Supply chain – The COVID 19 pandemic has definitely had the impact of its impact on the world. Economic indicators and health have been affected and all industries are touched inside a way or even another. Among the industries in which this was clearly obvious is the agriculture as well as food industry.
Throughout 2019, the Dutch agriculture and food sector contributed 6.4 % to the yucky domestic product (CBS, 2020). According to the FoodService Instituut, the foodservice industry in the Netherlands lost € 7.1 billion inside 2020. The hospitality business lost 41.5 % of the turnover of its as show by ProcurementNation, while at exactly the same time supermarkets enhanced their turnover with € 1.8 billion.
Disruptions in the food chain have significant consequences for the Dutch economy as well as food security as lots of stakeholders are impacted. Even though it was clear to numerous folks that there was a huge effect at the tail end of this chain (e.g., hoarding around grocery stores, eateries closing) and at the beginning of this chain (e.g., harvested potatoes not finding customers), you will find numerous actors inside the supply chain for that will the effect is much less clear. It is thus important to find out how well the food supply chain as being a whole is equipped to cope with disruptions. Researchers from the Operations Research and Logistics Group at Wageningen University and coming from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the influences of the COVID-19 pandemic throughout the food supplies chain. They based the analysis of theirs on interviews with around 30 Dutch supply chain actors.
Demand within retail up, in food service down It is apparent and widely known that demand in the foodservice channels went down due to the closure of places, amongst others. In a few cases, sales for suppliers of the food service business therefore fell to about 20 % of the first volume. Being a complication, demand in the list channels went up and remained within a level of aproximatelly 10-20 % higher than before the crisis began.
Products that had to come through abroad had their very own issues. With the change in demand coming from foodservice to retail, the demand for packaging changed considerably, More tin, glass or plastic material was necessary for wearing in customer packaging. As more of this particular product packaging material ended up in consumers’ houses instead of in restaurants, the cardboard recycling function got disrupted as well, causing shortages.
The shifts in need have had an important effect on production activities. In a few instances, this even meant the full stop of production (e.g. in the duck farming industry, which came to a standstill on account of demand fall-out on the foodservice sector). In other instances, a major portion of the personnel contracted corona (e.g. in the meat processing industry), leading to a closure of equipment.
Supply chain – Distribution activities were also affected. The start of the Corona crisis of China caused the flow of sea bins to slow down pretty soon in 2020. This resulted in limited transport electrical capacity throughout the earliest weeks of the issues, and costs that are high for container transport as a consequence. Truck transportation experienced various problems. Initially, there were uncertainties on how transport would be managed at borders, which in the end weren’t as rigid as feared. What was problematic in cases which are many, nevertheless, was the accessibility of drivers.
The response to COVID 19 – supply chain resilience The supply chain resilience analysis held by Prof. de Colleagues as well as Leeuw, was based on the overview of the core components of supply chain resilience:
To us this framework for the assessment of the interview, the results indicate that not many businesses were nicely prepared for the corona problems and in reality mostly applied responsive methods. Probably the most important supply chain lessons were:
Figure 1. Eight best methods for food supply chain resilience
To begin with, the need to develop the supply chain for agility and flexibility. This appears particularly complicated for smaller sized companies: building resilience into a supply chain takes attention and time in the organization, and smaller organizations often do not have the potential to accomplish that.
Second, it was discovered that more interest was required on spreading danger and aiming for risk reduction within the supply chain. For the future, this means far more attention should be given to the way businesses rely on specific countries, customers, and suppliers.
Third, attention is needed for explicit prioritization as well as clever rationing techniques in situations in which need can’t be met. Explicit prioritization is needed to continue to meet market expectations but additionally to increase market shares wherein competitors miss options. This challenge isn’t new, although it has additionally been underexposed in this specific crisis and was frequently not part of preparatory activities.
Fourthly, the corona crisis shows us that the financial impact of a crisis additionally is determined by the way cooperation in the chain is actually set up. It is often unclear precisely how extra costs (and benefits) are actually distributed in a chain, if at all.
Lastly, relative to other functional departments, the businesses and supply chain works are actually in the driving seat during a crisis. Product development and marketing activities have to go hand in deep hand with supply chain activities. Whether or not the corona pandemic will structurally change the traditional discussions between logistics and production on the one hand as well as marketing and advertising on the other, the potential future will have to tell.
How’s the Dutch foods supply chain coping during the corona crisis?