Supply chain – The COVID 19 pandemic has undoubtedly had its impact impact on the world. health and Economic indicators have been compromised and all industries have been touched within one of the ways or even another. Among the industries in which it was clearly visible is the agriculture and food business.
In 2019, the Dutch farming and food niche contributed 6.4 % to the gross domestic item (CBS, 2020). As per the FoodService Instituut, the foodservice business in the Netherlands shed € 7.1 billion in 2020. The hospitality industry lost 41.5 % of its turnover as show by ProcurementNation, while at the identical time supermarkets enhanced the turnover of theirs with € 1.8 billion.
Disruptions of the food chain have big effects for the Dutch economy and food security as lots of stakeholders are affected. Even though it was clear to most folks that there was a great effect at the end of this chain (e.g., hoarding around food markets, restaurants closing) and at the start of this chain (e.g., harvested potatoes not finding customers), there are many actors inside the source chain for that will the effect is much less clear. It’s therefore imperative that you determine 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 Faculty and coming from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the effects of the COVID 19 pandemic all over the food supplies chain. They based the analysis of theirs on interviews with about 30 Dutch source chain actors.
Need within retail up, in food service down It is apparent and popular that demand in the foodservice stations went down due to the closure of joints, amongst others. In some instances, sales for suppliers of the food service business as a result fell to aproximatelly twenty % of the first volume. As a complication, demand in the retail channels went up and remained within a degree of aproximatelly 10-20 % higher than before the problems began.
Products which had to come from abroad had the own problems of theirs. With the change in desire from foodservice to retail, the demand for packaging improved considerably, More tin, glass and plastic was needed for wearing in customer packaging. As much more of this particular product packaging material concluded up in consumers’ homes rather than in places, the cardboard recycling system got disrupted too, causing shortages.
The shifts in desire have had a big affect on output activities. In some instances, this even meant a full stop of production (e.g. inside the duck farming industry, which came to a standstill due to demand fall-out on the foodservice sector). In other cases, a major portion of the personnel contracted corona (e.g. to the meat processing industry), causing a closure of facilities.
Supply chain – Distribution pursuits were also affected. The start of the Corona crisis of China sparked the flow of sea canisters to slow down fairly shortly in 2020. This resulted in transport electrical capacity which is limited throughout the first weeks of the issues, and high costs for container transport as a direct result. Truck transport experienced various problems. Initially, there were uncertainties about how transport would be handled for borders, which in the long run weren’t as strict as feared. What was problematic in many instances, nevertheless, was the accessibility of drivers.
The reaction to COVID-19 – deliver chain resilience The source chain resilience evaluation held by Prof. de Leeuw as well as Colleagues, was based on the overview of the core elements of supply chain resilience:
Using this framework for the assessment of the interviews, the results show that few companies had been well prepared for the corona crisis and in reality mainly applied responsive methods. The most important source chain lessons were:
Figure one. Eight best methods for food supply chain resilience
First, the need to design the supply chain for agility and flexibility. This appears particularly challenging for small companies: building resilience right into a supply chain takes attention and time in the business, and smaller organizations oftentimes don’t have the potential to accomplish that.
Next, it was found that more attention was necessary on spreading risk as well as aiming for risk reduction within the supply chain. For the future, what this means is far more attention should be provided to the way companies rely on suppliers, customers, and specific countries.
Third, attention is necessary for explicit prioritization and clever rationing techniques in cases in which need can’t be met. Explicit prioritization is actually needed to continue to satisfy market expectations but additionally to improve market shares wherein competitors miss opportunities. This challenge isn’t new, however, it has in addition been underexposed in this specific crisis and was frequently not part of preparatory activities.
Fourthly, the corona crisis teaches us that the financial impact of a crisis also is determined by the way cooperation in the chain is set up. It’s usually unclear precisely how extra costs (and benefits) are actually sent out in a chain, in case at all.
Last but not least, relative to other functional departments, the businesses and supply chain functions are actually in the driving seat during a crisis. Product development and marketing activities have to go hand in hand with supply chain pursuits. Whether the corona pandemic will structurally change the basic discussions between logistics and creation on the one hand as well as advertising and marketing on the other hand, the long term will have to explain to.
How’s the Dutch foods supply chain coping throughout the corona crisis?