Supply chain – The COVID-19 pandemic has definitely had the impact of its influence on the planet. Economic indicators and health have been affected and all industries have been touched within one of the ways or yet another. One of the industries in which this was clearly visible would be the farming and food industry.
Throughout 2019, the Dutch agriculture and food industry contributed 6.4 % to the yucky domestic product (CBS, 2020). According to the FoodService Instituut, the foodservice industry in the Netherlands dropped € 7.1 billion in 2020. The hospitality industry lost 41.5 % of the turnover of its as show by ProcurementNation, while at the identical time supermarkets enhanced the turnover of theirs with € 1.8 billion.
Disruptions in the food chain have big consequences for the Dutch economy as well as food security as a lot of stakeholders are impacted. Despite the fact that it was clear to most individuals that there was a great effect at the tail end of this chain (e.g., hoarding doing supermarkets, restaurants closing) and also at the beginning of this chain (e.g., harvested potatoes not searching for customers), you will find numerous actors inside the source chain for which the effect is much less clear. It is thus imperative that you find out how properly the food supply chain as a whole is actually equipped to cope with disruptions. Researchers in the Operations Research as well as Logistics Group at Wageningen Faculty and out of Wageningen Economics Research, led by Professor Sander de Leeuw, studied the consequences of the COVID 19 pandemic all over the food supply chain. They based their examination on interviews with around thirty Dutch source chain actors.
Need within retail up, contained food service down It is evident and widely known that need in the foodservice channels went down due to the closure of places, amongst others. In certain instances, sales for suppliers of the food service industry therefore fell to aproximatelly 20 % of the original volume. As an adverse reaction, demand in the list channels went up and remained within a degree of about 10-20 % higher than before the crisis started.
Products that had to come through abroad had the own problems of theirs. With the change in desire from foodservice to retail, the requirement for packaging improved considerably, More tin, glass and plastic was required for use in buyer packaging. As much more of this particular packaging material ended up in consumers’ homes instead of in restaurants, the cardboard recycling process got disrupted also, causing shortages.
The shifts in demand have had an important impact on production activities. In a few instances, this even meant a full stop in production (e.g. in the duck farming business, which emerged to a standstill on account of demand fall-out inside the foodservice sector). In other cases, a big part of the personnel contracted corona (e.g. in the meat processing industry), causing a closure of equipment.
Supply chain – Distribution activities were also affected. The beginning of the Corona crisis in China caused the flow of sea canisters to slow down fairly shortly in 2020. This resulted in restricted transport capability throughout the very first weeks of the issues, and high costs for container transport as a consequence. Truck travel experienced different issues. Initially, there were uncertainties on how transport would be handled at borders, which in the long run were not as rigid as feared. The thing that was problematic in most situations, nonetheless, was the availability of drivers.
The reaction to COVID-19 – deliver chain resilience The source chain resilience evaluation held by Prof. de Colleagues as well as Leeuw, was used on the overview of the main components of supply chain resilience:
Using this particular framework for the analysis of the interview, the results indicate that few businesses had been nicely prepared for the corona problems and actually mainly applied responsive methods. Probably the most notable supply chain lessons were:
Figure 1. Eight best methods for food supply chain resilience
For starters, the need to create the supply chain for agility and flexibility. This looks particularly challenging for smaller sized companies: building resilience into a supply chain takes time and attention in the organization, and smaller organizations usually don’t have the capacity to do so.
Second, it was observed that much more attention was necessary on spreading danger and aiming for risk reduction within the supply chain. For the future, this means far more attention has to be provided to the way businesses depend on suppliers, customers, and specific countries.
Third, attention is required for explicit prioritization as well as smart rationing strategies in cases where need cannot be met. Explicit prioritization is actually required to keep on to satisfy market expectations but in addition to increase market shares wherein competitors miss options. This challenge isn’t new, though it’s also been underexposed in this specific crisis and was often not a component of preparatory activities.
Fourthly, the corona crisis teaches us that the monetary effect of a crisis additionally relies on the way cooperation in the chain is actually set up. It is typically unclear how additional costs (and benefits) are distributed in a chain, if at all.
Finally, relative to other functional departments, the businesses and supply chain functions are in the driving seat during a crisis. Product development and marketing and advertising activities need to go hand in hand with supply chain activities. Regardless of whether the corona pandemic will structurally change the classic discussions between generation and logistics on the one hand and marketing and advertising on the other hand, the long term must explain to.
How’s the Dutch foods supply chain coping throughout the corona crisis?