Supply chain – The COVID 19 pandemic has certainly had the impact of its effect on the world. Economic indicators and health have been affected and all industries are touched within a way or another. One of the industries in which this was clearly apparent would be the agriculture and food business.
In 2019, the Dutch farming and food sector contributed 6.4 % to the gross domestic product (CBS, 2020). As per the FoodService Instituut, the foodservice industry in the Netherlands dropped € 7.1 billion in 2020. The hospitality business lost 41.5 % of its turnover as show by ProcurementNation, while at the identical time supermarkets increased the turnover of theirs with € 1.8 billion.
Disruptions of the food chain have significant consequences for the Dutch economy and food security as a lot of stakeholders are affected. Even though it was clear to majority of people that there was a significant impact at the end of this chain (e.g., hoarding around food markets, restaurants closing) as well as at the beginning of this chain (e.g., harvested potatoes not searching for customers), there are numerous actors in the source chain for that the impact is much less clear. It’s thus imperative that you figure out how properly the food supply chain as a whole is prepared to contend with disruptions. Researchers from the Operations Research and Logistics Group at Wageningen Faculty and also coming from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the influences of the COVID 19 pandemic throughout the food supply chain. They based the analysis of theirs on interviews with about thirty Dutch source chain actors.
Need within retail up, found food service down It is apparent and popular that demand in the foodservice stations went down due to the closure of restaurants, amongst others. In a few instances, sales for vendors of the food service industry thus fell to about 20 % of the original volume. As a side effect, demand in the list channels went up and remained at a level of aproximatelly 10-20 % higher than before the problems started.
Products which had to come through abroad had their very own problems. With the change in need coming from foodservice to retail, the requirement for packaging changed dramatically, More tin, cup or plastic was required for wearing in consumer packaging. As much more of this product packaging material ended up in consumers’ homes as opposed to in places, the cardboard recycling system got disrupted also, causing shortages.
The shifts in demand have had an important impact on production activities. In a few cases, this even meant a complete stop in output (e.g. in the duck farming business, which emerged to a standstill on account of demand fall out on the foodservice sector). In other instances, a major portion of the personnel contracted corona (e.g. in the various meats processing industry), causing a closure of equipment.
Supply chain – Distribution activities were also affected. The start of the Corona crisis in China caused the flow of sea bins to slow down pretty soon in 2020. This resulted in limited transport electrical capacity throughout the first weeks of the problems, and high costs for container transport as a direct result. Truck transportation faced different issues. At first, there were uncertainties on how transport will be handled for borders, which in the long run were not as rigid as feared. That which was problematic in many cases, nonetheless, was the accessibility of motorists.
The reaction to COVID-19 – provide chain resilience The source chain resilience analysis held by Prof. de Leeuw and Colleagues, was based on the overview of this main things of supply chain resilience:
Using this particular framework for the assessment of the interview, the results indicate that not many organizations had been well prepared for the corona crisis and actually mostly applied responsive methods. The most important supply chain lessons were:
Figure 1. Eight best methods for meals supply chain resilience
For starters, the need to design the supply chain for versatility as well as agility. This looks especially challenging for smaller companies: building resilience into a supply chain takes time and attention in the organization, and smaller organizations usually don’t have the capability to accomplish that.
Second, it was discovered that more interest was needed on spreading threat and also aiming for risk reduction in the supply chain. For the future, what this means is far more attention should be provided to the way organizations count on suppliers, customers, and specific countries.
Third, attention is needed for explicit prioritization and clever rationing strategies in situations where demand can’t be met. Explicit prioritization is necessary to continue to meet market expectations but in addition to boost market shares where competitors miss opportunities. This challenge isn’t new, though it’s in addition been underexposed in this problems and was usually not part of preparatory pursuits.
Fourthly, the corona problems shows us that the economic impact of a crisis in addition is determined by the way cooperation in the chain is set up. It’s usually unclear how further costs (and benefits) are sent out in a chain, if at all.
Finally, relative to other purposeful departments, the operations and supply chain works are actually in the driving seat during a crisis. Product development and advertising activities need to go hand in deep hand with supply chain activities. Whether the corona pandemic will structurally change the traditional considerations between generation and logistics on the one hand and advertising and marketing on the other hand, the potential future will need to explain to.
How is the Dutch food supply chain coping throughout the corona crisis?