Root Causes of the Baby Formula Crisis Remain Unaddressed
Some of the stories we cover during the year are so big, and impactful, and educational, that we try to stay on top of them – even after they have faded from the mainstream media headlines.
Earlier this year, a widespread baby formula shortage rocked the United States.
I covered the crisis on Dial P for Procurement back in May, but the shortages didn't peak until July – when the national average out of stock rate was 31 percent. As of October, we are still seeing an average out of stock rate of 18 percent - mercifully down from July, but nearly double the rate recorded before the Abbott plant recall and closure.?
Speaking of that Abbott plant in Sturgis, Michigan… it reopened on July first, an important event which was delayed for two weeks because of heavy flooding at the facility.
Perhaps the most unbelievable thing about this story is the lack of update on one specific front. I found no evidence that WIC, the federal Women Infants and Children program, is being reexamined for the role it played in causing this crisis. By signing one contract for all of their formula demand by state, they led to an over concentration of the national market - just 3 providers are the source of 89 percent of volume. Whether they realized it or not, WIC traded market resilience for lower costs. I think once you’ve heard the full episode you’ll be just as surprised as I am.
The federal government seems more interested in making it easier to import baby formula from abroad than they do increasing levels of competition here at home.
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And remember, my article on the baby formula crisis is a finalist in the Supply Chain Brief MVP Awards in the Supply Chain Management category. Click here to vote!
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