Ryan Rutter, vice president of healthcare market strategy at Texas, outlines how supply chain flexibility can be maintained in the face of tariffs.
Ryan Rutter, vice president of healthcare market strategy at Tecsys
Tariffs introduce a kind of confusion that can feel sudden and confusing. Policies can change with little notice, vary by country and product type, and come after production and distribution plans are already set in motion. For pharmaceutical leaders, the real issue is rarely the tariff line items themselves. Major problems exist in the chain reaction that follows tariff announcements: quick decisions about incomplete information that emerge through sourcing, pricing, listing strategy, service levels and, ultimately, patient access.
When tariffs are implemented, or even threatened, attitudes change quickly and unpredictably. Customers may place unusually large orders to avoid cost exposure. Distributors may adjust lines, change buying behavior or increase safety stock to maintain consistency. Manufacturers may speed up some steps, delay others, or reroute the product to avoid fees. Then the pattern can be turned on a dime. Orders are lost because customers are now sitting on surplus, policies change again, or someone discovers a product that was not effectively viewed on the network. The initial increase is interpreted as a real demand, only to quickly adjust after a few weeks. This whiplash strains forecasting and production planning, distorts allocation decisions, and increases the likelihood that the wrong product will end up in the wrong place at the wrong time.
Supply chain resilience begins when manufacturers and distributors stop managing volatility through partial insight and their gut instincts. And a flexible supply chain is one built on a vision that is comprehensive, current and reliable, supported by repeatable playbooks that keep decisions under pressure.
Tariffs are usually discussed as a cost issue, but their effects are primarily operational. A Pulse survey from KPMG after last summer’s tariff news found that 55% of US businesses plan to restructure their supply chain in response to new or increased tariffs – a change that nearly half of respondents said would take 7-12 months to implement and another 21% 1-2 years.
When costs change, leaders are forced to act quickly, often without a complete picture of inventory and demand across the network. A manufacturer may not know what stock is available through third parties and channels, or which customers are actually at risk of shortages. A distributor may have a clear view of these distribution centers but lack reliable demand signals from downstream care settings. Even within a single health system, inventory practices may be strong at one site and inconsistent at another, driving an ongoing order based on habit rather than necessity.
The most valuable inventory is the inventory that no one knows they have. If teams can’t have products sitting in overflow rooms, assembly areas, hazardous drug storage or other secondary locations, they’ll adjust what they always order. This results in locked-in working capital, higher losses to maturity, and last-minute impulse purchases that come at a premium.
The above partners also absorb the results. Fixed orders look like fixed requests. When hidden surpluses are discovered and orders suddenly stop, manufacturers face canceled forecasts, overproduction and sudden changes in allocation decisions. Tariffs can create these behaviors, but limited visibility is what allows them to persist and compound.
For manufacturers and distributors, end-to-end visibility means having a connected view across all warehouses, plants and channels that support planning and execution across the entire network, including the data needed to meet compliance requirements and verify product movement with confidence.
This vision begins with integration. When organizations connect wholesalers, third-party vendors, and internal systems to a common data foundation, leaders can stop treating inventory as isolated pockets and start managing it as a cohesive asset. Integration also closes the loop between what is planned, purchased, received and actually used. This loop becomes more important when tariffs squeeze both margins and service.
Integration is not just a technical project. This is how companies replace their “best guesses” with real signals and reduce the volatility that comes from the bottom blind spots, where inventory exists but remains hidden from the people making purchasing decisions. When forecasting, replenishment, and allocation draw from a common source of facts, the supply chain becomes calm instead of in the midst of chaos.
Tariffs are just one form of confusion. In any given year, the same supply chain may face severe weather, geopolitical instability, road closures, labor shortages or cyber threats. According to a recent survey of US hospital CEOs, pharmacy and supply chain leaders, 77% say they are not fully prepared for major disruptions. And many operations lack a solid playbook on how to manage supply disruptions, despite jumping into action when a bottleneck is detected. This is where preparation breaks down. Disruption planning can no longer be an annual box-checking exercise; This should be an ongoing operational priority.
A resilient approach starts with mapping vulnerabilities across the entire network, including single points of failure that look impressive on paper but become critical in real life. Many organizations use a digital twin, a computer-based model of suppliers, routes, warehouses, and dependencies that allows teams to run scenarios and see where a tariff, port delay, or supplier failure will cause the most damage. This clarity enables structured prioritization rather than reactive optimization.
Flexibility is then enhanced when redundancy is created where it matters most. This comes at a cost, but so do outages, service failures, escalating premiums, and reputational damage when patients are affected. The goal is not to copy everything. This avoids dependence on one facility, one line, or one supplier for critical items.
Most importantly, planning for disruption should be routine. Teams need repeatable playbooks, clear roles, and quick escape routes. They also need to get into the habit of looking for early warning signs, whether it’s unusual configuration behavior, weather patterns that threaten a site, or suspicious network activity that indicates a cyber threat. When conditions change rapidly, the speed of reaction often defeats the complete plan.
Artificial intelligence (AI) can help, but only if it is treated as an acceleration tool rather than a magic solution. In tariff volatility, time is a competitive advantage because decisions must often be made before the full picture emerges. AI can analyze large amounts of data, surface risk signals, and recommend actions to lead for reliability. In shortage management, it can integrate risk factors such as weather threats, inventory levels, days on hand, and possible replacements, while scanning shortage histories to measure the operational risk of replacement.
Beyond crisis response, AI can support executive decisions that are directly related to business performance. It can help leaders evaluate insourcing versus outsourcing by weighing labor, materials, and usage patterns, and it can support complex contracting decisions where tiers, mixed commitments, and competing offers create too many variables for quick manual comparison. For distributors, AI can strengthen compatible secondary sources by scanning alternatives, checking contract status, and guiding procurement decisions when primary channels become tight or when tariff changes make traditional sourcing less viable.
Technology can also change behavior, not just make things faster. Tools like RFID can dramatically reduce tracking work, freeing up teams for high-value activities and improving the reliability of inventory records. The profound influence is cultural. When teams experience fast, accurate data capture, they stop accepting slow manual processes as inevitable. They are starting to question more entrenched workflows and push toward repeatable, scalable operating models. This mindset becomes part of resilience because it reduces reliance on improvisation and individual heroes.
Tariffs will continue to introduce uncertainty, and manufacturers and distributors cannot control when policy changes occur. What leaders can control is whether they run their supply chains on partial truth or trusted, shared signals.
The path to flexibility is straightforward even when execution is difficult: create an end-to-end vision through integration so availability and demand reflect reality rather than habit. Use contracting and standardization to limit exposure and reduce avoidable complexity. Disruption playbooks establish a routine operational capability informed by vulnerability mapping and targeted displacement; And apply AI where it first removes the heaviest burden, especially in outage planning, sourcing decisions, and inventory rebalancing.
In a market where chaos is the norm, the advantage will go to organizations that can see across the board, act ahead of their peers, and keep supply steady while others suffer.
“Tariffs, Uncertainty and Confusion: How Drug Manufacturers and Distributors Can Build Operational Supply Chain Resilience” was originally developed and published by Pharmaceutical Technologies, a brand owned by Global Data.
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