COVID-19: Supply Chain Management Challenges of Food Industry

COVID-19: Supply Chain Management Challenges of Food Industry

Abstract

The outbreak of COVID-19, popularly known as the coronavirus, has had a

major impact on the global economy because of the containment measures that

the World Health Organization has proposed. The limited movement and

physical interaction of people have crippled many businesses, including those in

the food industry. The supply chain has been significantly affected.

The guiding question in the study was to determine how players in the food

industry can manage challenges in the supply chain to ensure that their

significantly affected by the pandemic. It is crucial for players in this industry to

find ways of dealing with these challenges to ensure that their operations remain

sustainable. The government also has a role to play in protecting this industry

during this period.

Introduction

The food industry is one of the most sensitive sectors in the economy of any

country. In the United Arab Emirates, the sector has transformed significantly

over the past decades as the government continues to invest in the agricultural

sector to reduce the country’s reliance on imported products.

According to Metcalfe (2019), the UAE no longer relies on imported vegetables

to feed its population. Despite these initiatives, it still relies on imported food

products such as rice and other cereals to sustain its people. The movement of

food items across the border has been significantly affected by the global

outbreak of COVID-19 pandemic. It is essential to note that the UAE is not the

only nation that is affected by this pandemic.

The problem is global in nature and almost every country is struggling to

protect the food industry. The impact that the pandemic has had on the transport

sector has crippled the supply chain in the food industry. Erokhin and Gao

supply chain management challenges of the food industry during the outbreak

of the COVID-19 pandemic.

Literature Review

chapter, the focus is to review related works conducted by other scholars. Food

industry is one of the main pillars of economy in the United Arab Emirates.

According to Balasubramanian (2020), the United Arab Emirates has emerged

as one of the leading global tourists’ destination. The growth of the tourism

industry has enhanced the development of food industry, especially in the

The containment measures required people to avoid physical interaction. It

meant that free movement of people was restricted. One of the sectors within

the food industry most affected by these containment measures was the supply

chain. According to Cheshmehzangi (2020), the government has allowed hotels

and restaurants to operate under specific guidelines. However, these businesses

are facing a new challenge of having access to products they need.

The UAE largely relies on imported food products to sustain its economy. One

of the most important imports is rice, which is one of the staples. India and

that is starting to affect the industry may become worse. In cases where a

company finds a way of sourcing for these products, transportation is becoming

another major challenge.

essential items despite the lockdown and cessation of movement that has been

witnessed in different parts of the country. Berson (2019) explains that despite

this free movement of goods, many transport companies are still finding it

challenging to deliver their products to the market. One of the issues that they

cite is discrimination and unfair attacks. Studies have shown that long-distance

As such, a trend has emerged where they are shunned away because they are

viewed as part of the problem instead of being stakeholders trying to find

solutions. Sometimes they are denied accommodations because of this negative

perception. Many drivers have opted to stay at home or to engage in other

economic activities instead of continuing with this job. The outcome has been a

case where the much needed food products cannot reach the market at the right

time.

The World Health Organization and other international bodies have

of cutting costs, may no longer be desirable. Instead of ordering products that

meet a firm’s need within a short period, it may now be necessary to have

proper ways of storing non-perishable products for long periods.

One of the main areas impacted by the outbreak is in harvesting agricultural

produce. Many governments around the world issued directives limiting the

physical interaction of people. Those who are working in the agricultural sector

are considered essential workers, but they have been affected. Many people who

are involved in harvesting have avoided going to work for fear of contracting

Cheshmehzangi (2020) explains that cases where agricultural produce are left to

rot in the farm have become common across the world. In Europe and North

America, the agricultural sector relies heavily on immigrants, some of whom

are not documented. The global ban on the physical interaction of people and

the closure of many borders has limited the number of staff in these farms.

Harvesting has become almost impossible as a result.

