A nationwide baby formula shortage has desperate parents spending hours tracking down food for their newborns, and putting one of the nation’s most vulnerable groups at risk.
The supply crunch is so bad that President Joe Biden invoked emergency powers with the Defense Production Act (DPA) on Wednesday to get baby formula on shelves as soon as possible. It allows the president to allocate materials or services deemed necessary for national defense, to mandate that ingredient suppliers prioritize baby formula manufacturers above other customers. He simultaneously launched a program called “Operation Fly Formula” to use federal planes to fly in formula from abroad.
The federal government has also taken other actions to solve the crisis. The FDA is easing barriers for foreign formula products entering the U.S. and working with other manufacturers to increase production.
Experts say that these actions will likely help ease the baby formula shortage over weeks and months. But they caution that there is no silver bullet to solve the crisis, and that the moves won’t solve every possible knot in a complicated series of supply chains involved in formula production.
The baby formula shortage was triggered by a single production plant owned by Abbott Nutrition shutting down amid reports that its product was contaminated. The most recent data available from May 15 shows that stores nationwide had only 55% of their usual formula products in stock, according to Datasembly, a company that provides real-time consumer product insights.
The DPA does not increase formula production beyond what other manufacturers, like Nestlé and Mead-Johnson, have already done, says Henry Jin, an associate professor and expert in supply chain, inventory, and retail management at Miami University’s Farmer School of Business. Rather, it’s an anticipatory move aimed at ensuring a smooth return to normal operations once Abbott’s plant reopens.
When the plant reopens, says Jin, it will begin producing formula alongside other manufacturers that have increased production in recent weeks to help meet the national demand. As a result, it could place significant strain on the supply of input ingredients. The DPA, he says, should ease the risk of bottlenecks in that supply chain.
“In invoking the DPA, the Biden Administration is trying to ensure that we don’t engage in a game of whack-a-mole with supply chain shortages,” says Jin.
But he adds that the order alone will not be enough to alleviate the shortage. “In the near term, not by itself,” he says.
Hyun-Soo Ahn, a professor of technology and operations at Michigan’s Ross School of Business, agrees. He told Fortune that while DPA will ultimately help with formula production and delivery, it will do so over a timeline between weeks and months, adding that the federal government made similar moves at the onset of the pandemic to alleviate the sudden PPE shortage.
He notes that in addition to the approximately 30 ingredients in baby formula, the product also requires packaging materials. Persistent supply chain areas in those areas could still delay production, even if everything else is running smoothly.
“The supply chain is as weak as its weakest link,” says Ahn. “While the key ingredient suppliers may be influenced by the DPA, it is still possible that a ramp-up is delayed by a shortage in packaging material and logistic services.”
Jin is hopeful that Operation Fly Formula, which will fly baby formula in from abroad, will have more immediate results for solving the shortage.
“Whereas invoking the DPA is in anticipation of potential future supply shortages, Operation Fly Formula will have more immediate impact on healthcare facilities, and then store shelves, albeit at very high logistical costs,” he says.
Ahn agrees, saying that “Operation Fly Formula is likely to hit the shelves sooner.”
This year’s baby formula shortage began after Abbott voluntarily shut down a major factory in Sturgis, Michigan following reports connecting its products to infant illnesses and deaths. It also recalled a number of its products made at the facility.
The shut-down promptly had a domino-effect on the market, which was already fragile due to COVID-related supply chain issues, leading to all formula products to become scarce. In response, the FDA has urged other major manufacturers to increase production and has loosened regulations with the aim of making it easier for foreign formula products to enter the U.S.
Abbott and the FDA announced this week that they reached a settlement to reopen the Sturgis plant. The settlement is now awaiting court approval, with the promise of reopening as early as next week. Once open again, Abbott says it will take another six to eight weeks before its product is available on store shelves.
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