Global Supply Chain Management GSCM Final Assignment Abdirahman Adan Ahmed

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Global supply chain management GSCM


This forth module assignment is partially submitted of the requirement of the university Salford
for the Degree of MSc. Procurement, logistics and supply chain management.

The assignment is about “How the Covid-19 and Russian-Ukraine war affected the Global supply
chain network and Egyptian’s food sector.”

Name: Abdirahman Adan Ahmed


Student ID: @00698616
Course leader: Prof John Bancroft
Word limit: 3000+/- 10%
Assignment type: Final Assignment
Submission Date: 16th July 2023.

Confirmation of Originality, this is to certify that the work is solely mine and any other sources
utilized are fully referenced.
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Executive Summary
Global supply chain consists mainly on global firms that are operating jointly over several
countries or even continents to make sure that their final raw supplies or services reach the final
consumers, however there are several layers of challenges or obstacles that makes no easy task for
managers whether on man-made or natural (cultures, designs, customs etc. or natural calamities).
Over the last three years, the world has experienced a catastrophic event of Covid-19 that
devastated the global supply chain management GSCM followed by the Russian-Ukraine, R-U
war.
The assignment report is currently based on the two mentioned Burdens; the report will be
subdivided into three sections.
Section A, Assessment of supply chain disruption during covid-19 period and how the Russian-
Ukraine war affected the food chain system of Egypt.
Section B. Initiatives taken by Egyptian authorities to keep the supply go smooth during the
periods mainly during the R-U war.
Section C. Implementation of technological advances on food industries to mitigate the
challenges of the both Burdens.
The covid-19 and Russian-Ukraine war have both affected the GSCM in a level that have not
been experienced by the Egyptians before, to mitigate the situation, Egyptian authorities engaged
in mitigation measures to reduce the spread of the virus, lock-downs, Restriction on international
cargo movement, closure of some food processing plants, reduction of work force, etc. that
reduced the level of the spread of the virus and on the other-hand it has affected production of
flatbread that is consumed in Egypt in every morning.
The R-U war has also disrupted the availability of wheat and sun-flower oil so the government
planned to source from other suppliers, the government increased local production and also
increased the subsidiaries to help 88 million users of government aid package.
Egyptian’s local production of wheat is estimated at 9 million Mt while its consumption is totaled
21.3 million Mt, leaving a big gap of 12.3Mmt that the Egyptian Government has to cover an
approximate of more than 88% of Egyptian population registered bread rationing system, the
Government allocated some $3.3B for bread subsidies.
Not only the food was disrupted by the war, also energy was also disrupted, as Ukraine imports
fuel for its food industries from Russia and Belarus so this fuel supply is critical to spring planting
and harvesting in August 2022 as of Ukrainian harvesting time.
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Table of contents.
Executive summary……………………………………………………………………………...1
Table of content.………………………………………………………………………………...2
Table of figures……………………………………………………………………………….…2
Introduction …………………………………………………………………………………......5
Global Food supply chain management………………………………………………………....6
Importance of wheat for Egypt…………………………………………………………….……7

Section A
Egyptian food supply chain disruptions during Covid-19………………………..…………..…8
Agricultural production……………………………………………………………………8
Food import/export………………………………………………………...........................9
Section B
Egyptian’s initiatives to mitigate supply chain disruptions during the Covid-19 and Russia-
Ukraine war
Over all concept
Increase of government aid Package………………………………………...……...........11
Increase local production…………………………………………...…………………….11
Diversification of wheat imports ……………………………………………...................12
Initiatives taken by some flour mills in Egypt during Covid-19 and R&U war………….13
Al-hazaa investment Group co………………....………………………………................13

Section C
Technological advancement in food supply chain………………………………………….13
The importance of AI in food industries……………………………………...…………….14
Conclusion…………………………………………………………..…………..….…….…14
References ……………………………………………….……………………………….....16
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Table of Figures