Logistical Challenges

Logistics has become another major challenge in this sector. Farmers who

succeed in harvesting their products face numerous challenges in making them

for their company. Finding their replacements within a short time, especially

when handling perishable products, is a major challenge.

Processing documents at the border points has become another nightmare for

have developed stringent measures that truck drivers have to observe, further

restricting movements. Some of these border officials also fear contracting the

disease and are now employing unconventional strategies causing further strain

in the movement of goods.

movement. The prejudice has resulted in cases where they are denied services

they need because of the belief that they could be positive of the virus. Many of

these drivers have opted to avoid going to work because of these numerous

challenges, making it difficult for food items to reach the market.

Processing Difficulties

Processing of food items has also become a major challenge during this period

of the pandemic. Containment measures put in place by the government has

significantly affected the industry. In the United Arab Emirates, there has been a

shortage of staff in some industries because the government has been forced to

meat and fish has been affected significantly because of the limited movement

of people. Fishermen also find it challenging to venture into the deep seas

because they know they cannot get some of the essential assistance they might

need in cases of emergency.

Market Challenges

Hotels and restaurants are some of the critical customers of suppliers of food

products. The United Arab Emirates is one of the leading tourists’ destinations

in the world, especially its city of Dubai (Ivanov et al., 2017). Major hotels rely

on a regular supply of food products from different products both locally and in

One of the sectors that the government was closed includes the hotel and

restaurant businesses. In so doing, the huge market that farmers relied on was

eliminated. As tourists were forced to go home, and the hotels temporarily

closed their operations, major food suppliers were forced to find an alternative

market. Schools were also major target markets for these suppliers. They too

were closed to help limit the spread of the virus (Erokhin & Gao, 2020). The

problem is not unique to the United Arab Emirates.

Food suppliers in almost every other country are feeling the impact as the size

of the market continues to shrink. According to the Food and Agriculture

food products. However, these institutions have been hit by a major sourcing

problem. Like many other organisations, they have to deal with the challenge of

understaffing. Finding the products they need in the market is also another

major challenge.

The government has warned retailers against hiking the price of their products

(Erokhin & Gao, 2020). However, having access to these items has become

challenging and expensive. Some of the supermarkets have been forced to have

empty shelves instead of stocking products that may result in loss. The problem

is worse for companies that had relied on imported products.

Emerging Trends and Forces Fuelling the Transition

The challenges brought about by the new normal have forced stakeholders in

the food industry to find ways of adapting. As Wallace (2016) observes,

successful firms have learnt how to adapt to forces in the market to help them

remain sustainable. Emerging trends and forces within the macro-environment

are fuelling transition in this sector. It is important to look at these emerging

trends, challenges associated with them, and how players in the food industry

are responding.

Changes in Consumer Preferences

However, the virus is a real threat that they cannot ignore any longer (Shanker,

et al., 2019). More than ever, people are now focusing on healthy diets as a way

of remaining in good health. These health-conscious customers are now looking

2017).

Players in the industry are finding it almost impossible to meet this new demand

during this period. Sourcing for food products is a major challenge, and when

customers become choosy, the problem becomes worse. The trend is likely to

Increased Volatility in Supply

The geopolitical and climatic factors have been the greatest factor contributing

to the volatility in the food supply in the United Arab and its neighbouring

countries within the Middle East. However, COVID-19 has worsened the

situation. Berson (2019) explains that a new practice where farmers accumulate

their products and sell them in large quantities at once is emerging. The trend is

fuelled by the desire to cut the unit cost of making their products available in

the market.

Tightening of Rules and Standards

The food industry was already going through the transition before the outbreak

of the virus as governments and customers demanded greater responsibility.

expectations. Research has revealed that when an infected person touches any

surface, it becomes infected and poses a major risk to others.

