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MSU supply chain management expert helps us understand the baby formula crisis.
The infant formula shortage is far from over. Families across the U.S. are struggling to access proper nutrition for their infants after a major supplier halted production.
“A major issue is the consolidation of the food industry,” said David Hammons, supply chain management senior instructor at Missouri State University. “In the U.S., just a few manufacturers account for the bulk of our food supply.”
“It’s time to consider how we can improve our regulatory systems and our recall management to ensure this won’t keep happening.”
While the formula industry is the most observable case in recent supply chain breakdowns, it is not alone. We have seen shortages of many food products with some favorite name brands missing from the grocery shelves.
A major reason for these shortages? Extensive and often costly regulation by the Food and Drug Administration (FDA).
“We of course want our food production to be well regulated,” Hammons said. “But the regulations in place are often created by legislators with limited understanding of food manufacturing practices.”
“These regulations can make it difficult for smaller companies to survive.”
This leads to a consolidated industry, Hammons explains. When only a few companies can afford to stay afloat, there are fewer options when a major incident happens that limits the supply of a particular product.
Another issue at play is lot sizes. When manufacturers create a product, they assign it a code corresponding to its production run or lot. Lot codes are the numbers you look for on your product when a recall has been announced.
These codes may include all products from the same day or even week of production. The large size of these lots can result in massive recalls when many of these products may be safe to sell.
To help families get the formula they need, the Biden administration in May invoked the defense production act. The act will import about 58 million 8-ounce bottle equivalents into the U.S. market by the end of the year.
But this is not a long-term solution. The act has required significant laxity within the FDA and left many parents concerned they may need to switch their infant from one formula to the new foreign brands.
Until the shortages conspired, Special Supplemental Nutrition Program for Women, Infants and Children (WIC) required its members to use only pre-approved formula brands.
But the recent flexibility implemented by WIC may have come too late. Families are resistant to switch from one formula to another, fearing a change may cause digestive and other health issues.
“Unnecessary limitations like this can cause undue pressure on the supply chain when something goes awry,” Hammons said. “As long as the formula is safe, then parents should be permitted to use it.”
Hammons suggests one more solution: A database to connect manufacturers and distributors with parents and guardians of infants who need specialized formulas.
Premature infants and infants with allergies often need specialized formulas and there is no way for families to know when that formula might hit the shelf.
Resources for families
So, how can we prevent future food supply crises? Hammons has two suggestions:
Companies have begun experimenting with decreasing lot sizes and enforcing more clearcut coding for each production run.
“If we can develop smaller, more specific lot codes and the technology to track them, we will be able to enforce better recall techniques,” Hammons said. “We won’t see such extensive recalls because we won’t be forced to remove products that are safe to sell from our stores.”
This shortage has opened the eyes of many legislators and regulatory bodies such as the FDA to the shortfalls of our food industry and the regulations intended to safeguard it.
“Larger companies have the power to lobby for regulations that won’t stifle their work, but small companies need to be offered a seat at the table too,” Hammons said.
“Small companies can’t survive such a strict regulatory environment so they’re going out of business or being forced to sell their business to large companies.”
These changes may alleviate consolidation and prevent further threats to the health of families in the U.S.
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Filed Under: Discovery
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