Supply chain – The COVID-19 pandemic has certainly had its impact impact on the world. Economic indicators and health have been compromised and all industries are touched in one way or perhaps some other. One of the industries in which this was clearly noticeable is the agriculture and food industry.
In 2019, the Dutch farming and food industry contributed 6.4 % to the gross domestic item (CBS, 2020). According to the FoodService Instituut, the foodservice business in the Netherlands dropped € 7.1 billion in 2020. The hospitality trade lost 41.5 % of the turnover of its as show by ProcurementNation, while at exactly the same time supermarkets enhanced their turnover with € 1.8 billion.
Disruptions of the food chain have significant consequences for the Dutch economy and food security as lots of stakeholders are affected. Despite the fact that it was apparent to numerous folks that there was a huge impact at the end of the chain (e.g., hoarding doing grocery stores, eateries closing) as well as at the beginning of the chain (e.g., harvested potatoes not searching for customers), there are many actors in the source chain for which the impact is less clear. It is thus vital that you determine how effectively the food supply chain as a whole is actually equipped to deal with disruptions. Researchers from your Operations Research and Logistics Group at Wageningen University and from Wageningen Economics Research, led by Professor Sander de Leeuw, analyzed the influences of the COVID-19 pandemic all over the food supplies chain. They based their analysis on interviews with about 30 Dutch supply chain actors.
Need within retail up, contained food service down It’s apparent and popular that demand in the foodservice channels went down due to the closure of places, amongst others. In some instances, sales for vendors in the food service industry as a result fell to about 20 % of the initial volume. Being a side effect, demand in the retail channels went up and remained at a quality of aproximatelly 10-20 % higher than before the crisis began.
Goods that had to come through abroad had the own issues of theirs. With the change in desire from foodservice to retail, the demand for packaging changed dramatically, More tin, cup and plastic material was needed for use in buyer packaging. As more of this product packaging material ended up in consumers’ houses rather than in joints, the cardboard recycling function got disrupted as well, causing shortages.
The shifts in need have had a big effect on output activities. In certain cases, this even meant a complete stop of production (e.g. in the duck farming industry, which arrived to a standstill due to demand fall-out on the foodservice sector). In other cases, a major section of the personnel contracted corona (e.g. to the meat processing industry), causing a closure of facilities.
Supply chain – Distribution activities were also affected. The beginning 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 restricted during the earliest weeks of the problems, and costs that are high for container transport as a result. Truck transport faced various problems. Initially, there were uncertainties on how transport would be managed for borders, which in the long run weren’t as stringent as feared. That which was problematic in instances which are many, nonetheless, was the accessibility of drivers.
The reaction to COVID 19 – provide chain resilience The supply chain resilience analysis held by Prof. de Leeuw as well as Colleagues, was used on the overview of this primary components of supply chain resilience:
To us this framework for the evaluation of the interview, the conclusions show that not many companies had been well prepared for the corona crisis and in fact mainly applied responsive practices. The most notable supply chain lessons were:
Figure 1. 8 best methods for food supply chain resilience
To begin with, the need to design the supply chain for versatility and agility. This looks especially complicated for small companies: building resilience into a supply chain takes time and attention in the organization, and smaller organizations oftentimes do not have the capability to do so.
Next, it was found that more attention was required on spreading risk and also aiming for risk reduction inside the supply chain. For the future, this means more attention has to be given to the way companies rely on specific countries, customers, and suppliers.
Third, attention is needed for explicit prioritization as well as smart rationing strategies in situations where demand can’t be met. Explicit prioritization is actually necessary to keep on to satisfy market expectations but also to boost market shares in which competitors miss opportunities. This challenge isn’t new, though it’s in addition been underexposed in this crisis and was frequently not a component of preparatory pursuits.
Fourthly, the corona crisis shows us that the financial result of a crisis in addition relies on the way cooperation in the chain is actually set up. It is usually unclear precisely how further costs (and benefits) are distributed in a chain, if at all.
Last but not least, relative to other functional departments, the businesses and supply chain works are in the driving seat during a crisis. Product development and marketing activities need to go hand deeply in hand with supply chain events. Whether or not the corona pandemic will structurally switch the classic considerations between production and logistics on the one hand as well as marketing on the other, the potential future will have to tell.
How is the Dutch food supply chain coping during the corona crisis?