Supply chain – The COVID-19 pandemic has undoubtedly had the impact of its effect on the world. health and Economic indicators have been affected and all industries are touched inside one way or another. One of the industries in which this was clearly apparent would be the agriculture as well as food business.
Throughout 2019, the Dutch agriculture and food sector contributed 6.4 % to the yucky domestic item (CBS, 2020). As per the FoodService Instituut, the foodservice business in the Netherlands lost € 7.1 billion in 2020. The hospitality trade lost 41.5 % of its turnover as show by ProcurementNation, while at the same time supermarkets increased their turnover with € 1.8 billion.
Disruptions in the food chain have significant effects for the Dutch economy as well as food security as lots of stakeholders are affected. Though it was apparent to most people that there was a great effect at the tail end of the chain (e.g., hoarding in supermarkets, restaurants closing) as well as at the beginning of this chain (e.g., harvested potatoes not finding customers), you will find many actors in the source chain for which the impact is less clear. It is therefore important to determine how well the food supply chain as being a whole is actually prepared to cope 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, analyzed the influences of the COVID 19 pandemic all over the food resources chain. They based the analysis of theirs on interviews with around 30 Dutch source chain actors.
Demand within retail up, found food service down It is apparent and widely known that demand in the foodservice stations went down as a result of the closure of joints, amongst others. In some cases, sales for vendors of the food service business therefore fell to aproximatelly twenty % of the first volume. Being an adverse reaction, demand in the list stations went up and remained within a level of about 10 20 % higher than before the crisis began.
Products that had to come from abroad had the own problems of theirs. With the change in desire coming from foodservice to retail, the need for packaging changed considerably, More tin, cup or plastic material was needed for use in consumer packaging. As more of this packaging material ended up in consumers’ houses instead of in restaurants, the cardboard recycling function got disrupted also, causing shortages.
The shifts in demand have had a big affect on output activities. In certain instances, this even meant a full stop in production (e.g. inside the duck farming business, which arrived to a standstill as a result of demand fall-out in the foodservice sector). In other situations, a major portion of the personnel contracted corona (e.g. in the meat processing industry), resulting in a closure of equipment.
Supply chain – Distribution pursuits were also affected. The start of the Corona crisis of China triggered the flow of sea bins to slow down pretty shortly in 2020. This resulted in restricted transport capability during the very first weeks of the crisis, and costs which are high for container transport as a result. Truck transport experienced different problems. At first, there were uncertainties on how transport would be handled for borders, which in the long run weren’t as stringent as feared. What was problematic in a large number of cases, however, was the accessibility of drivers.
The reaction to COVID 19 – provide chain resilience The supply chain resilience analysis held by Prof. de Colleagues and Leeuw, was based on the overview of the core elements of supply chain resilience:
To us this particular framework for the analysis of the interviews, the findings show that not many businesses were well prepared for the corona crisis and in reality mostly applied responsive practices. The most notable supply chain lessons were:
Figure one. Eight best methods for food supply chain resilience
For starters, the need to develop the supply chain for agility and flexibility. This looks especially challenging for small companies: building resilience right into a supply chain takes time and attention in the organization, and smaller organizations oftentimes don’t have the capability to accomplish that.
Second, it was observed that more attention was needed on spreading risk as well as aiming for risk reduction in the supply chain. For the future, what this means is more attention ought to be given to the manner in which organizations depend on specific countries, customers, and suppliers.
Third, attention is needed for explicit prioritization and intelligent rationing techniques in situations in which need cannot be met. Explicit prioritization is actually needed to keep on to meet market expectations but also to increase market shares in which competitors miss options. This task isn’t new, although it has also been underexposed in this problems and was often not a component of preparatory activities.
Fourthly, the corona problems shows us that the financial impact of a crisis additionally depends on the manner in which cooperation in the chain is set up. It’s typically unclear how extra costs (and benefits) are actually distributed in a chain, in case at all.
Last but not least, relative to other functional departments, the businesses and supply chain features are in the driving seat during a crisis. Product development and advertising and marketing activities need to go hand in deep hand with supply chain pursuits. Whether the corona pandemic will structurally switch the classic discussions between logistics and creation on the one hand and marketing on the other, the future will need to tell.
How is the Dutch food supply chain coping throughout the corona crisis?