There are over 3.5 million births in the United States each year. That’s a lot of babies who need baby food.
With such a large number of births, you would expect there to be a stable, well-established industry supporting catering to all the needs of new mothers, babies and their families.
But in mid-2022 there will be a shortage of baby food. That is certainly totally unacceptable. How is that possible?
Apparently there is a single point of failure in the baby food supply chain!
The lack of baby food
The global pandemic has devastated countless supply chains across all industries around the world. I first became aware of this very early in 2020 when the shelves were emptied of toilet paper and other basic household goods.
Like many others, we were stockpiling toilet paper not knowing when the shelves would be restocked, which obviously only compounded the problem as other people were doing the same.
In 2022, shortages and stockpiling have now reached the realm of baby food. According to The Atlantic, there are three factors driving this shortage:
- Bacteria. Following 2 infant deaths, an FDA investigation by Abbott led to the closure of its Michigan manufacturing facility and the recall of products manufactured in that facility.
- Pandemic. As in my toilet paper example, families have been stockpiling baby food, leading to a short-term increase in demand, followed by a demand shortage that led to production cuts, followed by a demand recovery for which production capacity has not been restored. This is a recurring story with many commodities.
- US trade policy. Because FDA guidelines are not strictly followed, imports from Europe and other countries have been restricted, further restricting the necessary supply lines.
The collective global experience of pandemic-related impacts on supply lines is now ingrained in all of us. So it should come as no surprise that this happened in this highly sensitive market that provides babies with groceries and other necessities.
And US trade policy, whether it’s too restrictive or not, isn’t something that just happened overnight either. In theory, the people managing such regulatory requirements would have first performed the supply-demand analysis to predict the impact of policy decisions. And based on that analysis, any upcoming continuity of supply issues could have been anticipated and proactively addressed and contained.
But the most alarming problem, in my opinion, is that with over 3.5 million babies born in the US each year, the entire baby food supply chain could be affected by the closure of a single factory.
This is clearly an unacceptable single point of failure.
Good and bad solutions for the single point of failure
During the pandemic, we heard calls from everywhere that too much business was being outsourced to low-wage countries, particularly China, where the pandemic originated. People explained that by bringing more of this business back to shore and domesticating this production, they would somehow solve the supply problems caused by the pandemic.
The fallacy of this kind of myopic thinking is that the coronavirus pandemic neither recognizes nor respects geographic or political borders. Onshoring and domestic production is not the answer. This has proven itself again and again.
Any point of single sourcing, whether materials, parts, resources, systems, processes, suppliers, production or facilities, is a single point of failure. Supply chains will always be more prone to failures, which are directly proportional to the number of single points of failure.
The short- and long-term solution to this type of problem is to mitigate, if not eliminate, single points of failure and create more robust and resilient supply chains.
In the event of a baby food shortage, all short-term steps should be to ramp up production wherever possible and seek alternative sources of supply, whether national or international (assuming FDA guidelines are followed, of course).
In the long term, the US must establish at least one other facility separate and separate from the one in Michigan to also be a source of these products. These facilities must be able to manufacture the same products to the same quality standards. You must be able to ramp up or shut down production at short notice.
Finally, supply-demand planning needs to be improved in this industry, with more real-time visibility into demand patterns and more real-time responsiveness to market dynamics. This needs to be coupled with an eye on market dynamics outside of this industry. Just looking at what is happening in other industries should have provided a leading indicator of what was likely to happen in this area as well.
Although no one could have predicted the impact of the pandemic, we know that there are always some disasters. Tornadoes, disease, man-made disasters, and other events can all conspire to disrupt life and supplies in any area without notice.
The fundamental key is to understand and address all single points of failure in the supply chain. This is the only true way to create more robust and resilient supply chains that are better able to contain and weather any inevitable disasters lurking around the corner.
Single points of failure are rife, from KFC running out of chicken, McDonald’s struggling to cover fresh hamburgers and cold and flu medication.
The non-supply of a single infant is totally unacceptable and this should be reason enough to create greater supply chain resilience in the delivery of baby food so we never have to worry about this area again.