Food Supply Chain Disruption
By Endeavor Greece Apr 21, 2020
Endeavor Webinar Series:
Insights by Maria Velissariou
Continuing its webinar series aiming to support its network in navigating through the crisis caused by the Coronavirus outbreak, Endeavor Greece invited Maria Velissariou, Chief Science and Technology Officer, Institute of Food Technologists (IFT), to discuss the big challenges in the supply chain of F&B.
During the webinar, Maria, an F&B expert, tackled the key issues around the effect of the pandemic on the industry. She shared best practices on food safety and offered global advice on handling raw materials. Maria focused on food value chain before the outbreak and explained the current situation of supply chain, while mentioning the disruptions and challenges caused by the pandemic. She also talked about what differentiates the current crisis from previous ones and she pointed out the key priorities and lessons for mitigation. Finally, she discussed the opportunities that arise from this situation, including the scientific and technological advancement of the industry.
Food value chain before the pandemic
The global food value chain was way different before the outbreak, according to Maria Velissariou. Before the pandemic, the world was leaning towards some transformative food security and innovation strategies, that have been reshaping the food chain. Nutrigenetics and food sensing technologies have been changing the shape of demand, whereas big data, IoT and blockchain, have been allowing real-time supply chain transparency and have been promoting value chain linkages. At the same time, technologies such as microbiome and biological based crop protection have been used to create effective production systems.
“Things have evolved very fast in the past month and they will continue to change. During the past years we have been focusing on sustainability and we have started using technologies such AI, robotics, IOT, Traceability, Blockchain, that have been transforming the F&B industry. However, the COVID-19 pandemic has brought us back to a more regressive place, as we have to go back to making sure that we have enough supplies and we must ensure business continuity and stability. In the near future, we are waiting to see changes in culture, consumers, healthcare, climate, geopolitics and regulation, capital markets, data and disruptive innovation, food system and the planetary boundaries.” explained Maria.
This pandemic is unique
Maria pointed out the uniqueness of this pandemic. So far, scientists have limited knowledge and data on the virus, something that makes risk management difficult. According to the expert, the lack of knowledge is already clear in the food industry as far as conducting robust hygiene instructions and sanitization protocols are concerned. “During this global health crisis, that will come with massive economic consequences, the entire food ecosystem is essential.It has already been designated as a critical infrastructure and its employees as critical workers. The food industry keeps the production running 24/7, from supply chain efficiency to supply assurance. Therefore, the employees’ health and safety must be insured, the food safety, sanitization and transportation must be tracked and analyzed.” she added.
“At the same time” she continued “supply Chains have been under tremendous stress at all points.” Regarding CPG, Maria explained that sales are up and factories are running flat out under labor health pressures and heightened risks. As far as grocery stores are concerned, most countries face high forward demand that drives sales up and inventories have been starting to have shortages. Food service is also facing a huge challenge. Due to the closing of most restaurants and schools, restaurants that were primary selling food to students, are now out of business. They try to convert to delivery, but it is challenging. Whereas in transportation, although there have been no major interruptions nationally, border and port closures are driving shortages in commodities and packaging.
Maria also pointed out that there has been a dramatic increase in food fraud since the outbreak. She explained that COVID-19 is a hazard that challenges our ability to reduce risk exposure. The latter is the combination of the probability of a hazard to occur and the impact of this hazard. These two are in the primary focus of interventions and they are very challenging in the case of this pandemic, due to the fact that we know too little about the virus. “We must not forget that this is not a food safety issue, it is a health issue. We need to focus on risk management, face the hazard to mitigate the risks, react and continue to feed the population.” she explained.
Regarding the major challenges the new crisis brings for the food and beverage industry, Maria singled out access to facilities, the ongoing certification process – as there are certificates that are running out of date, new supplier qualification – as companies have been running with very small number of supplies, the critical service – such as pest management, the evolving COVID-19 science and best practices – such as face masks, the cumulative pressure on workforce and the readiness of technology to be deployed to alleviate system stressors.
In addition, she said that border closure will have a huge impact on the industry as well. “In the United States”, she explained, “50% of food is imported. In the next months, many countries will close their borders in order to prevent the spread of the virus and to stock out for their own citizens. They will also place big tariffs to protect their local manufacturing and create jobs in their country. We might also see geopolitical tension rising. The magnitude of the disruption remains to be seen.” she stated.
