Supply chain – The COVID 19 pandemic has definitely had its impact effect on the planet. Economic indicators and health have been compromised and all industries have been touched inside one of the ways or even another. One of the industries in which it was clearly noticeable would be the agriculture and food industry.
In 2019, the Dutch farming as well as food industry contributed 6.4 % to the gross domestic item (CBS, 2020). As per the FoodService Instituut, the foodservice industry in the Netherlands dropped € 7.1 billion within 2020. The hospitality business lost 41.5 % of the turnover of its as show by ProcurementNation, while at the same time supermarkets increased their turnover with € 1.8 billion.
Disruptions in the food chain have big effects for the Dutch economy as well as food security as a lot of stakeholders are affected. Though it was apparent to many folks that there was a big effect at the end of this chain (e.g., hoarding in grocery stores, eateries closing) and at the start of this chain (e.g., harvested potatoes not searching for customers), you will find many actors within the source chain for that the effect is less clear. It’s thus important to find out how effectively the food supply chain as a whole is equipped to cope with disruptions. Researchers from the Operations Research and Logistics Group at Wageningen University and 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 their analysis on interviews with about thirty Dutch supply chain actors.
Need within retail up, contained food service down It’s apparent and widely known that demand in the foodservice channels went down due to the closure of restaurants, amongst others. In some instances, sales for suppliers in the food service industry as a result fell to aproximatelly 20 % of the first volume. Being an adverse reaction, demand in the retail channels went up and remained at a level of aproximatelly 10-20 % greater than before the crisis started.
Products that had to come via abroad had the own problems of theirs. With the change in desire coming from foodservice to retail, the requirement for packaging changed considerably, More tin, cup and plastic material was necessary for use in customer packaging. As more of this particular packaging material ended up in consumers’ houses instead of in restaurants, the cardboard recycling function got disrupted as well, causing shortages.
The shifts in desire have had a major effect on production activities. In some instances, this even meant a total stop of output (e.g. within the duck farming business, which arrived to a standstill as a result of demand fall-out inside the foodservice sector). In other instances, a significant part of the personnel contracted corona (e.g. to the various meats processing industry), leading to a closure of facilities.
Supply chain – Distribution activities were also affected. The beginning of the Corona crisis of China caused the flow of sea canisters to slow down pretty shortly in 2020. This resulted in transport electrical capacity that is limited during the earliest weeks of the problems, and high expenses for container transport as a direct result. Truck travel faced various problems. At first, there were uncertainties regarding how transport will be managed at borders, which in the end weren’t as rigid as feared. What was problematic in cases which are many, however, was the accessibility of drivers.
The reaction to COVID-19 – provide chain resilience The supply chain resilience evaluation held by Prof. de Colleagues as well as Leeuw, was based on the overview of the core components of supply chain resilience:
Using this framework for the evaluation of the interviews, the results indicate that not many businesses were well prepared for the corona crisis and actually mainly applied responsive methods. Probably the most important supply chain lessons were:
Figure one. 8 best practices for meals supply chain resilience
For starters, the need to develop the supply chain for agility and flexibility. This looks particularly complicated for smaller companies: building resilience into a supply chain takes attention and time in the business, and smaller organizations oftentimes don’t have the capability to do it.
Next, it was discovered that more interest was necessary on spreading danger and aiming for risk reduction inside the supply chain. For the future, what this means is far more attention should be provided to the way businesses depend on suppliers, customers, and specific countries.
Third, attention is needed for explicit prioritization as well as clever rationing strategies in situations where need can’t be met. Explicit prioritization is necessary to continue to satisfy market expectations but in addition to boost market shares where competitors miss opportunities. This particular challenge isn’t new, however, it has also been underexposed in this specific crisis and was often not a part of preparatory activities.
Fourthly, the corona issues shows us that the monetary impact of a crisis also is determined by the manner in which cooperation in the chain is actually set up. It is typically unclear precisely how additional costs (and benefits) are distributed in a chain, in case at all.
Last but not least, relative to other functional departments, the operations and supply chain operates are in the driving accommodate during a crisis. Product development and advertising and marketing activities need to go hand in deep hand with supply chain pursuits. Regardless of whether the corona pandemic will structurally switch the traditional discussions between logistics and creation on the one hand and advertising and marketing on the other hand, the potential future must explain to.
How is the Dutch meal supply chain coping throughout the corona crisis?