Tariffs are the latest disruption facing medtech companies, but they won’t be the last. Protectionism, extreme weather events, geopolitical tensions, and regulatory shifts will keep coming and expose companies to ever-evolving risks. Some medtech companies have started putting measures in place to reduce tariffs and comply with new trade requirements. But they shouldn’t stop there.
Tomorrow’s winners in medtech will be those that look beyond trade compliance and build resilience muscles along the supply chain to meet all types of disruption and risk. Specifically, they should focus on three priorities:
• Build a full supply chain command center.
• Improve transparency and map supplier networks, using AI.
• Redesign the network with future shocks in mind.
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Trade compliance as a foundation
Leading medtech companies are already investing to build stronger trade compliance capabilities, giving them an advantage in responding to the current challenges. They have developed tariff control towers, improved data visibility, and put cross-functional processes in place, all of which help them track and report content and comply with changing tariffs as their products move through the value chain. By building on that foundation and taking a more comprehensive approach, companies can prepare for a broader set of disruptions and risks.
Where to go next? Companies should focus on three priorities.
1. Expand the tariff control tower into a full supply chain command center. The first priority is to build on the foundation of the tariff command center and scale it up to a dedicated supply chain command center with a broader mandate. The goal of the center is to identify and proactively mitigate emerging risks of all types — regulatory, operational, reputational. Reflecting its broader scope, the center should have a cross-functional staff that includes compliance, procurement, and operations teams, to break decision-making silos. It should track advance signals like logistics delays, labor shortages, and geopolitical shifts, and use scenario modeling to assess their impact on the company’s supply chain and financial performance and test potential responses (along with the moves of competitors). The goal is to be ready for any type of disruption, with response measures already mapped out and ready to deploy.
2. Improve transparency and map supplier networks end-to-end, using AI where possible. Many medtech companies have reasonable visibility into their tier 1 suppliers, but they should push further upstream, to tier 3 and beyond. Rising standards on regional content, labor sourcing, origin of capital, make this kind of transparency a must-have, not a nice-to-have. Richer and more accurate supply-chain data is both a compliance and a resilience win — it helps companies anticipate risks and supports smarter supply chain decisions and actions. To improve, some medtech players partner directly with suppliers and make explicit stipulations about sourcing and performance disclosures as part of supplier qualifications. Others are investing in AI-enabled solutions that can trace ownership, map risk exposure, and flag hidden dependencies. AI can also synthesize all supply chain information — such as country-of-origin data, bills of materials, sales patterns, operational plans, tariff rates, and other core data — into a single source of truth to help leaders understand their current situation and the potential impact of specific decisions.
3. Redesign the network with future shocks in mind, A supply chain command center and stronger trade compliance will help companies with the third priority — making capex decisions about structural changes to the production network in order to increase resilience. Many organizations are considering near-shoring to the U.S., but others are casting a wider net, with regional production to serve local markets as a winning model. Companies can also diversify their suppliers to increase redundancy. These kinds of decisions need to be made soon for companies to avoid being left behind. But it’s important to think long-term, mapping the supply-chain outlook over the coming three to ten years under different scenarios, considering disruptions due to extreme weather events, geopolitical factors, and evolving technology.
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In sum, the current tariff volatility creates a new set of challenges for medtech companies, but uncertainty is here to stay. Companies must act now, building on the trade compliance capabilities they are building to create a resilient supply chain that is ready for future disruptions. In that way, they can evolve from the compliance win of today to create a long-term competitive advantage.
Author’s note: This article builds on insights from a publication in which Michele Brocca, Lorenzo Capucci, and Sarah Lichtblau served as co-authors.
Photo: mohd izzuan, Getty Images
Vikram Aggarwalis the global leader for Boston Consulting Group’s medical devices and technology work, and a core member of the firm’s Health Care, and Marketing, Sales & Pricing practices.
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