Supply chain – The COVID 19 pandemic has certainly had the impact of its impact on the planet. Economic indicators and health have been affected and all industries have been touched in one of the ways or yet another. Among the industries in which it was clearly noticeable will be the agriculture and food industry.
In 2019, the Dutch farming and food industry contributed 6.4 % to the gross domestic item (CBS, 2020). Based on the FoodService Instituut, the foodservice industry in the Netherlands lost € 7.1 billion in 2020. The hospitality business lost 41.5 % of its turnover as show by ProcurementNation, while at the same time supermarkets increased the turnover of theirs with € 1.8 billion.
Disruptions in the food chain have major consequences for the Dutch economy and food security as many stakeholders are affected. Though it was apparent to numerous individuals that there was a big effect at the end of this chain (e.g., hoarding in grocery stores, restaurants closing) and at the start of the chain (e.g., harvested potatoes not searching for customers), you will find numerous actors in the source chain for that will the impact is much less clear. It’s therefore vital that you determine how properly the food supply chain as a whole is armed to contend with disruptions. Researchers from the Operations Research as well as Logistics Group at Wageningen University and also out of Wageningen Economics Research, led by Professor Sander de Leeuw, studied the consequences of the COVID 19 pandemic throughout the food supplies chain. They based their analysis on interviews with around 30 Dutch source chain actors.
Need within retail up, in food service down It’s apparent and widely known that need in the foodservice channels went down due to the closure of restaurants, amongst others. In certain cases, sales for suppliers in the food service business as a result fell to about twenty % of the initial volume. As an adverse reaction, demand in the retail stations went up and remained at a level of about 10-20 % higher than before the crisis began.
Goods that had to come via abroad had the own problems of theirs. With the shift in desire from foodservice to retail, the need for packaging improved dramatically, More tin, glass and plastic was required for wearing in customer packaging. As more of this particular product packaging material concluded up in consumers’ homes as opposed to in places, the cardboard recycling system got disrupted too, causing shortages.
The shifts in demand have had a major effect on production activities. In a few instances, this even meant the full stop in production (e.g. in the duck farming business, which emerged to a standstill as a result of demand fall-out inside the foodservice sector). In other cases, a big portion of the personnel contracted corona (e.g. to the various meats processing industry), leading to a closure of equipment.
Supply chain – Distribution pursuits were also affected. The beginning of the Corona crisis of China triggered the flow of sea containers to slow down pretty soon in 2020. This resulted in transport capability which is restricted throughout the earliest weeks of the crisis, and high expenses for container transport as a direct result. Truck transport faced different problems. To begin with, there were uncertainties on how transport would be managed for borders, which in the end were not as stringent as feared. What was problematic in a large number of cases, nevertheless, was the accessibility of motorists.
The response to COVID-19 – provide chain resilience The source chain resilience analysis held by Prof. de Colleagues as well as Leeuw, was used on the overview of the main components of supply chain resilience:
Using this framework for the assessment of the interviews, the conclusions show that not many businesses were well prepared for the corona crisis and in fact mostly applied responsive methods. The most notable source chain lessons were:
Figure one. Eight best methods for meals supply chain resilience
For starters, the need to create the supply chain for flexibility as well as agility. This appears especially complicated for smaller sized companies: building resilience into a supply chain takes time and attention in the business, and smaller organizations oftentimes don’t have the capability to accomplish that.
Next, it was observed that much more interest was necessary on spreading danger and aiming for risk reduction in the supply chain. For the future, what this means is more attention has to be made available to the way companies depend on specific countries, customers, and suppliers.
Third, attention is needed for explicit prioritization and clever rationing techniques in cases where demand can’t be met. Explicit prioritization is required to keep on to satisfy market expectations but also to boost market shares where competitors miss opportunities. This particular challenge is not new, although it has additionally been underexposed in this crisis and was usually not a part of preparatory pursuits.
Fourthly, the corona issues teaches us that the financial impact of a crisis also relies on the way cooperation in the chain is actually set up. It is often unclear how extra expenses (and benefits) are sent out in a chain, in case at all.
Last but not least, relative to other functional departments, the businesses and supply chain capabilities are actually in the driving seat during a crisis. Product development and marketing activities have to go hand deeply in hand with supply chain activities. Whether or not the corona pandemic will structurally switch the basic considerations between creation and logistics on the one hand and marketing and advertising on the other, the future must tell.
How is the Dutch foods supply chain coping throughout the corona crisis?