We all remember the empty shelves in our supermarkets during the early phase of the Covid-19 pandemic. Pasta, tomato sauce, flour, yeast and even toilet paper were not available, or available on very limited number, for a few weeks. While these supply shortages have been eliminated, the aftermath of the crisis will still occupy the food industry for a long time.
On June 25, the Academy Fresenius held an interactive webinar giving the audience the opportunity to discuss the short-, mid- and long-term effects with the speakers.
Our own Bert Popping from FOCOS – Food Consulting Strategically presented an overview of the developments of the corona lockdown. He showed that Asian countries acted early, resorted to local lockdowns in some cases and, unlike Europe, initially tried to avoid national lockdowns.
What are the challenges?
Bert showed that while there was a supply shortage for some products due to enormous increase of demand, the retailers managed to restock the shelves quickly. After two to three months, all items were back in stock and in ample supply. Considering the complexity of the food supply network, this was an amazing achievement.
He also pointed out that the supply challenges for the food industry during the covid-19 pandemic have resulted in two distinct mitigation approaches that would impact the food supply chains:
- Diversification of suppliers
- Increased visibility beyond tier 1
Diversification: this is the approach taken to still supply certain products if one region is unable to deliver products (e.g. due to poor harvest or a pandemic). Suppliers who obtain their good only from a narrow geographical region are exposed to higher risks from shortages. Diversification includes widening the network of supplier and adds additional effort on auditing and verification of these new suppliers.
Visibility beyond tier-1: Depending on the level of integration of the supply chain, food manufacturer may – in the worst-case scenario – only know their immediate supplier and their immediate customers. That this may be challenging was demonstrated when some suppliers ran out of stock during the pandemic. Tier-2 and beyond visibility allows food manufacturers (and generally stakeholders in the supply chain) to assess how likely their suppliers will be affected in case of shortages in a specific region. And here it links with diversification: a supplier with a diversified network of his own supplier is more likely to be able to continue to supply when a shortage in one region occurs.
Dr. Popping pointed out that both diversification and visibility beyond tier-1 go hand-in-hand.
Dr. Markus Lipp from the Food and Agricultural Organization (FAO) pointed out that the key message is that Covid-19 is – according to current scientific knowledge – not transmitted via food. However, all other food safety risks still remain. Therefore, precautionary measures like frequent washing of hands and cleaning equipment are essential, not only in times of Covid 19. He pointed out that especially countries where agriculture is a large or even major segment contributing to the countries’ GDP, people are adversely affected by the pandemic. He pointed out that in these challenging times, food safety authorities may prioritize certain tasks, including inspection of high-risk food businesses, export- and import certification as well as food incident management.
Dr. Karen Everstine from Decernis highlighted the different factors contributing to food fraud, with one factor being the supply chain. She mentioned that especially in times where supply chains are disrupted, the risk of food fraud increases disproportionally. She went through a number of examples of recent cases including those affecting spirits, meat, dairy and fish industry. Following this, she highlighted which cases are likely to occur in the future, partially driven by supply chain disruption due to Covid-19.
Norbert Kolb started his presentation by pointing out which materials were currently in short supply, and also highlighted the concerns of stakeholders in the supply chain, e.g. the fear of losing existing contracts. He then went on to explain that the covid pandemic had led to changes in consumer behavior, which in turn will impact the supply chain. He provided an example from Vietnam, how existing challenges can be addressed and overcome, and which parameters need to be adjusted to prevent future challenges of this kind.
The webinar concluded with a thirty-minute live (“open microphone”) question and answer session with the webinar audience.
