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ASCM Insights

Formula Shortage Exposes Essential Products Supply Chain Shortfalls

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The latest product shortage is being called the cruelest yet: a shortage of infant formula. On average, about 40% of America’s baby formula supplies are out of stock, with out-of-stock rates as high as 57% in San Antonio. While parents across the country are driving from store to store hunting for nutrition for their hungry babies, experts are telling them to brace for at least two more months of struggles.

Compared with the other product shortages experienced throughout the past couple years, this one is especially dire because formula can be the exclusive or predominant source of nutrition for babies. Nutritional deficits could have long-term health and developmental consequences for these babies.

Formula supplies have already been low throughout the past couple of years because of pandemic-related disruptions, labor shortages, inflation and supply chain challenges. However, since a major formula manufacturer announced a recall of certain batches of its products and subsequently closed a manufacturing plant in Sturgis, Mich., in February, the situation has gotten markedly worse. The out-of-stock rate was about 29% in March, and it keeps climbing. Many stores across the country have bare shelves in the formula aisle, while those with stock often are setting purchase limits and keeping the products under lock and key.

The affected formula manufacturer announced Wednesday in a statement that the plant could be up and running again in two weeks, pending U.S. Food and Drug Administration (FDA) approval, noting that there was no evidence to link its formulas to the infant illnesses that prompted the recall. Once the production lines are restarted, it will be another six to eight weeks before product reaches shelves. In the meantime, the manufacturer has been increasing the production of formula at its FDA-registered plant in Ireland and flying it into the United States daily.   

While some families have been able to switch to other brands of formula during the shortage, others need specific specialty formulas for people of all ages with a variety of rare medical conditions, including metabolic, allergic and gastrointestinal disorders. These families may have no other option and worry that their loved ones will not survive the formula shortage. The affected manufacturer also is the exclusive formula supplier for more than half of the nation’s Women, Infants, and Children agencies, but it is working with government agencies to help affected families obtain other products at no cost.

Some are calling for the federal government to do more to prevent life-sustaining supply chains from breaking down like this. For example, the FDA recommends requiring manufacturers of formula and other essential medical foods to notify the FDA when there are anticipated manufacturing interruptions. Congress has planned a hearing about the shortage on May 25. Others have pointed out that there are many restrictions on importing formula — including import tariffs as high as 17.5%, specific label and ingredient requirements, and a 90-day waiting period before marketing newly imported formulas in America — that are making it difficult for the nation to restock amid the shortage.

The FDA said it is meeting with other formula manufacturers to see if they can increase production. However, formula-production operations tend to be set for a steady level of demand and are not typically able to ramp up or ramp down production easily. Plus, the manufacturers are reporting that they already are producing at full capacity and are making as much formula as they can.

A cry for help

Although this undoubtedly is one of the most pressing production interruptions, an interruption like this can affect any industry and have dire consequences. Companies need to be prepared, and that means ensuring their professionals are educated in the best supply chain practices and strategies.

ASCM’s Certified Supply Chain Professional (CSCP) certification program features added emphasis on demand management, supply chain risk, and modern supply chain technology trends to help professionals and their employers better prepare for and respond to a host of supply chain disruptions. The CSCP program has helped professionals in manufacturing, consulting, education, government, services, defense, health care, distribution, pharmaceutical and other fields.

Individuals can test-drive the content free for 30 days to see if the CSCP designation is a good fit for them. Organizations also can work with ASCM to set up company-specific training to help educate employees on-site or virtually. To learn more, visit ascm.org/cscp.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer of the Association for Supply Chain Management (ASCM), the largest organization for supply chain and the global pacesetter of organizational transformation, talent development and supply chain innovation. During his tenure, ASCM has significantly expanded its services to corporations, individuals and communities. Its revenue has more than doubled, and the association successfully completed three mergers in response to both heightened industry awareness and the vast and ongoing global impact driven by supply chains. Previously, Eshkenazi was the managing director of the Operations Consulting Group of American Express Tax and Business Services. He may be contacted at abe@ascm.org.

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