Supply chain – The COVID-19 pandemic has certainly had its impact effect on the planet. Economic indicators and health have been affected and all industries have been completely touched in one of the ways or some other. One of the industries in which this was clearly noticeable is the agriculture as well as food industry.
In 2019, the Dutch farming and food industry contributed 6.4 % to the disgusting domestic item (CBS, 2020). According to the FoodService Instituut, the foodservice business in the Netherlands shed € 7.1 billion within 2020. The hospitality industry lost 41.5 % of its turnover as show by ProcurementNation, while at the identical time supermarkets increased the turnover of theirs with € 1.8 billion.
Disruptions in the food chain have significant consequences for the Dutch economy and food security as a lot of stakeholders are impacted. Though it was apparent to most men and women that there was a great effect at the end of this chain (e.g., hoarding in supermarkets, restaurants closing) and also at the start of this chain (e.g., harvested potatoes not finding customers), you will find a lot of actors inside the supply chain for that the impact is much less clear. It’s thus vital that you determine how effectively the food supply chain as a whole is armed to cope with disruptions. Researchers from the Operations Research and Logistics Group at Wageningen Faculty and from Wageningen Economics Research, led by Professor Sander de Leeuw, analyzed the influences of the COVID-19 pandemic throughout the food resources chain. They based their analysis on interviews with around thirty Dutch source chain actors.
Demand within retail up, contained food service down It is evident and widely known that demand in the foodservice stations went down due to the closure of joints, amongst others. In certain cases, sales for suppliers of the food service industry thus fell to aproximatelly 20 % of the initial volume. Being an adverse reaction, demand in the retail channels went up and remained within a quality of aproximatelly 10-20 % greater than before the problems started.
Goods that had to come through abroad had the own problems of theirs. With the shift in need from foodservice to retail, the requirement for packaging improved dramatically, More tin, cup or plastic material was required for use in buyer packaging. As much more of this product packaging material ended up in consumers’ homes instead of in joints, the cardboard recycling system got disrupted also, causing shortages.
The shifts in demand have had a significant affect on production activities. In some cases, this even meant a full stop of production (e.g. in the duck farming business, which came to a standstill as a result of demand fall-out on the foodservice sector). In other situations, a big section of the personnel contracted corona (e.g. to the meat processing industry), resulting in a closure of facilities.
Supply chain – Distribution activities were also affected. The start of the Corona crisis in China sparked the flow of sea canisters to slow down pretty shortly in 2020. This resulted in transport electrical capacity which is limited during the first weeks of the crisis, and costs which are high for container transport as a consequence. Truck travel faced different problems. Initially, there were uncertainties on how transport will be handled for borders, which in the end were not as rigid as feared. What was problematic in cases which are most, nevertheless, was the accessibility of motorists.
The response to COVID 19 – provide chain resilience The source chain resilience evaluation held by Prof. de Leeuw as well as Colleagues, was based on the overview of this primary elements of supply chain resilience:
Using this particular framework for the assessment of the interviews, the conclusions show that few businesses had been well prepared for the corona crisis and in fact mostly applied responsive practices. Probably the most notable source chain lessons were:
Figure 1. 8 best methods for food supply chain resilience
To begin with, the need to create the supply chain for flexibility and agility. This appears particularly challenging for small companies: building resilience right into a supply chain takes attention and time in the organization, and smaller organizations usually do not have the capacity to accomplish that.
Second, it was observed that much more interest was necessary on spreading risk and aiming for risk reduction within the supply chain. For the future, this means far more attention has to be made available to the way businesses rely on specific countries, customers, and suppliers.
Third, attention is required for explicit prioritization as well as clever rationing strategies in cases in which need can’t be met. Explicit prioritization is needed to continue to satisfy market expectations but also to boost market shares where competitors miss options. This particular challenge is not new, though it has in addition been underexposed in this problems and was often not a part of preparatory activities.
Fourthly, the corona crisis teaches us that the financial effect of a crisis also is determined by the manner in which cooperation in the chain is actually set up. It’s typically unclear how additional costs (and benefits) are distributed in a chain, in case at all.
Finally, relative to other functional departments, the operations and supply chain operates are actually in the driving seat during a crisis. Product development and marketing and advertising activities have to go hand in hand with supply chain pursuits. Whether the corona pandemic will structurally replace the classic considerations between generation and logistics on the one hand as well as advertising on the other hand, the long term will need to explain to.
How’s the Dutch meal supply chain coping during the corona crisis?