Supply chain – The COVID-19 pandemic has undoubtedly had the impact of its effect on the world. health and Economic indicators have been compromised and all industries have been completely touched within a way or some other. One of the industries in which it was clearly obvious would be the agriculture as well as food industry.
Throughout 2019, the Dutch extension and food industry contributed 6.4 % to the gross domestic item (CBS, 2020). According to the FoodService Instituut, the foodservice business in the Netherlands shed € 7.1 billion within 2020. The hospitality industry lost 41.5 % of its turnover as show by ProcurementNation, while at the same time supermarkets increased their turnover with € 1.8 billion.
Disruptions in the food chain have significant effects for the Dutch economy as well as food security as a lot of stakeholders are impacted. Even though it was clear to numerous men and women that there was a significant effect at the end of the chain (e.g., hoarding around food markets, restaurants closing) and also at the beginning of the chain (e.g., harvested potatoes not finding customers), you will find a lot of actors within the source chain for that will the impact is less clear. It is therefore important to figure out how properly the food supply chain as a whole is actually equipped to deal with disruptions. Researchers from the Operations Research and Logistics Group at Wageningen University as well as out of Wageningen Economics Research, led by Professor Sander de Leeuw, analyzed the effects of the COVID-19 pandemic all over the food resources 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 popular that need in the foodservice channels went down due to the closure of joints, amongst others. In some instances, sales for suppliers of the food service industry therefore fell to about 20 % of the initial volume. Being a complication, demand in the retail stations went up and remained within a quality of about 10 20 % higher than before the crisis began.
Goods that had to come through abroad had their very own problems. With the shift in need coming from foodservice to retail, the need for packaging improved dramatically, More tin, glass and plastic was necessary for wearing in consumer packaging. As much more of this particular packaging material ended up in consumers’ houses instead of in restaurants, the cardboard recycling process got disrupted also, causing shortages.
The shifts in need have had a significant effect on production activities. In some instances, this even meant a total stop of output (e.g. within the duck farming industry, which emerged to a standstill due to demand fall out inside the foodservice sector). In other situations, a significant portion of the personnel contracted corona (e.g. in the various meats processing industry), leading to 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 soon in 2020. This resulted in restricted transport capability during the first weeks of the problems, and high expenses for container transport as a consequence. Truck transportation encountered various issues. To begin with, there were uncertainties regarding how transport will be handled for borders, which in the long run were not as strict as feared. What was problematic in a large number of instances, nonetheless, was the accessibility of motorists.
The response to COVID-19 – provide chain resilience The supply chain resilience analysis held by Prof. de Leeuw and Colleagues, was based on the overview of the core elements of supply chain resilience:
Using this particular framework for the evaluation of the interviews, the conclusions indicate that not many companies were well prepared for the corona problems and actually mostly applied responsive practices. Probably the most notable supply chain lessons were:
Figure 1. 8 best practices for food supply chain resilience
First, the need to design the supply chain for agility and flexibility. This appears particularly complicated for smaller sized companies: building resilience into a supply chain takes attention and time in the business, and smaller organizations often do not have the capacity to do it.
Next, it was discovered that more interest was required on spreading risk as well as aiming for risk reduction within the supply chain. For the future, meaning more attention ought to be made available to the way organizations count on specific countries, customers, and suppliers.
Third, attention is required for explicit prioritization and smart rationing techniques in cases in which demand cannot be met. Explicit prioritization is actually needed to keep on to satisfy market expectations but in addition to boost market shares wherein competitors miss options. This particular challenge is not new, but it has in addition been underexposed in this specific problems and was frequently not part of preparatory activities.
Fourthly, the corona problems shows you us that the monetary impact of a crisis additionally is determined by the manner in which cooperation in the chain is actually set up. It’s typically unclear exactly how further expenses (and benefits) are actually distributed in a chain, if at all.
Finally, relative to other purposeful departments, the operations and supply chain functions are in the driving seat during a crisis. Product development and marketing activities need to go hand in hand with supply chain activities. Regardless of whether the corona pandemic will structurally switch the classic considerations between creation and logistics on the one hand as well as marketing and advertising on the other hand, the future will need to tell.
How’s the Dutch foods supply chain coping during the corona crisis?