Supply chain – The COVID 19 pandemic has certainly had the impact of its effect on the planet. health and Economic indicators have been compromised and all industries have been touched inside a way or perhaps some other. One of the industries in which it was clearly visible will be the agriculture and food business.
Throughout 2019, the Dutch farming and food niche contributed 6.4 % to the yucky domestic product (CBS, 2020). According to the FoodService Instituut, the foodservice business in the Netherlands lost € 7.1 billion within 2020. The hospitality business lost 41.5 % of its turnover as show by ProcurementNation, while at exactly the same time supermarkets enhanced the turnover of theirs with € 1.8 billion.
Disruptions in the food chain have major effects for the Dutch economy as well as food security as many stakeholders are impacted. Though it was clear to most individuals that there was a huge impact at the end of the chain (e.g., hoarding around food markets, restaurants closing) and at the start of this chain (e.g., harvested potatoes not finding customers), you will find a lot of actors within the supply chain for which the effect is less clear. It is thus imperative that you figure out how well the food supply chain as being a whole is armed to cope with disruptions. Researchers in the Operations Research and Logistics Group at Wageningen University and also from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the consequences of the COVID 19 pandemic throughout the food supply chain. They based the examination of theirs on interviews with around 30 Dutch supply chain actors.
Demand in retail up, found food service down It is evident and well known that demand in the foodservice channels went down as a result of the closure of joints, amongst others. In a few instances, sales for suppliers in the food service business thus fell to aproximatelly twenty % of the initial volume. As a side effect, demand in the retail channels went up and remained at a degree of about 10-20 % greater than before the problems started.
Goods that had to come via abroad had their own problems. With the change in need from foodservice to retail, the demand for packaging changed dramatically, More tin, glass or plastic was needed for wearing in consumer packaging. As more of this particular packaging material ended up in consumers’ houses instead of in places, the cardboard recycling function got disrupted also, causing shortages.
The shifts in need have had an important affect on output activities. In some instances, this even meant the full stop of output (e.g. inside the duck farming business, which emerged to a standstill as a result of demand fall-out in the foodservice sector). In other instances, a significant section of the personnel contracted corona (e.g. in 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 triggered the flow of sea canisters to slow down pretty shortly in 2020. This resulted in transport capability which is restricted during the earliest weeks of the crisis, and costs which are high for container transport as a result. Truck travel faced various issues. Initially, there were uncertainties on how transport will be managed at borders, which in the end weren’t as rigid as feared. What was problematic in most situations, nevertheless, was the accessibility of motorists.
The reaction to COVID 19 – deliver chain resilience The supply chain resilience evaluation held by Prof. de Colleagues as well as Leeuw, was based on the overview of this key components of supply chain resilience:
Using this framework for the analysis of the interview, the findings indicate that not many companies had been nicely prepared for the corona problems and actually mostly applied responsive methods. The most important source chain lessons were:
Figure 1. Eight best methods for food supply chain resilience
To begin with, the need to design the supply chain for agility and flexibility. This appears particularly challenging for smaller companies: building resilience into a supply chain takes time and attention in the organization, and smaller organizations usually do not have the capacity to do it.
Next, it was observed that more interest was needed on spreading danger as well as aiming for risk reduction within the supply chain. For the future, what this means is far more attention has to be made available to the way organizations count on suppliers, customers, and specific countries.
Third, attention is required for explicit prioritization and smart rationing strategies in situations where demand can’t be met. Explicit prioritization is actually necessary to continue to meet market expectations but additionally to increase market shares where competitors miss opportunities. This challenge isn’t new, though it’s additionally been underexposed in this problems and was usually not part of preparatory pursuits.
Fourthly, the corona issues shows us that the financial effect of a crisis in addition is determined by the manner in which cooperation in the chain is actually set up. It’s usually unclear precisely how extra expenses (and benefits) are actually distributed in a chain, in case at all.
Finally, relative to other functional departments, the operations and supply chain characteristics are in the driving seat during a crisis. Product development and marketing and advertising activities have to go hand in deep hand with supply chain activities. Whether the corona pandemic will structurally switch the basic discussions between logistics and production on the one hand and advertising on the other hand, the potential future must explain to.
How is the Dutch food supply chain coping throughout the corona crisis?