Building Supply Chain Resilience in the Face of Tariffs and Disruption

The healthcare industry often operates in a state of constant disruption. From global pandemics to geopolitical instability, supply chains are constantly being tested. Tariffs and unpredictable trade policies are again forcing leaders to ask: How exposed are we? How resilient is our network? What can be done today to prepare for tomorrow’s shocks?

Most healthcare organizations have historically taken a reactive stance to managing any crisis impacting their supply chain. But simply reacting to new crises only results in leaders and their team’ scrambling, making recovery efforts all the more difficult and costly. Building supply chain agility and resilience doesn’t come from experience or waiting for the next challenge.

It’s about what organizations do with that experience and how they put proactive strategies in place long before they’re needed. Because, as much as we hate to admit, disruption is inevitable and it’s become a matter of when the next disruption will occur, not if. 

Hospitals and health systems can no longer cross their fingers and hope they’ll be exempt from disruption. Tariffs are one example where no organization will be spared and we’re still determining the full impact of these tariffs as pharmaceutical and healthcare products have historically been exempt. But the 15% tariffs on medical devices imported from the European Union may likely lead to higher costs for healthcare organizations and their patients. There’s also still uncertainty around pharmaceutical tariffs and whether some medications will receive up to 200% tariffs if they’re made outside the U.S. or Europe. 

After spending more than 20 years in the healthcare supply chain industry, I’ve learned that while it’s impossible to predict the next disruption, what matters is how your organization prepares for it. 

Here are five ways to build resilience amid tariffs and before the next disruption strikes:  

1. Start with education and visibility

You can’t manage what you can’t see. Start by finding your organization’s weak points and vulnerabilities. Go beyond standard vendor reports and ask your team, partners, suppliers and manufacturers tough questions. Where do your products come from? Which suppliers face the most trade risk? Are there hidden dependencies? Do you have a backup plan for alternative sources of supply?

These regular talks with top suppliers increase clarity. They also allow health systems to run “what if” scenarios and stress-test contracts and operations before new tariffs take effect. Additionally, healthcare organizations should also consider partnering closely with industry associations and group purchasing organizations that are helping put together toolkits to help hospitals navigate policy changes.

2. Use contracts as risk management tools

Contracts should be seen as more than just transactional. There’s an opportunity for health systems to use them strategically and incorporate flexible terms to help cap tariff exposure or allow variable payments. These steps help organizations avoid or absorb shocks from tariffs, inflation, or price increases. 

Still, contracts have limits. Supply chain leaders should also look at where products are sourced. Diversifying suppliers, both globally and locally, is even more crucial in the face of uncertain healthcare and pharmaceutical tariffs. Onshoring is being discussed, but it may be years before it offers a practical solution for immediate protection and stability. 

3. Standardize to unlock cost savings

In a way, tariffs are providing an opportunity for healthcare leadership to partner more closely with their clinicians than ever before around a shared mission to increase standardization across departments. Addressing product variation has the potential to create sufficient savings to offset the impact of tariffs on the organization’s bottom line and also improve the efficiency and consistency of patient care. Looking at vendor consolidation, increasing supplier compliance levels in specific categories and doubling down with supplier partners have also proven an effective strategy for those willing to drive clinical integration and take a longer term approach. 

4. Empower change management and culture

Honest discussions about change management are essential for preparing for and mitigating against disruption. Because even the best mitigation plans quickly fall apart if the culture doesn’t support it. Additionally, sometimes leaders may overestimate their team’s ability to adapt faster than they actually can and it’s important to pressure test these situations before it becomes reality. 

Leadership from the C-suite and within the supply chain should set the tone and empower their teams to make fast, data-driven decisions while partnering with clinical counterparts. Processes should all be in place to show how supply chain is working across the healthcare enterprise to help balance cost, quality, and patient outcomes. Strategies are likely to fall apart or fall short of their intended impact without organizational buy-in and integration. 

5. Leverage AI and predictive analytics

In supply chain, resilience isn’t only about bracing for impact and having the ability to endure during disruptions, whether it’s from tariffs or drug shortages. Resilience should be thought more about adaptability and having the tools and resources in place to respond and recover quickly. Technology, namely AI and predictive analytics, is helping make that possible by identifying where tariff risk is highest or what products are on the brink of shortage. 

In turn, hospital and supply chain leaders gain insight into their vulnerabilities and how it may send ripple effects throughout the organization. Having all the data together can help illuminate the problems and give leaders the foresight to take action, whether that means adjusting purchasing strategies or lining up alternative suppliers, to course correct early and keep patient care running smoothly. 

What’s ahead 

The reality is that tariffs are only the latest disruption in a long line of constant volatility throughout the healthcare supply chain. These disruptions and trade talks are all beyond any one organization’s control, but there’s an opportunity for hospitals and health systems to set themselves apart. 

Despite all the technological and pharmaceutical breakthroughs in healthcare over the last several decades, the core business of healthcare continues to stay the same. The way we buy and pay for supplies hasn’t changed in decades. 

It’s time to start putting the supply chain at the center of conversations around cost, quality, and access if we want to move forward and challenge the status quo. The path forward is creating a more resilient supply chain that bends without breaking and keeps care delivery running seamlessly so hospitals and their patients receive better outcomes.

Photo: sorbetto, Getty Images

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