin impact of rising tariffs and adjust sales pricing or negotiate terms with the supplier in reaction to those changes.

Another great feature of IFS is its extensive forecasting capabilities that allow you to anticipate how much product you should make and how much it’s going to cost. This helps your teams make better decisions and maximize your business’s ROI in the long run. 

No matter which ERP platform your business relies on, whether it’s Odoo, IFS, or another system, the principles of effective tariff management remain the same. Tariffs can shift quickly with changes in trade agreements, government policies, and international relations, so it’s very important to have a proactive strategy to effectively handle these industry fluctuations within your ERP.

Keep Product Classification Codes Up to Date

Accurate HS and HTS codes are the foundation of tariff management. Even a small misclassification can result in incorrect duty rates, delayed shipments, or costly fines. Establish an internal process for reviewing and updating codes regularly, especially if you introduce new products or source materials from different regions.

Regularly Review Tariff Schedules and Regulatory Changes

Tariff rates are not static; they can change as governments adjust trade policies. Assign responsibility within your organization for monitoring updates from customs authorities and trade organizations. By feeding this information into your ERP system, you can make sure your duty calculations remain accurate and compliant.

Leverage Automation to Reduce Errors

Manual entry of tariff data is not only time-consuming but also prone to mistakes. Most modern ERP systems offer ways to automate tariff calculations, integrate customs data, and generate compliance reports. By automating these processes, businesses minimize risk, improve efficiency, and gain real-time visibility into landed costs.

Work with ERP Specialists to Configure Systems for Compliance

Even with the right tools, proper configuration is key. ERP consultants and specialists can help tailor your system to handle tariff data correctly, ensure that reporting features are set up properly, and recommend additional modules or integrations if needed. This guidance can be especially valuable when working across multiple countries with varying requirements.

Addressing tariffs in your ERP system isn’t just about compliance—it’s about maintaining profitability and operational efficiency in a constantly changing global trade environment. By following these best practices, your business can stay agile, avoid costly mistakes, and keep international trade running smoothly.

If you’re interested in improving this area of your supply chain operations, our team is here and ready to help. Contact us today, and we’ll be happy to walk through the best next steps you can take to leverage and implement technology for better business processes and success.