Supply chain – The COVID 19 pandemic has definitely had its impact impact on the world. Economic indicators and health have been affected and all industries have been touched inside a way or perhaps some other. One of the industries in which this was clearly noticeable is the agriculture and food industry.
Throughout 2019, the Dutch agriculture and food sector contributed 6.4 % to the gross domestic product (CBS, 2020). Based on the FoodService Instituut, the foodservice industry in the Netherlands shed € 7.1 billion in 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 of the food chain have significant effects for the Dutch economy as well as food security as many stakeholders are impacted. Even though it was clear to majority of individuals that there was a huge impact at the conclusion of the chain (e.g., hoarding in grocery stores, eateries closing) and also at the start of the chain (e.g., harvested potatoes not finding customers), there are many actors inside the source chain for which the impact is less clear. It is thus imperative that you figure out how properly the food supply chain as being a whole is equipped to deal with disruptions. Researchers from your Operations Research and Logistics Group at Wageningen Faculty and from Wageningen Economics Research, led by Professor Sander de Leeuw, analyzed the consequences of the COVID 19 pandemic throughout the food supply chain. They based the analysis of theirs on interviews with about 30 Dutch source chain actors.
Demand in retail up, contained food service down It’s obvious and popular that demand in the foodservice stations went down due to the closure of places, amongst others. In a few cases, sales for vendors of the food service business as a result fell to aproximatelly twenty % of the first volume. Being an adverse reaction, demand in the list channels went up and remained within a degree of about 10-20 % higher than before the crisis started.
Products that had to come from abroad had the own issues of theirs. With the change in need from foodservice to retail, the need for packaging improved considerably, More tin, glass and plastic material was necessary for use in consumer packaging. As much more of this product packaging material ended up in consumers’ houses rather than in places, the cardboard recycling process got disrupted as well, causing shortages.
The shifts in need have had a big impact on production activities. In some instances, this even meant a full stop of output (e.g. inside the duck farming industry, which emerged to a standstill due to demand fall out on the foodservice sector). In other instances, a significant part of the personnel contracted corona (e.g. to the meat processing industry), resulting in a closure of facilities.
Supply chain – Distribution pursuits were also affected. The start of the Corona crisis in China caused the flow of sea canisters to slow down pretty shortly in 2020. This resulted in transport capacity that is restricted throughout the first weeks of the issues, and high costs for container transport as a consequence. Truck travel encountered different issues. Initially, there were uncertainties on how transport will be managed for borders, which in the end were not as strict as feared. The thing that was problematic in instances which are many, nonetheless, was the availability of motorists.
The response to COVID 19 – provide chain resilience The source chain resilience evaluation held by Prof. de Leeuw as well as Colleagues, was based on the overview of this key elements of supply chain resilience:
To us this framework for the evaluation of the interview, the conclusions indicate that few companies were well prepared for the corona problems and actually mainly applied responsive practices. Probably the most notable supply chain lessons were:
Figure 1. 8 best practices for meals supply chain resilience
For starters, the need to design the supply chain for agility and versatility. This appears particularly complicated for small companies: building resilience right into a supply chain takes time and attention in the business, and smaller organizations oftentimes do not have the capacity to do so.
Second, it was observed that more interest was necessary on spreading threat and also aiming for risk reduction within the supply chain. For the future, this means more attention has to be given to the way companies rely on suppliers, customers, and specific countries.
Third, attention is needed for explicit prioritization and clever rationing strategies in situations in which need cannot be met. Explicit prioritization is necessary to keep on to satisfy market expectations but also to improve market shares where competitors miss opportunities. This task isn’t new, but it’s also been underexposed in this specific problems and was usually not a component of preparatory activities.
Fourthly, the corona issues shows us that the financial impact of a crisis additionally depends on the manner in which cooperation in the chain is actually set up. It’s often unclear precisely how extra costs (and benefits) are sent out in a chain, if at all.
Lastly, relative to other purposeful departments, the businesses and supply chain operates are actually in the driving accommodate during a crisis. Product development and marketing activities have to go hand deeply in hand with supply chain events. Whether or not the corona pandemic will structurally change the basic discussions between logistics and production on the one hand as well as marketing on the other, the long term must tell.
How’s the Dutch foods supply chain coping throughout the corona crisis?