Supply chain – The COVID-19 pandemic has undoubtedly had its impact effect on the world. Economic indicators and health have been affected and all industries are touched in one of the ways or even yet another. One of the industries in which it was clearly apparent would be the agriculture as well as food business.
Throughout 2019, the Dutch farming and food niche contributed 6.4 % to the gross domestic product (CBS, 2020). As per the FoodService Instituut, the foodservice industry in the Netherlands dropped € 7.1 billion within 2020. The hospitality business lost 41.5 % of its turnover as show by ProcurementNation, while at exactly the same time supermarkets enhanced their turnover with € 1.8 billion.
Disruptions in the food chain have major consequences for the Dutch economy as well as food security as many stakeholders are affected. Though it was clear to many folks that there was a significant impact at the end of this chain (e.g., hoarding around supermarkets, restaurants closing) as well as at the beginning of this chain (e.g., harvested potatoes not searching for customers), you will find many actors within the supply chain for which the effect is less clear. It is thus vital that you determine how well the food supply chain as being a whole is actually prepared to deal with disruptions. Researchers from your Operations Research and Logistics Group at Wageningen Faculty and out of Wageningen Economics Research, led by Professor Sander de Leeuw, studied the influences of the COVID-19 pandemic all over the food supplies chain. They based their analysis on interviews with about 30 Dutch source chain actors.
Need in retail up, in food service down It is evident and well known that need in the foodservice channels went down as a result of the closure of joints, amongst others. In certain instances, sales for vendors in the food service business as a result fell to aproximatelly twenty % of the first volume. Being an adverse reaction, demand in the retail stations went up and remained at a level of aproximatelly 10-20 % higher than before the problems started.
Products that had to come from abroad had their very own problems. With the shift in need coming from foodservice to retail, the need for packaging improved considerably, More tin, cup and plastic was needed for use in consumer packaging. As much more of this packaging material ended up in consumers’ houses as opposed to in restaurants, the cardboard recycling process got disrupted as well, causing shortages.
The shifts in demand have had a significant effect on production activities. In a few instances, this even meant the full stop of output (e.g. inside the duck farming business, which came to a standstill due to demand fall-out on the foodservice sector). In other instances, a significant part of the personnel contracted corona (e.g. in the meat processing industry), leading to a closure of facilities.
Supply chain – Distribution pursuits were also affected. The start of the Corona crisis in China triggered the flow of sea containers to slow down pretty shortly in 2020. This resulted in transport capability which is limited throughout the earliest weeks of the problems, and high costs for container transport as a consequence. Truck transportation experienced various problems. To begin with, there were uncertainties about how transport would be managed for borders, which in the long run weren’t as strict as feared. The thing that was problematic in situations which are a large number of, nonetheless, was the accessibility of motorists.
The reaction to COVID 19 – provide chain resilience The supply chain resilience evaluation held by Prof. de Colleagues as well as Leeuw, was used on the overview of this main components of supply chain resilience:
To us this framework for the evaluation of the interviews, the findings show that not many organizations had been nicely prepared for the corona problems and actually mostly applied responsive practices. Probably the most notable source chain lessons were:
Figure one. 8 best practices for food supply chain resilience
First, the need to develop the supply chain for agility as well as flexibility. This seems particularly challenging for small companies: building resilience into a supply chain takes time and attention in the organization, and smaller organizations oftentimes don’t have the capability to do it.
Second, it was found that more attention was required on spreading danger and also aiming for risk reduction inside the supply chain. For the future, this means far more attention ought to be made available to the manner in which companies count on specific countries, customers, and suppliers.
Third, attention is necessary for explicit prioritization and intelligent rationing techniques in cases in which demand cannot be met. Explicit prioritization is necessary to continue to satisfy market expectations but additionally to boost market shares where competitors miss options. This particular task is not new, though it has additionally been underexposed in this problems and was often not a component of preparatory pursuits.
Fourthly, the corona issues shows us that the monetary effect of a crisis also relies on the way cooperation in the chain is actually set up. It’s typically unclear exactly how further costs (and benefits) are sent out in a chain, in case at all.
Finally, relative to other purposeful departments, the businesses and supply chain capabilities are in the driving seat during a crisis. Product development and advertising and marketing activities have to go hand in hand with supply chain pursuits. Regardless of whether the corona pandemic will structurally replace the traditional discussions between logistics and creation on the one hand and advertising on the other hand, the potential future will have to tell.
How’s the Dutch food supply chain coping during the corona crisis?