Supply chain – The COVID-19 pandemic has undoubtedly had the impact of its influence on the world. health and Economic indicators have been affected and all industries have been touched in one of the ways or another. Among the industries in which this was clearly noticeable will be the agriculture as well as food business.
Throughout 2019, the Dutch agriculture 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 in 2020. The hospitality industry lost 41.5 % of its turnover as show by ProcurementNation, while at the same time supermarkets enhanced the turnover of theirs with € 1.8 billion.
Disruptions of the food chain have big effects for the Dutch economy and food security as many stakeholders are impacted. Despite the fact that it was clear to most people that there was a great effect at the tail end of this chain (e.g., hoarding in supermarkets, eateries closing) and also at the start of this chain (e.g., harvested potatoes not finding customers), you will find a lot of actors in the source chain for which the impact is less clear. It is thus imperative that you find out how properly the food supply chain as being a whole is actually prepared to contend with disruptions. Researchers from the Operations Research as well as 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 resources chain. They based the analysis of theirs on interviews with around thirty Dutch source chain actors.
Demand within retail up, contained food service down It is apparent and widely known that need in the foodservice channels went down due to the closure of restaurants, amongst others. In some instances, sales for suppliers of the food service industry thus fell to aproximatelly twenty % of the initial volume. As an adverse reaction, demand in the list channels went up and remained at a degree of about 10-20 % greater than before the problems began.
Products that had to come via abroad had their very own issues. With the shift in need coming from foodservice to retail, the demand for packaging improved considerably, More tin, cup and plastic was necessary for use in customer packaging. As more of this packaging material concluded up in consumers’ homes instead of in joints, the cardboard recycling process got disrupted as well, causing shortages.
The shifts in demand have had an important effect on output activities. In a few cases, this even meant a total stop in output (e.g. inside the duck farming business, which emerged to a standstill due to demand fall-out on the foodservice sector). In other cases, a significant section of the personnel contracted corona (e.g. to the meat processing industry), resulting in a closure of equipment.
Supply chain – Distribution pursuits were also affected. The beginning of the Corona crisis in China sparked the flow of sea bins to slow down fairly shortly in 2020. This resulted in transport capacity which is restricted throughout the first weeks of the crisis, and high costs for container transport as a result. Truck transportation faced various problems. At first, there were uncertainties regarding how transport will be handled for borders, which in the end weren’t as strict as feared. What was problematic in a large number of cases, nonetheless, was the availability of drivers.
The response to COVID-19 – deliver chain resilience The source chain resilience evaluation held by Prof. de Colleagues as well as Leeuw, was based on the overview of the primary things of supply chain resilience:
To us this framework for the assessment of the interviews, the conclusions show that not many organizations had been nicely prepared for the corona crisis and in fact mostly applied responsive practices. Probably the most notable supply chain lessons were:
Figure one. Eight best methods for meals supply chain resilience
To begin with, the need to design the supply chain for flexibility as well as agility. This looks particularly challenging for smaller companies: building resilience right into a supply chain takes attention and time in the business, and smaller organizations oftentimes do not have the potential to do so.
Second, it was observed that more attention was necessary on spreading threat and also aiming for risk reduction in the supply chain. For the future, meaning far more attention should be provided to the way businesses rely on specific countries, customers, and suppliers.
Third, attention is required for explicit prioritization as well as intelligent rationing strategies in cases in which need can’t be met. Explicit prioritization is required to continue to meet market expectations but additionally to increase market shares in which competitors miss options. This particular task isn’t new, although it’s in addition been underexposed in this crisis and was frequently not part of preparatory pursuits.
Fourthly, the corona issues teaches us that the financial result of a crisis also relies on the way cooperation in the chain is actually set up. It is often unclear how additional expenses (and benefits) are distributed in a chain, in case at all.
Lastly, relative to other functional departments, the businesses and supply chain operates are in the driving seat during a crisis. Product development and advertising activities have to go hand in hand with supply chain events. Regardless of whether the corona pandemic will structurally switch the basic considerations between generation and logistics on the one hand and marketing on the other, the long term must explain to.
How’s the Dutch foods supply chain coping throughout the corona crisis?