By Bill Murphy · Powered by Colony Spark

THE OPERATIONS
BRIEF

ISSUE #18 · JULY 9, 2026

Hi there,

The planning meeting used to be where opinions collided and a decision emerged. It worked when the operating environment held still long enough to make an annual plan mean something. Tariffs changing more than 50 times in 18 months, working capital getting priced by the week, and margin conversations happening at customer speed have quietly retired that model.

This issue is about the layer replacing it: fast, pre-tested scenarios that arrive before the meeting starts. At the end, a first look at a new roundtable series we are launching later this summer.

Bill

THE SHIFT

Simulation Is Becoming the New Planning Meeting.

The meeting no longer debates assumptions. It reviews rehearsed scenarios.

The old planning meeting assumed the operation could absorb a stale view of the business. A team reviewed the forecast, argued about assumptions, checked inventory, debated price changes, and left with a decision that might hold for a quarter. That rhythm is breaking.

Three data points explain why the shift is happening now.

Three signals from 2025 and 2026

· 50 plus US tariff policy changes recorded since early 2025, pushing the effective tariff rate from 2.4% in 2024 to 7.7% in 2025 (highest reading since 1947), with 2026 estimated at 5.3% if temporary tariffs expire (Tax Foundation).

· 78% of manufacturing leaders now allocate more than 20% of their improvement budget to smart manufacturing initiatives, with scheduling, execution, and quality systems at the top of the priority list (Deloitte 2025 Smart Manufacturing Survey).

· $37.9 billion is NIST’s estimated annual potential impact of digital twin adoption in US manufacturing, with a median Monte Carlo scenario of $27.2 billion, tied to specific operational uses: predictive maintenance, business optimization, performance monitoring, and inventory management (NIST).

The Tax Foundation number is not just a policy story. As ABF Journal’s middle-market analysis lays out, that volatility now shows up inside the business as working-capital pressure. Some manufacturers can buy ahead when commodity prices dip. Capital-constrained ones have to finance inventory, stretch payables, or absorb margin compression. Either way, the choice is a scenario, not a policy statement.

The tooling side of the story is also moving. Advanced simulation is shifting out of installed specialty software and into cloud-accessible platforms. Siemens made its Process Simulate Collaborate available via AWS Marketplace this year, framing the shift around faster onboarding, lower cost, and moving from capital expense to operating expense. That is a vendor signal, but it is not the only one. The access model is opening up for teams that cannot justify a large transformation project.

The most important use of AI-powered simulation is not a perfect digital replica of the enterprise. It is a pre-decision rehearsal layer. Before a distributor accepts a large customer order, the team can model what it does to labor, material availability, promised ship dates, and existing customers. Before a manufacturer raises prices, the team can see margin, volume, and customer-risk scenarios side by side. Before a buyer stocks ahead of a tariff deadline, finance can see the working-capital hit and the downside if the tariff changes again.

The room still makes the decision. The decision has just been rehearsed first.

FROM THE FLOOR

Focus on what you can control.

Anesa Chaibi, CEO of Global Industrial, on operating discipline under tariff volatility

Anesa Chaibi runs Global Industrial, a US industrial distributor serving manufacturing, MRO, and business customers. Speaking with Distribution Strategy Group in March about the current tariff regime, she described how her team is thinking about the parts of the business they can actually move.

“The team focused on what we could control and mitigated the risk of the things that were out of our control.”

Anesa Chaibi

CEO, Global Industrial · Distribution Strategy Group, March 2026

Chaibi’s frame is straightforward operating discipline. Control the controllable. Mitigate the rest. What has changed since Q1 is that “the rest” now includes weekly-scale policy volatility and daily-scale cost movement. The controllable part now requires a mechanism the annual planning cycle was not built for: fast, tested scenarios. Watch and wait becomes wait and rehearse.

The takeaway

The distributors and manufacturers moving through this tariff cycle best are not the ones with the best forecasts. They are the ones who have made “what we can control” a scenario the team can rehearse before the decision gets made.

THE STACK

The Pre-Meeting Scenario Simulator.

Three costed scenarios delivered before the meeting starts.

A one-page decision brief the room can react to, instead of a stack of static reports the room has to argue with.

Most planning meetings still start with static reports and end with a room full of assumptions. Someone believes demand will hold. Someone else believes a price increase will push customers away. Purchasing wants to buy ahead. Finance worries about cash. Operations knows a large order will break the schedule but cannot prove it quickly. The problem is not that the team lacks opinions. The problem is that the team has not rehearsed the decision before the meeting starts.

The Pre-Meeting Scenario Simulator runs a daily or pre-meeting snapshot of the operation and generates three costed scenarios for the specific decision on the table. Not a full digital twin. A pre-decision rehearsal layer.

Inputs

· Demand. ERP open orders, backlog, forecast, customer mix and margin history.

· Supply. On-hand inventory, purchase orders, supplier lead times, BOMs, routings, current material quotes, tariff exposure by SKU or material.

· Capacity. Work-center calendar, labor schedule, overtime rules.

· Cost and commitment. Standard costs, freight assumptions, quote-expiration rules.

Three scenarios, every decision

Same shape, different decision

Pricing meeting. Hold price, partial pass-through, full pass-through.

Capacity meeting. Accept the large order as requested, accept with revised ship date, or decline unless materials arrive by a threshold date.

Inventory meeting. Buy now, split purchase, or wait.

Each scenario is scored against margin, customer risk, material availability, labor hours, ship-date risk, working-capital impact, and downstream effect on existing commitments. The output is a one-page decision brief with a scenario table, the recommended option, the two assumptions that matter most, and the risk trigger that would change the recommendation.

What the meeting stops debating

· Whether the data is current.

· Which SKUs are tariff-exposed.

· Whether capacity is already committed.

· What customers are affected.

· Whether the margin hit is real.

The meeting can focus on the actual trade-off: which risk the business is willing to take.

Two paths to build it

Path 1: Internal build

Start with one recurring decision, not the whole operation. Choose a decision with visible consequence: a tariff-exposed price increase, a large-order capacity commitment, or an inventory buy-ahead call. Export the required data from the ERP into a controlled spreadsheet or BI model. Build three scenarios with fixed formulas for margin, capacity, inventory, and customer impact. Assign an owner to refresh it before the weekly planning meeting. The first version does not need to be a full digital twin. It needs to stop the team from walking into the room with untested assumptions.

Path 2: ERP or planning partner

Ask the ERP partner or planning-system consultant to add a scenario layer on top of existing ERP data. The brief should be generated from saved ERP views or reports: open orders, inventory availability, PO status, routings, standard cost, and customer margin. The partner’s job is not to sell a new planning platform first. It is to connect the current system’s data to a repeatable scenario brief, then automate the refresh once the logic is trusted.

Make the meeting prove the decision before the business pays for it.

COMING SOON

The Operators Table.

A new roundtable series from The Operations Brief

Once a month, we are putting four operators around a table (virtual or otherwise) to talk about one specific problem their peers are wrestling with. No panels. No vendor pitches. No abstract keynotes. Just working mid-market manufacturers and distributors comparing notes on what they tried, what worked, and what they would not do again.

The first session drops later this summer. Watch this space.

Suggest a topic

If you are running through a decision you would want to hear four other operators think out loud about, hit reply and tell us what it is. The topics that come from readers are the ones the room actually cares about.

THE OPERATIONS BRIEF