Supply chain – The COVID-19 pandemic has undoubtedly had the impact of its effect on the world. Economic indicators and health have been compromised and all industries are touched within one way or another. One of the industries in which this was clearly visible will be the farming and food business.
In 2019, the Dutch agriculture and food industry contributed 6.4 % to the gross domestic product (CBS, 2020). According to the FoodService Instituut, the foodservice business in the Netherlands lost € 7.1 billion inside 2020. The hospitality trade 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 big effects for the Dutch economy as well as food security as a lot of stakeholders are impacted. Though it was apparent to most individuals that there was a great impact at the end of this chain (e.g., hoarding in grocery stores, restaurants closing) as well as at the beginning of the chain (e.g., harvested potatoes not finding customers), you will find many actors within the source chain for which the effect is much less clear. It is thus important to determine how effectively the food supply chain as a whole is prepared to contend with disruptions. Researchers from the Operations Research as well as Logistics Group at Wageningen University and coming from Wageningen Economics Research, led by Professor Sander de Leeuw, analyzed the consequences of the COVID 19 pandemic throughout the food supplies chain. They based their analysis on interviews with about thirty Dutch source chain actors.
Need within retail up, in food service down It’s apparent and widely known that need in the foodservice stations went down as a result of the closure of places, amongst others. In some instances, sales for suppliers in the food service business therefore fell to about 20 % of the original volume. As a complication, demand in the retail stations went up and remained at a quality of aproximatelly 10-20 % higher than before the problems started.
Products that had to come via abroad had their own issues. With the change in need from foodservice to retail, the need for packaging improved considerably, More tin, glass and plastic material was required for wearing in consumer packaging. As much more of this product packaging material concluded up in consumers’ homes rather than in restaurants, the cardboard recycling system got disrupted as well, causing shortages.
The shifts in demand have had a major effect on production activities. In some cases, this even meant a total stop of output (e.g. within the duck farming industry, which came to a standstill as a result of demand fall-out inside the foodservice sector). In other cases, a significant part 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 caused the flow of sea canisters to slow down fairly soon in 2020. This resulted in transport capacity which is restricted throughout the earliest weeks of the crisis, and expenses that are high for container transport as a result. Truck transport faced various issues. To begin with, there were uncertainties on how transport will be handled for borders, which in the long run weren’t as strict as feared. The thing that was problematic in situations which are many, nevertheless, was the availability of motorists.
The response to COVID-19 – deliver chain resilience The supply chain resilience analysis held by Prof. de Leeuw and Colleagues, was based on the overview of the primary components of supply chain resilience:
Using this framework for the assessment of the interview, the findings indicate that not many businesses were well prepared for the corona crisis and in reality mostly applied responsive methods. The most important source chain lessons were:
Figure one. Eight best methods for food supply chain resilience
To begin with, the need to develop the supply chain for versatility and agility. This seems particularly challenging for smaller sized companies: building resilience into a supply chain takes attention and time in the organization, and smaller organizations often don’t have the capability to accomplish that.
Second, it was observed that much more interest was required on spreading threat as well as aiming for risk reduction inside the supply chain. For the future, meaning more attention ought to be given to the manner in which companies count on specific countries, customers, and suppliers.
Third, attention is needed for explicit prioritization and intelligent rationing strategies in cases in which demand cannot be met. Explicit prioritization is actually required to continue to meet market expectations but also to improve market shares where competitors miss options. This task is not new, although it’s in addition been underexposed in this problems and was frequently not part of preparatory pursuits.
Fourthly, the corona problems shows us that the financial impact of a crisis additionally is determined by the manner in which cooperation in the chain is set up. It is typically unclear exactly how additional costs (and benefits) are actually distributed in a chain, in case at all.
Last but not least, relative to other functional departments, the operations and supply chain operates are actually in the driving seat during a crisis. Product development and advertising activities need to go hand in deep hand with supply chain events. Whether the corona pandemic will structurally replace the classic discussions between logistics and production on the one hand as well as marketing on the other, the potential future will need to tell.
How is the Dutch food supply chain coping throughout the corona crisis?