Actively mapping resilience strategies makes your company more robust against unplanned disruptions. Focus should be on building security that can be obtained by increasing physical security of a company or creating public-private partnerships, which diminishes the negative effect of a disruption, such as COVID-19. This blog highlights the main take-aways of a case study conducted in the Dutch dairy industry in light of COVID-19.
At the end of 2019, the world was hit by the COVID-19 pandemic. Within a few months, the coronavirus spread around the world with an unprecedented negative effect on everyday business. Specifically, supply chain activities were disrupted due to ports and plants being closed down, underscoring the vulnerability of global supply chains with their resilience at risk.
The export-oriented dairy sector is one of the most profitable Dutch agricultural sectors, playing an important role in the economy. The dairy industry in the Netherlands is not only large in value but also in volume, being the third largest milk producer within the European Union. The lion’s share of the dairy production is destined for Europe, although a significant share is sent further on.
Multiple important stakeholders at different stages of the supply chain were interviewed. This included leaders of production companies, as well as transport companies and branch organizations. Moreover, the participating companies were sizeable representatives of their industry. Interviews covered two topics, namely:
1. The COVID-19 effect on:
- trade & transport
2. Resilience strategies
Analyzing the supply chain resilience has been done by way of the resilience framework, shown in Figure 1. The supply chain resilience has three different phases: pre-, during-, and post-disruption. All phases need a different strategy to mitigate the negative disruption effects. At the time of the analysis, we were amidst the peak of the pandemic, therefore, making the concurrent strategies especially important. These strategies are implemented through increased safety stock, low-capacity utilization and flexible pricing.
Figure 1. Resilience Framework. (Data Source: Ali, Mahfouz & Arisha, 2017).
COVID-19 has had a negative effect on the Dutch dairy supply chain, but this effect has been mitigated due to the resilience inherent to the sector. One director interviewed said “COVID-19 has been a different type of crisis, where we needed to react quickly. Thinking of alternatives has been important within the supply chain”. Especially, the concurrent strategies used during disruptions are identified as important strategies utilized by the Dutch dairy chain. Companies maintaining sufficient collaboration with suppliers and having back-up suppliers for specific products were able to partially offset the negative COVID-19 effects. Lastly, warm governmental relations aided the short reaction time to the ever-changing COVID-19 situation and, consequently, consumer behavior.