Since January 20, 2025, U.S. import duties have experienced significant fluctuations, making it nearly impossible for manufacturers to plan with certainty. By April, the U.S. effective tariff rate had surged from approximately 2.5 percent to over 27 percent, impacting nearly every major trading partner. Each new announcement – whether it imposes a 25 percent levy on Canadian and Mexican goods or pauses most tariffs for 90 days – forces manufacturers to rework cost projections, renegotiate with suppliers, and strive to meet delivery dates, often with minimal notice. Concurrently, Red Sea shipping delays and ongoing labor shortages leave little margin for error. In this challenging environment, traditional planning procedures can easily collapse under the complexity.
In this article, we’ll show how AI-powered production planning not only helps manufacturers stay agile and keep schedules on track amid tariffs, delays, or labor shortages but also enables them to unlock hidden capacity within existing operations. This means meeting increased demand without significant capital expenditures, a critical advantage when CapEx budgets are constrained.
Supply Chains Under Pressure
Keeping track of President Trump’s tariff policies in his second term has tested even the most seasoned supply-chain professionals. In the span of just a few weeks, he first reinstated 25 percent surcharges on over $300 billion of imports from Canada, Mexico, and Europe, then added a 10 percent baseline tariff on Chinese goods. Almost as quickly, most of those rates were paused for 90 days – with an exception for China, which remained with a minimum 145 percent duty (The Guardian). Just Yesterday, the July 9 deadline for enacting new tariffs has been delayed again, moving it to August 1, extending the window for trade negotiations (Politico). U.S. exporters continue to face the risk of retaliatory tariffs from the EU and other partners, depending on negotiation outcomes. With such rapid reversals and steep rate swings, material costs and lead times can change without warning.
Tariff volatility adds to ongoing supply chain disruptions — from extended shipping routes to labor shortages — that already make production planning hardly predictable (Financial Times). Security incidents in the Red Sea have extended Asia–Europe transit times by two to four weeks and driven freight rates to twice their 2021 levels.
When each of these factors shifts in isolation it’s hard enough. Together, these shocks turn planning assumptions on costs, lead times, and capacity into moving targets. Even a single supplier delay or a one-day freight variance can derail an entire week’s schedule – and oftentimes traditional planning methods simply can’t keep up anymore.
Tariff Volatility Demands Dynamic Planning
Many small and mid-sized factories still rely on weekly Excel schedules, manual tweaks, and instinct-based adjustments — all of which fail under today’s pace of change. According to the Manufacturing Leadership Council, 70% of manufacturers still enter data manually. In a stable environment, these approaches may have been adequate. Today, they expose four critical vulnerabilities.
1. Fragmented information
Key data like cost parameters, order details or capacity figures reside across spreadsheets, email threads, and legacy ERP modules. Reconciling the financial impact of a tariff increase can become a manual, error-prone process that diverts valuable scheduling time.
2. Inability to run real-time scenarios
Without automated “what-if” functionality, evaluating the effects of sudden cost surges or supplier delays requires extensive manual recalculation. This undermines the planner’s ability to respond swiftly and confidently.
3. Excessive manual effort
Maintaining static schedules demands continuous data entry and coordination. As a result, planners devote the majority of their time to updating documents instead of analyzing alternatives or optimizing operations.
4. Over-reliance on individual expertise
When critical planning knowledge is concentrated in just a few team members, their absence can bring scheduling to a standstill and expose the operation to undue risk. Under today’s market pressures, these limitations drive reactive “firefighting” behaviors: excessive inventory buffers, emergency orders, and last-minute schedule changes. What was once considered a routine back-office task has become a significant business liability.
How AI Restores Control in Production Planning
This is where modern AI techniques change the game. Rather than relying on static spreadsheets, today’s planning systems learn from a digital twin of your factory. By training AI agents in a virtual environment that mirrors machines, staff shifts, setup rules, and routing logic, they can be given experience in handling hundreds of “what-if” scenarios before they ever touch live factory data.
