Supply chain – The COVID 19 pandemic has undoubtedly had the impact of its effect on the planet. Economic indicators and health have been affected and all industries have been touched in one of the ways or perhaps some other. One of the industries in which it was clearly visible will be the agriculture and food industry.
Throughout 2019, the Dutch agriculture and food niche contributed 6.4 % to the gross domestic item (CBS, 2020). As per the FoodService Instituut, the foodservice business in the Netherlands lost € 7.1 billion in 2020. The hospitality business lost 41.5 % of its turnover as show by ProcurementNation, while at exactly the same time supermarkets enhanced the turnover of theirs with € 1.8 billion.
Disruptions of the food chain have major consequences for the Dutch economy as well as food security as lots of stakeholders are impacted. Despite the fact that it was clear to many individuals that there was a significant effect at the conclusion of this chain (e.g., hoarding in food markets, restaurants closing) as well as at the start of this chain (e.g., harvested potatoes not finding customers), there are numerous actors inside the supply chain for which the effect is much less clear. It is therefore vital that you find out how effectively the food supply chain as being a whole is armed to contend with disruptions. Researchers in the Operations Research and Logistics Group at Wageningen University as well as from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the influences of the COVID-19 pandemic all over the food resources chain. They based their analysis on interviews with around 30 Dutch supply chain actors.
Need in retail up, in food service down It is obvious and well known that need in the foodservice channels went down due to the closure of places, amongst others. In some instances, sales for vendors of the food service industry thus fell to about 20 % of the initial volume. As a complication, demand in the list channels went up and remained at a quality of about 10-20 % greater than before the crisis began.
Products that had to come from abroad had the own issues of theirs. With the change in desire from foodservice to retail, the need for packaging changed considerably, More tin, cup and plastic was necessary for wearing in customer packaging. As more of this particular product packaging material ended up in consumers’ homes as opposed to in places, the cardboard recycling function got disrupted as well, causing shortages.
The shifts in desire have had a major impact on production activities. In certain instances, this even meant a complete stop in production (e.g. inside the duck farming industry, which emerged to a standstill as a result of demand fall-out in the foodservice sector). In other cases, a big portion of the personnel contracted corona (e.g. to the meat processing industry), leading to a closure of facilities.
Supply chain – Distribution pursuits were also affected. The beginning of the Corona crisis of China triggered the flow of sea canisters to slow down pretty shortly in 2020. This resulted in transport capacity that is limited throughout the first weeks of the problems, and expenses which are high 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 were not as rigid as feared. What was problematic in many situations, nonetheless, was the availability of drivers.
The reaction to COVID-19 – supply chain resilience The supply chain resilience analysis held by Prof. de Colleagues and 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 conclusions indicate that few companies had been nicely prepared for the corona crisis and in reality mostly applied responsive practices. Probably the most important supply chain lessons were:
Figure 1. 8 best practices for meals supply chain resilience
First, the need to design the supply chain for versatility as well as agility. This appears especially challenging for smaller companies: building resilience right into a supply chain takes attention and time in the business, and smaller organizations usually do not have the capability to do so.
Second, it was discovered that more interest was required on spreading danger and aiming for risk reduction within the supply chain. For the future, what this means is more attention ought to be given to the manner in which companies rely on suppliers, customers, and specific countries.
Third, attention is needed for explicit prioritization as well as clever rationing strategies in cases where demand can’t be met. Explicit prioritization is needed to keep on to meet market expectations but additionally to boost market shares in which competitors miss opportunities. This particular challenge is not new, although it has in addition been underexposed in this problems and was often not a part of preparatory pursuits.
Fourthly, the corona crisis teaches us that the monetary impact of a crisis also depends on the manner in which cooperation in the chain is set up. It is typically unclear how further costs (and benefits) are distributed in a chain, if at all.
Lastly, relative to other purposeful departments, the businesses and supply chain characteristics are actually in the driving seat during a crisis. Product development and advertising activities need to go hand in deep hand with supply chain activities. Regardless of whether the corona pandemic will structurally replace the traditional considerations between creation and logistics on the one hand and advertising on the other hand, the future must tell.
How’s the Dutch food supply chain coping throughout the corona crisis?