Supply chain – The COVID-19 pandemic has undoubtedly had its impact impact on the world. Economic indicators and health have been affected and all industries are touched within one way or even another. Among the industries in which it was clearly obvious would be the farming and food industry.
In 2019, the Dutch agriculture as well as food niche contributed 6.4 % to the gross domestic product (CBS, 2020). According to the FoodService Instituut, the foodservice business in the Netherlands dropped € 7.1 billion within 2020. The hospitality trade lost 41.5 % of its turnover as show by ProcurementNation, while at exactly the same time supermarkets increased 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. Though it was apparent to numerous individuals that there was a huge impact at the tail end of this chain (e.g., hoarding in food markets, restaurants closing) as well as at the start of the chain (e.g., harvested potatoes not searching for customers), there are many actors in the source chain for that the effect is much less clear. It’s thus vital that you find out how well the food supply chain as a whole is prepared to deal with disruptions. Researchers in the Operations Research as well as Logistics Group at Wageningen Faculty and also from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the influences of the COVID 19 pandemic throughout the food resources chain. They based the examination of theirs on interviews with around thirty Dutch source chain actors.
Need within retail up, contained food service down It’s apparent and widely known that need in the foodservice stations went down as a result of the closure of joints, amongst others. In certain instances, sales for suppliers of the food service business as a result 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 % greater than before the crisis began.
Products which had to come from abroad had their very own problems. With the change in desire from foodservice to retail, the requirement for packaging improved dramatically, More tin, glass and plastic material was needed for wearing in customer packaging. As more of this product packaging material concluded up in consumers’ homes as opposed to in places, the cardboard recycling system got disrupted too, causing shortages.
The shifts in need have had a big affect on output activities. In a few cases, this even meant a complete stop of output (e.g. within the duck farming business, which emerged to a standstill due to demand fall-out on the foodservice sector). In other situations, a big section of the personnel contracted corona (e.g. in the meat processing industry), leading to a closure of facilities.
Supply chain – Distribution activities were also affected. The beginning of the Corona crisis in China caused the flow of sea bins to slow down pretty shortly in 2020. This resulted in transport electrical capacity which is restricted throughout the first weeks of the crisis, and high expenses for container transport as a direct result. Truck transportation encountered different problems. To begin with, there were uncertainties regarding how transport will be managed at borders, which in the long run were not as strict as feared. What was problematic in situations that are a large number of , nonetheless, was the availability of drivers.
The reaction to COVID-19 – supply chain resilience The source chain resilience analysis held by Prof. de Colleagues as well as Leeuw, was used on the overview of the key elements of supply chain resilience:
Using this particular framework for the analysis of the interviews, the results indicate that few businesses had been nicely prepared for the corona problems and actually mostly applied responsive methods. The most important source chain lessons were:
Figure one. 8 best practices for meals supply chain resilience
First, the need to design the supply chain for agility and flexibility. This seems especially challenging for smaller companies: building resilience into a supply chain takes attention and time in the business, and smaller organizations usually don’t have the capability to accomplish that.
Second, it was found that much more attention was necessary on spreading threat and also aiming for risk reduction in the supply chain. For the future, this means far more attention has to be made available to the way organizations count on specific countries, customers, and suppliers.
Third, attention is necessary for explicit prioritization and clever rationing strategies in situations where demand cannot be met. Explicit prioritization is required to keep on to satisfy market expectations but in addition to improve market shares where competitors miss options. This particular challenge is not new, but it has in addition been underexposed in this specific crisis and was often not a component of preparatory pursuits.
Fourthly, the corona crisis shows us that the economic impact of a crisis in addition relies on the manner in which cooperation in the chain is set up. It is usually unclear how further expenses (and benefits) are actually sent out in a chain, in case at all.
Last but not least, relative to other functional departments, the operations and supply chain functions are actually in the driving accommodate during a crisis. Product development and marketing and advertising activities need to go hand in deep hand with supply chain events. Whether or not the corona pandemic will structurally switch the traditional discussions between production and logistics on the one hand and marketing on the other hand, the long term will have to tell.
How’s the Dutch foods supply chain coping throughout the corona crisis?