COVID-19 has broken the global food supply chain. So now what? has been saved
COVID-19 has broken the global food supply chain. So now what?
Reshaping food supply chains to prepare for the post-outbreak era
The containment measures during the COVID-19 pandemic have drastically impacted the essential flow of food from farms and producers to consumers. Many lessons will be learned once the worst effects of COVID-19 subside, but we think one of the key lessons for food businesses is already crystal clear. Companies need to use the momentum of the outbreak as an opportunity to re-design their supply chain with future resilience in mind.
Go directly to
- How COVID-19 is disrupting supply chains
- Forces fuelling the transition
- Building supply chain resilience
- Make the most of downtime
- Questions? Get in touch!
How COVID-19 is disrupting supply chains
From farm to fork, missing links in the food supply chain are causing increasing disruption and damage:
- Harvests: As spring arrives, crops are rotting in the fields. Europe’s asparagus growers, for instance, are dramatically short of staff, with migrant workers from Eastern Europe unable to come to their farms due to border restrictions - or simply afraid to risk infection.
- Logistics: Food transport, meanwhile, is steadily turning into a logistics nightmare. Where produce does get harvested, border controls and air freight restrictions are making international transport of fresh goods extremely difficult – and expensive2.
- Processing: Food processing plants are scaling or shutting down due to containment measures or staff shortages, with their suppliers scrambling to adjust their output. In Canada, for example, poultry farmers collectively acted to reduce their output by 12.6%3.
- Go-to-market: Companies that normally sell a significant portion of their output through out-of-home channels (for example soft drink producers) are seeing their sales slashed4.
- Sourcing: Supermarkets, while scoring stellar sales figures, are understaffed and underdelivered5. Because of sourcing problems, products based on wide range of ingredients are becoming increasingly difficult to make and are therefore disappearing from store shelves6.
Stay 1 step ahead regarding Future of Food
Get the latest insights in your mailbox
Forces fuelling the transition
Even before the coronavirus outbreak, the food supply chain was in transition. The forces at play are still the same, though the pandemic has added fuel to quite a few of them:
- Changing consumer preferences: More than ever, consumers are health-conscious and looking for fresh, additive-free food with traceable origins, with an increasing preference for local7.
- Increasing volatility in supply: The coronavirus pandemic is further fuelling volatility, which was already on the rise due to geopolitical and climate factors.
- Changing trade conditions: On top of global trade wars and ensuing political tensions, COVID-19 and related containment measures are putting the brakes on international trade8.
- Tightening rules & standards: Food safety concerns will be further heightened in the wake of the pandemic, leading to more regulatory pressure.
- Demographic and social changes: While growing populations and middle classes will remain a theme, we could see new social patterns emerge in the post-outbreak era, such as less globalisation, as regional and local products capture a bigger share in production and consumption.
- Rapid technological advances: IT innovations are improving not just efficiency and sustainability, but also supply chain visibility, particularly vital now to spot and address supply chain issues in an early stage.
- Sustainability requirements & legislation: COVID-19 could slow the momentum of the transition to a carbon-neutral society (for example the EU’s Green Deal), but it also provides an opportunity to accelerate the shift9.
Webinar future food supply chains (Dutch)
5 speakers share their view on future food supply chains (Dutch) - 6 October 2020Re-watch the webinar
Building supply chain resilience
In the post-outbreak era, what can food sector players do to make their supply chains both responsible and resilient? Solutions should run along these lines:
- Go-to-market versatility: Existing go-to-market channels like bars and restaurants have closed down and expectations are that it will take 12-18 months before societies fully recover from COVID-19. Companies therefore need to invest in omnichannel capabilities, especially focusing on online/digital solutions. This should also include product fungibility across channels.
- End-to-end supply chain management: As sourcing ingredients/merchandise becomes harder for businesses, one alternative is to work with a wider pool of suppliers, including regional ones, and keep larger strategic stocks. A broad product range is more expensive to maintain, but spreads risks. An alternative is to simplify recipes and/or remove problem products from the portfolio, resulting in a leaner, more manageable product range, less risk and lower costs. That would also free up time and resources to invest in the development of innovative new products that combine a healthy lifestyle with minimal environmental impact. Meanwhile, it’s important to invest in relationships with supply chain partners. Supplier and customer loyalty and resilience are pivotal to ensure business continuity and to thrive post-COVID-19.
- Industry 4.0: Digital supply networks are going to make businesses less vulnerable in the longer term. Robots, for instance, reduce dependence on migrant labour. Track-and-trace solutions help businesses zoom in on supply chain bottlenecks. And the latest tools based on artificial intelligence revolutionise business processes and scenario management, thereby reducing both costs and risks. AI supports companies in predicting uptake in demand in an early stage, anticipating future bottlenecks and choosing the best course of action.
Make the most of downtime
Nobody knows the timetable for the lifting of COVID-19 containment measures. But when the lockdown is over, businesses that have used the downtime well – by embracing supply chain innovation, diversification and collaboration, preferably also integrating sustainability goals– will come out fitter for the future.
More information on securing the future of food in times of COVID-19
Do you want to know more on the Future of Food? Please contact Randy Jagt at +31 (0)6 5008 3845.