Maria also mentioned that she expects medium and long-term changes in local manufacturing. “I anticipate that many countries will balance the local production with dependency from imports, as part of their food security policies.” she explained. “But this also depends on the availability of raw materials, such as grains and other crops as well as packaging materials. The whole manufacturing and agricultural ecosystem will have to be rethought on a country by country level. We should start seeing some innovation in indoor or vertical agriculture. At the same time, I think that local manufacturing or local food production may become part of a desired way of living.” she added.
Customer and consumer demand dynamics
Maria also discussed the results of a recent report byIRI, showing that 86% of the total US population is concerned about COVID-19 and concern transcends age, generation, gender, ethnicity, household, income and the presence of children in the home. “These concerns make sense, as people are feeling isolated and elder people are not allowed to leave the house at all” she argued. According to this report, people’s buying habits have changed. Now they visit the supermarket less frequently and they buy bigger quantities of products. Only 8% of the population are more likely to shop supplies online. “The new situation rises a problem with elderly people that are used to go more often to the supermarket and to buy small quantities of food. Now, since they are the most in danger, they are forced to change their habits” she added.
“This crisis has brought up the need to redesign our supply chain system to be more flexible and more resistant.“
The study also shows that comfort food consumption has been increasing. According to the F&B expert, “People have been asked to stay at home and implement social distancing, something that makes them seek food that offers them comfort and joy. At the same time, the report shows that the pattern of the current purchasing behavior is similar to consumers’ buying after hurricane events. More specifically, there is a decrease in the number of products people buy and consumers tend to purchase cheaper products.
Science and technology as catalysts for change
According to Maria, we have optimized supply chains to be just-in-time, highly efficient and globalized. However, the COVID-19 pandemic has shown that today’s lean supply chains are not necessarily going to be a guarantee for future access to food. “This crisis has brought up the need to redesign our supply chain system to be more flexible and more resistant. We will need to have systems that can divert food from one warehouse to another. We need more diverse ecosystems of local manufacturing and local distribution.” She argued. “Life in the cities has provided a lot of opportunities for new businesses. We must accelerate the adoption of technology and digitize the food supply chains from the ‘first’ to the ‘last’ mile” she added.
“This crisis could speed up game-changing innovations at the interface of food science, biology and technology. Entrepreneurs will see the opportunity to step forward. There will be a fast growth of IOT and robotics.” Maria explained. Data science is unlocking information that was not available previously, that includes food safety, product formulation and impact on nutrition and health, product stability and shelf-life and trade-price models. According to the F&B expert, “Traceability, along with other manufacturing efficiencies can become a catalyst for transparency and trust.”.
“Science and tech collaboration is the only way to prevent catastrophic events like this in the future.”
She also insisted on the importance of collaboration among continents. “Technology solutions are available and can be deployed fast to mitigate risk exposure. At the same time, this pandemic may restore consumer trust in science and urge governments to step up investment and policy collaboration across borders” she explained.
Takeaways from the crisis
Maria pointed out three major takeaways from this crisis:
Supply chains need to evolve.
They need to be redesigned, in order to be cost efficient, more resilient and flexible to more unknown situations like unexpected crisis like the one we are dealing with right now.
Consumer behavior must change significantly.
It is important to rebalance some of the dynamics, including the point of sale where people go to buy their food and to ensure that all people have access to nutritious food.
Importance of scientific collaborations.
These are required in order for us to be ready to activate solutions not only on a local level, but also across countries. The collaboration in sciences and technology is the only way we can prevent catastrophic events like this in the future.
Maria wrapped up the webinar in a positive note, by reminding us that we are not alone, and that believing in science and collaborating is the only way to move forward. “There is always good news even in dark times. The technology is available, and it could be deployed. Science and tech collaboration is the only way to prevent catastrophic events like this in the future.” she said. “This pandemic shows us how small but at the same time how big the world is. Distances have suddenly become longer, as everyone is in lockdown, but they are also closer now, since everything has moved to virtual. Digital interaction tends to remind us that we are not alone.”
You can listen to the recording of the webinar here