Containment measures proposed by the World Health Organisation have meant

tightening of rules and standards of handling food. Food items cannot be

It is clear that none felt that they are safe from the pandemic. The result shows

the magnitude of the problem within the food industry. The researcher asked the

participants to state whether they feel their operations can be crippled if an

effective solution is not found. Figure 3 below shows their response.

It is clear from the statistics above that an overwhelming majority of the

respondents (95%) feel that their can easily be pushed out of operations if the

current problem persists. They know that the current strategies they are using to

access materials they need may not be sustainable in the long term. As such,

they need strategies that can enable them address the problem more effectively.

The researcher asked the participants to state whether they feel the government

has a major role to play in solving the problem in a cyclic model of the Theory

some (30%) felt that involving the government may interfere with the normal

operations in the industry. They cautioned that such a move should be done with

significant level of restraint.

Another 10% of the respondents were not sure whether it was prudent to allow

the government to be involved in solving the problem. The respondents were

asked to state what they believe is the single-most important measure that

should be taken to address the problem. Figure 5 below shows the suggestions

they made based on their experience.

As shown in the figure above, the use of technology was the most mentioned

solution when it comes to solving the current supply chain challenges in the

domestic agriculture to reduce reliance on imported products. Improved

transport system that protects long-distance truck drivers from contracting the

virus was also proposed as a means of managing the problem. One respondent

stated that it is necessary to have public awareness campaigns to enable people

to appreciate the sacrifice that truck drivers make to avail food materials to the

market. Instead of being victimized as super-spreaders, they need to be

supported for their bravery.

Discussion

The analysis has provided an insight into the nature of the problem within the

UAE and ways that the sampled respondents feel that it should be addressed.

Both the primary and secondary data shows that the outbreak of the novel

coronavirus has significantly disrupted the movement of food products in the

industry within the United Arab Emirates and in other parts of the world.

According to Balasubramanian (2020), the problem has affected almost every

sector of the chain, from the farm to the restaurants. It is essential to assess how

supply chain because of the pandemic (Akkucuk, 2019). Each of these

challenges need unique approach of solving them, and the model may be

effective. It emphasizes the need to identify a specific problem and then finding

a lasting solution based on the capacity of an individual company and the

Managing Supply Chain Challenges Associated with COVID-19

The outbreak of COVID-19 has had major implications on the food industry as

discussed above. Many large corporations in this industry such as McDonalds,

Burger King, and Al Dawaar Revolving Restaurant are struggling to remain

same grim situation in the market. Other food retailers, transporters, suppliers,

and producers are also dealing with different problems related to the outbreak of

the novel coronavirus (Ram & Davim, 2018).

The new business environment created by this virus may last for long, and the

food industry will remain one of the most sensitive sectors even if economies

around the world open. In the United Arab Emirates, it is expected that the

government may set new regulations meant to limit the spread of the virus in

these facilities (Detwiler, 2020). Companies must find strategies that can enable

them to operate effectively under the new environment. Building supply chain

persistent for long globally. Given that these preferential customers are crippled,

suppliers have to find alternative ways of making their products available to

their customers (Gersen et al., 2019).

solutions. They will have to use online platforms to ensure that they can reach

out to individual customers. It may not be as desirable as selling mass products

to large suppliers. However, it is the only way that they can continue selling

their products when restaurants and hotels are still closed or partially opened.

One of the lessons that many corporations have learnt during this period of

coronavirus outbreak is that it is risky to rely on one or two suppliers who can

easily change their loyalty if it suits them. Cases have been witnessed where

some retailers are unable to access important inventory because the supplier has

opted to sell their products to another company. It has become clear that

companies may be forced to have end-to-end management of the supply chain.

The vertical integration approach will mean that the firm will have full control

of the entire supply chain, from the production of raw materials, logistics

management, processing, and availing products in the market (Detwiler, 2020).

legally-binding contracts that can protect the company just in case issues arise

in the future.

Legislative and Policy Changes

communicable disease. It is expected that after the situation is managed,

countries will come up with various policy measures to ensure that such