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The food supply chain: enabling faster switching between sales channels and products

The Covid-19 crisis has shown that our food supply chain is fragile. Major disruptions led to a drop in demand, large surpluses for some products, and significantly more waste. According to agri-food expert Lars Langhout, the current crisis is a good reason to look at how we can make food supply chains more resilient and flexible.

There is always a lot of waste in the food supply chain, says Lars Langhout, because food is sometimes damaged during storage or transport, products do not always meet the standards, it is left in the supermarket or because consumers buy more than they need. Additionally, major disruptions almost always cause a lot of waste. "The characteristics of food makes its supply chain fragile and inflexible," says Lars Langhout. "However, there are ways in which we can make it much more resilient.”

From a fragile supply chain with surpluses...

  • There are two large, separate sales channels in the food chain: the retail channel (especially supermarkets) and the catering ('out of house') channel. During the Covid-19 crisis, the catering channel completely collapsed.
  • It is difficult for producers to switch from one channel to another. No consumer is waiting for a 25 kilo bag of pre-processed fries or a cask of beer for their home.
  • Food supply does not easily adapt to demand. Chicken continue to lay eggs, potatoes continue to grow and cows continue to supply milk. As a result, surpluses have resulted in price drops (as happened with potatoes during the Covid crisis).

...to a more flexible supply chain with less waste

  • Implementation of modern ERP systems that provide real-time data on issues such as expiry date,  stock, product quality and how the product has been transported provide information that enable faster and better decisions to match supply and demand.
  • More and better anticipation on consumers' online buying and searching behavior, which predicts what they will probably buy next.
  • Producers should organise their production and packaging in a way that they can quickly switch between sales channels or to products with a longer shelf-life.
  • The crisis has led to more focus on the question of how value can be created from raw materials. Good examples are the beer brewers who made disinfectant hand gel from surplus beer.
  • Innovative packaging, such as organic 'coatings' that ensure that fruit and vegetables stay fresh longer can improve the shelf life of produce.
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Peter Hoijtink

Peter Hoijtink

Partner Consulting, PwC Netherlands

Tel: +31 (0)64 201 93 83

Lars Langhout

Manager, PwC Netherlands

Tel: +31 (0)65 750 51 81

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