Supply chain – The COVID-19 pandemic has undoubtedly had its impact impact on the planet. Economic indicators and health have been compromised and all industries are touched within one of the ways or perhaps another. One of the industries in which it was clearly apparent is the agriculture and food business.
Throughout 2019, the Dutch extension as well as food industry contributed 6.4 % to the gross domestic item (CBS, 2020). Based on the FoodService Instituut, the foodservice industry in the Netherlands shed € 7.1 billion inside 2020. The hospitality industry lost 41.5 % of the turnover of its as show by ProcurementNation, while at the identical time supermarkets increased their turnover with € 1.8 billion.
Disruptions in the food chain have big consequences for the Dutch economy and food security as a lot of stakeholders are affected. Even though it was clear to a lot of people that there was a significant effect at the tail end of this chain (e.g., hoarding doing grocery stores, restaurants closing) as well as at the start of this chain (e.g., harvested potatoes not searching for customers), you will find numerous actors inside the source chain for which the impact is much less clear. It’s thus important to find out how effectively the food supply chain as a whole is armed to deal with disruptions. Researchers in the Operations Research and Logistics Group at Wageningen University as well as out of Wageningen Economics Research, led by Professor Sander de Leeuw, studied the consequences of the COVID-19 pandemic throughout the food supply chain. They based their analysis on interviews with around 30 Dutch source chain actors.
Demand in retail up, in food service down It is apparent and widely known that demand in the foodservice stations went down due to the closure of restaurants, amongst others. In some cases, sales for vendors in the food service industry as a result fell to aproximatelly twenty % of the first volume. Being a complication, demand in the retail stations went up and remained at a quality of aproximatelly 10-20 % higher than before the crisis started.
Products that had to come from abroad had the own problems of theirs. With the shift in need coming from foodservice to retail, the demand for packaging changed dramatically, More tin, cup and plastic material was required for use in customer packaging. As more of this packaging material concluded up in consumers’ houses instead of in places, the cardboard recycling process got disrupted also, causing shortages.
The shifts in desire have had a big affect on production activities. In certain instances, this even meant a full stop in production (e.g. within the duck farming business, which arrived to a standstill on account of demand fall-out inside the foodservice sector). In other cases, a big section of the personnel contracted corona (e.g. to the various meats processing industry), causing a closure of equipment.
Supply chain – Distribution pursuits were also affected. The beginning of the Corona crisis in China caused the flow of sea bins to slow down fairly shortly in 2020. This resulted in restricted transport capability during the very first weeks of the issues, and costs that are high for container transport as a consequence. Truck transportation encountered various problems. Initially, there were uncertainties on how transport would be handled at borders, which in the end were not as stringent as feared. The thing that was problematic in many cases, nevertheless, was the accessibility of drivers.
The response to COVID 19 – deliver chain resilience The source chain resilience analysis held by Prof. de Leeuw and Colleagues, was based on the overview of this main elements of supply chain resilience:
To us this particular framework for the analysis of the interview, the results indicate that not many businesses had been well prepared for the corona crisis and actually mostly applied responsive practices. The most notable supply chain lessons were:
Figure 1. Eight best practices for food supply chain resilience
For starters, the need to design the supply chain for agility as well as flexibility. This appears particularly complicated for small companies: building resilience into a supply chain takes time and attention in the organization, and smaller organizations usually don’t have the potential to do so.
Second, it was found that more attention was necessary on spreading danger as well as aiming for risk reduction in the supply chain. For the future, this means more attention has to be made available to the manner in which organizations rely on specific countries, customers, and suppliers.
Third, attention is necessary for explicit prioritization as well as intelligent rationing strategies in cases in which demand cannot be met. Explicit prioritization is needed to continue to satisfy market expectations but also to improve market shares where competitors miss opportunities. This challenge is not new, however, it’s also been underexposed in this specific crisis and was usually not part of preparatory activities.
Fourthly, the corona problems shows 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 is usually unclear how extra costs (and benefits) are sent out in a chain, if at all.
Last but not least, relative to other purposeful departments, the operations and supply chain functionality are in the driving accommodate during a crisis. Product development and marketing and advertising activities have to go hand deeply in hand with supply chain pursuits. Regardless of whether the corona pandemic will structurally replace the traditional considerations between generation and logistics on the one hand and marketing on the other, the long term must explain to.
How’s the Dutch foods supply chain coping throughout the corona crisis?