When a new tariff is announced or a supplier delay arises, costs or lead-time parameters can be updated in the system. The AI then re-analyzes the situation within seconds and proposes alternative schedules that make the most sense under your current constraints. Because it can balance multiple goals simultaneously – on-time delivery, inventory levels, throughput adjustments, and setup minimization – it delivers balanced, KPI-aligned plans instead of single-minded cost cutters. When quick reactions are needed, this lets planners spend their time on reviewing trade-offs and refining strategy instead of rebuilding spreadsheets.
But AI doesn’t just help teams adapt to shocks, it also makes better use of what’s already available. Many manufacturers today struggle with unused machine time, inefficient shift allocation, or overlapping tasks that limit output without anyone realizing. AI-powered planning tools continuously scan for underutilized capacity: idle machines between shifts, employees waiting for materials, or sequencing gaps between jobs. Instead of buying more machines or adding headcount, companies can unlock that capacity by optimizing around real-world constraints.
For example, planners might see that with a small shift in setup timing, or by reordering operations slightly, they can free up 6–8 hours per week per machine — across 10 machines, that’s like gaining a full extra week of capacity each month. And unlike CapEx-heavy expansions, these gains can be achieved within days, not quarters.
How To Get Started With AI-Driven Planning
You don’t need to replace your existing systems to get started. A good first step is to centralize and make accessible the key data needed for the production planning (orders, bills of materials, machine capacities and up-to-date tariff schedules). Then document your planning workflow: who sets priorities, how exceptions are handled, and which approvals are required.
Finally, choose a pilot scenario – such as high-mix, low-volume orders under fluctuating tariff rates – and compare AI-generated recommendations against your past performance. That initial pilot builds confidence in the technology and helps you fine-tune how AI suggestions work for your daily routines. As your team sees tangible improvements, you can expand AI-supported planning to more product lines or more plants easily. We’re happy to evaluate together whether your factory’s ready to adopt AI for production planning – simply get in touch with our team.
Adopting AI Without Big Data
It’s often assumed that AI in production planning only works if you already have large, well-structured historical datasets. That belief is understandable. Traditional machine-learning models do rely on past performance to make predictions, but that’s not the only approach out there.
At Phantasma, we only need a structured model of your current operations: machines, routing logic, shifts, and business rules – all of which can typically be drawn from the ERP. This is due to our unique approach based on Reinforcement Learning (RL) that offers a more practical path than data collection and analysis. Instead of learning from past data, an RL-agent trains itself using a digital model of your factory. This model includes your machines, production logic, rules, and business goals. The system then simulates thousands of possible planning decisions in seconds. It tries different strategies, evaluates the outcomes, and refines its recommendations based on what works best, according to the targets you set.
Through this simulation-based approach, the AI-agent gains experience in handling hundreds of “what-if” scenarios in your factory environment – such as a critical machine breaking down mid-run, a last-minute rush order, or a sudden change in labor availability – without needing any actual historical data from the factory.
Building Resilience for the Next Shift
Today’s trade and market conditions can shift overnight. One day you’re planning under one set of tariff rules; the next, you’re facing completely different costs and lead-time assumptions. In this fast-moving environment, the ability to run quick “what-if” tests and adjust your production schedule in real time has transitioned from a competitive advantage to a core requirement.
Adopting AI-driven planning does not mean sidelining your experienced planners. Instead, it empowers them to focus on strategic tasks like negotiating with suppliers, refining production strategies, and driving continuous improvement. By handling scenario simulations and data updates, AI provides the insights needed to identify and leverage existing capacities, enabling manufacturers to scale operations without incurring significant capital expenditures. This strategic agility is essential for building resilience and maintaining competitiveness in an unpredictable market landscape.
We know change can feel daunting. That’s why we’ve made our AI co-pilot easy to integrate into your existing systems. You don’t need a massive data lake or an army of data scientists to get started – just a ‘screenshot’ of your current operations and a willingness to explore.
If you want to dive deeper into how AI can act as a smart co-pilot for production planning, take a look at our latest whitepaper — it breaks down the approach, the benefits, and how to get started without relying on big data. Or, if you're navigating similar challenges right now, get in touch with our team. we're happy to talk them through and explore whether AI-powered planning could help.
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