How’s the Dutch foods supply chain coping during the corona crisis?

Supply chain – The COVID 19 pandemic has undoubtedly had its impact impact on the world. Economic indicators and health have been affected and all industries are touched in one of the ways or perhaps another. One of the industries in which it was clearly noticeable is the farming as well as food business.

In 2019, the Dutch farming and food niche contributed 6.4 % to the yucky domestic product (CBS, 2020). According to the FoodService Instituut, the foodservice industry in the Netherlands dropped € 7.1 billion inside 2020[1]. The hospitality industry lost 41.5 % of its turnover as show by ProcurementNation, while at the same time supermarkets enhanced their turnover with € 1.8 billion.

supply chain
supply chain

Disruptions in the food chain have major effects for the Dutch economy and food security as lots of stakeholders are impacted. Even though it was apparent to majority of individuals that there was a significant impact at the end of this chain (e.g., hoarding doing food markets, eateries closing) and also at the start of this chain (e.g., harvested potatoes not searching for customers), you will find numerous actors in the supply chain for that the impact is less clear. It is thus vital that you find out how well the food supply chain as being a whole is prepared to deal with disruptions. Researchers from the Operations Research and Logistics Group at Wageningen Faculty as well as from Wageningen Economics Research, led by Professor Sander de Leeuw, studied the influences of the COVID-19 pandemic all over the food resources chain. They based their analysis on interviews with about thirty Dutch supply chain actors.

Demand in retail up, contained food service down It’s obvious and well known that demand in the foodservice stations went down on account of the closure of restaurants, amongst others. In some instances, sales for suppliers of the food service industry thus fell to about 20 % of the initial volume. As a complication, demand in the retail stations went up and remained at a level of aproximatelly 10-20 % higher than before the problems started.

Goods that had to come through abroad had the own issues of theirs. With the shift in demand coming from foodservice to retail, the need for packaging changed considerably, More tin, cup and plastic was required for wearing in buyer packaging. As more of this product packaging material ended up in consumers’ houses rather than in places, the cardboard recycling process got disrupted also, causing shortages.

The shifts in demand have had an important effect on output activities. In some instances, this even meant a complete stop in production (e.g. within the duck farming industry, which arrived to a standstill due to demand fall-out on the foodservice sector). In other instances, a major 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 start of the Corona crisis of China triggered the flow of sea containers to slow down pretty shortly in 2020. This resulted in restricted transport capacity throughout the earliest weeks of the crisis, and costs that are high for container transport as a direct result. Truck transportation faced various issues. At first, there were uncertainties about how transport will be managed for borders, which in the end were not as stringent as feared. What was problematic in instances which are many, nonetheless, was the accessibility of drivers.

The response to COVID-19 – supply chain resilience The source chain resilience evaluation held by Prof. de Leeuw and Colleagues, was used on the overview of this key elements of supply chain resilience:

Using this particular framework for the evaluation of the interview, the findings indicate that not many companies were nicely prepared for the corona crisis and actually mainly applied responsive practices. Probably the most important source chain lessons were:

Figure 1. Eight best methods for food supply chain resilience

To begin with, the need to create the supply chain for versatility as well as agility. This seems particularly complicated 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.

Next, it was discovered that much more attention was required on spreading risk as well as aiming for risk reduction within the supply chain. For the future, what this means is far more attention should be given to the way companies count on suppliers, customers, and specific countries.

Third, attention is needed for explicit prioritization and intelligent rationing techniques in situations in which need cannot be met. Explicit prioritization is needed to continue to satisfy market expectations but additionally to increase market shares where competitors miss options. This challenge is not new, however, it has also been underexposed in this specific crisis and was usually not a component of preparatory pursuits.

Fourthly, the corona crisis teaches us that the financial result of a crisis also is determined by the way cooperation in the chain is actually set up. It’s often unclear how further costs (and benefits) are actually sent out 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 marketing activities need to go hand deeply in hand with supply chain activities. Whether or not the corona pandemic will structurally change the traditional considerations between creation and logistics on the one hand and marketing and advertising on the other, the long term will need to explain to.

How is the Dutch food supply chain coping throughout the corona crisis?

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