Supply chain – The COVID-19 pandemic has certainly had its impact effect on the world. Economic indicators and health have been affected and all industries have been completely touched in one way or some other. Among the industries in which it was clearly noticeable would be the agriculture and food business.
Throughout 2019, the Dutch agriculture as well as food niche contributed 6.4 % to the disgusting domestic product (CBS, 2020). As per the FoodService Instituut, the foodservice business in the Netherlands lost € 7.1 billion in 2020. The hospitality industry lost 41.5 % of its turnover as show by ProcurementNation, while at the identical time supermarkets increased their turnover with € 1.8 billion.
Disruptions of the food chain have significant effects for the Dutch economy and food security as lots of stakeholders are impacted. Even though it was clear to majority of individuals that there was a significant effect at the tail end of the chain (e.g., hoarding doing grocery stores, restaurants closing) and also at the start of this chain (e.g., harvested potatoes not finding customers), you will find many actors within the supply chain for that will the impact is much less clear. It’s thus important to determine how effectively the food supply chain as a whole is actually prepared to cope with disruptions. Researchers from your Operations Research and Logistics Group at Wageningen University as well as out of Wageningen Economics Research, led by Professor Sander de Leeuw, analyzed the consequences of the COVID-19 pandemic all over the food supply chain. They based the analysis of theirs on interviews with about 30 Dutch source chain actors.
Need in retail up, that is found food service down It’s obvious and well known that demand in the foodservice stations went down as a result of the closure of joints, amongst others. In some instances, sales for suppliers of the food service business as a result fell to about 20 % of the initial volume. Being a complication, demand in the list channels went up and remained within a degree of aproximatelly 10 20 % higher than before the problems started.
Products that had to come through abroad had the own issues of theirs. With the shift in demand coming from foodservice to retail, the need for packaging changed considerably, More tin, glass and plastic was needed for use in buyer packaging. As more of this product packaging material ended up in consumers’ houses as opposed to in joints, the cardboard recycling system got disrupted as well, causing shortages.
The shifts in demand have had a major affect on production activities. In a few cases, this even meant a full stop in production (e.g. inside the duck farming business, which emerged to a standstill as a result of demand fall-out inside the foodservice sector). In other situations, a major portion of the personnel contracted corona (e.g. to the various meats processing industry), resulting in a closure of equipment.
Supply chain – Distribution activities were also affected. The beginning of the Corona crisis in China sparked the flow of sea containers to slow down fairly shortly in 2020. This resulted in restricted transport capacity during the first weeks of the problems, and expenses which are high for container transport as a direct result. Truck travel experienced different problems. Initially, there were uncertainties about how transport will be handled for borders, which in the end weren’t as rigid as feared. The thing that was problematic in situations which are a large number of, nevertheless, was the accessibility of motorists.
The response to COVID-19 – deliver chain resilience The source chain resilience evaluation held by Prof. de Leeuw and Colleagues, was based on the overview of the key elements of supply chain resilience:
To us this particular framework for the evaluation of the interviews, the findings indicate that few businesses were well prepared for the corona crisis and in fact mainly applied responsive methods. The most important supply chain lessons were:
Figure 1. Eight best methods for food supply chain resilience
First, the need to develop the supply chain for flexibility and agility. This appears especially challenging for small companies: building resilience right into a supply chain takes attention and time in the business, and smaller organizations usually do not have the potential to do it.
Second, it was found that much more attention was needed on spreading risk as well as aiming for risk reduction in the supply chain. For the future, what this means is more attention ought to be given to the manner in which companies depend on suppliers, customers, and specific countries.
Third, attention is required for explicit prioritization and smart rationing strategies in cases where need cannot be met. Explicit prioritization is needed to continue to meet market expectations but in addition to improve market shares wherein competitors miss opportunities. This challenge is not new, although it has also been underexposed in this crisis and was often not a part of preparatory pursuits.
Fourthly, the corona crisis shows you us that the financial effect of a crisis additionally is determined by the way cooperation in the chain is set up. It’s often unclear how extra costs (and benefits) are distributed in a chain, if at all.
Last but not least, relative to other purposeful departments, the operations and supply chain capabilities are in the driving accommodate during a crisis. Product development and advertising and marketing activities need to go hand deeply in hand with supply chain pursuits. Whether the corona pandemic will structurally switch the traditional considerations between logistics and generation on the one hand and advertising on the other, the potential future must explain to.
How’s the Dutch foods supply chain coping throughout the corona crisis?