Figure 1 food supply chain Cycle ……………………………………………………………….6


Figure 2 Ukraine’s main production areas……………………………………………………….7
Figure 3 Change of food price…………………………………………………………………....9
Figure 4 Importation of wheat by Egypt from various sources………………………………….10
Figure 5 Egyptian local production………………………………………………………………12
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Introduction
The SCM encompasses the planning and management of all activities involved in sourcing and
procurement, conversion and all logistics management activities, importantly it also includes
coordination and collaboration with channel partners, which can be suppliers, intermediaries, third
part service providers, transportations, inbound logistics, outbound logistics, customers, in
essence, supply chain management integrates supply and demand management within and across
companies. (CSCMP, 2008).
However, food supply chain management (FSCM) is quite complex than other supply chains, a
gap in the FSCM can cost lives, as there are several challenges in the SC, such as food safety,
quality, food fraud, as well as inefficient processes, (Katsikouli et al, 2021).
FSCM is one of the most difficult supply chains to manage and is yet very important for our day-
to-day life, it requires proper production mechanism, proper storage to avoid humidity, it requires
proper transportation from country to country, from airport to airport and/or port to port.
Over the years, the world has experienced a covid-19 global food shortages, followed by R-U war
The covid-19 and Russia-Ukraine has mainly disrupted the FSC of the Middle east and North
Africa and Egypt is the major importer of wheat from both Russia and Ukraine and similarly both
R&U are the Global producers of wheat, corn and sunflower in the world, (FAO, 2022).
The ongoing conflict will also induce the disruption of global food security as it displaces
population, damages food industry infrastructure, prevents farmers from farming, blocks sea
cargo free movement, increases food price etc, (Li et al., 2022).
R&U both imported 86.01% of total wheat imports into Egypt and domestically produces roughly
(9 million tons of wheat), and Egypt cannot even reduce import dependence below 50% of their
monthly consumption, the Government propose of domestic increase production limited as the
country is mainly desert only about 5% fertile.
Egypt is the world’s major consumption of wheat about 45-55% of wheat that is consumed is
imported which makes Egypt the world’s biggest importer of wheat, (Woertz and Keulertz 2015).
as they make round flat bread.
This report will focus more on the effects of both burdens on the GSCM and how industry 4.0
will also affect the implementation of, production, procurement, logistical aspects as well as
transportation as the world is moving onto industrial 5.0, it will focus primarily on how the two
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global Burdens affected the Egyptian food industries. And how Egyptians implement industry 5.0
for their food supply chain system.
Global Food supply chain management.
Food industries play a crucial role in providing the basic necessities to support livelihoods of
various human needs (cooper et al, 1993), food is not like other products available in the markets
once harvested, produced, and should be stored delivered and retailed through specified
requirements
The food supply chain management requires special SC, like food quality, freshness within
limited time which makes the underlying supply chain more complex and difficult to manage (la
scalia et at., 2016).
Food chain become more complex unless stated and invested in, food chain start from
Agricultural and ends up in consumer and in-between these two ends encompass a large
geographical, economical over large distance between farm to food industry to retailers, from
country to country and sometimes from continent to continent, over these distance there are no
free challenge zones there might be challenges associated to it, such as food prices,
contamination, theft, food and terrorist attacks (Zsidisin et al., 2004),
After productions food requires proper maintenance like proper packaging in a way that it’s not
damaged during transportation or storage at the warehouse for retail, the packaging process is one
of the most important among all of the food manufacturing process, (Kelsey, 1985).

Fig 1: food supply chain Cycle


Note the figure Shows the food system from raw materials to processing to retailers and finally to
costumers sourced from Yale Experts Explain Sustainable Food Systems | Yale Sustainability.
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Ukraine is a major Agro-producer mainly wheat, sunflower, and maize and these are mainly
transported through ports in Mariupol and Odessa of Azov and Black sea respectively. As shown
in the figure below.

Fig2: Ukraine’s Main production areas


Note: as the figure illustrates the crop production are wheat, maize and Sunflower are produced
in these regions, information is sourced from International grains council, (Leon et al., 2022)

The importance of wheat for Egypt.


Soon after the covid-19 while some countries still struggle the financial and logistical shortfalls
here comes the world’s biggest producers of wheat Russian and Ukraine into war, both produce
more than 25% of global output of wheat production in the market, (Mbah & Wasum, 2022).
Now with the Current situation of Ukraine the global market has been disrupted in supply and
price surpassed the actual market price.
Wheat is the second most consumed food in the world roughly 173 countries, an average of 102
countries still consume more than average about 50kg per capita per annum, it also plays an
important role in world food security, after the R-U war some countries like Australia, Brazil, and
US expand several consignments to fill the gap vacated by the Russia and Ukraine (Erenstein, et
al,. 2022), when such global inappropriate like the pandemic, Main wheat producers into conflicts
Under different circumstances price and supplies become more scarce, the average gap for
Egyptian will be roughly 7.715m tons (Afifi, 2018).
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Egypt become highly dependent on wheat imports from both Russia and Ukraine countries than it
produces, Egyptian government spends roughly $3B annually for wheat imports alone the
Tamween ration card that covers the need of about 73 million people about half of Egyptian
population (MIST, 2019) this program is about 150 loaves of round bread per capita per month.
A part from food, Russian and Ukraine are also a major supplier of other important agro-products
in MENA Regions (middle east and North Africa) roughly 85% of sunflower imported to Egypt
are from Ukraine and 30% of corn imports because of the war this Region is suffering a lot and
Egypt is among them.
There are a number of countries roughly 25 countries supplying wheat to Egypt, so the biggest
two countries importing wheat to Egypt being R&U roughly 86.1% of Egypt’s Grand total wheat
imports (FAO, 2022), in 2020.
Section A
Egyptian food supply chain disturbances during the covid-19.
The Covid-19 and pandemics has resulted unforeseen pressure on food global supply chains,
creating unprecedented challenges for farm labor, production, processing, transport and logistical
activities (OECD), (Petetin,2020).
It has also affected Egypt’s Agri-food sector and brought the commonly known challenges of the
supply chain from Field to fork, agricultural production, food processing and transportation, it has
also affected implication for global food security the virus itself and policy restrictions resulted a
big disruption in food value chain, harvesting was interrupted as a result of shortage of workers,
farming because of lack of feed or fertilizers, transport because of reduced passage services,
market exchange because of curfews or social distancing, (Carrier-swallow et al., 2022).
Agricultural productions
Agri-food SMEs (small and medium enterprise) is an important sector for food and agricultural
economy, and they exemplify at least 90% of Egypt’s Agri-economic (MALR, 2015).
However, they are more vulnerable to any internal or external shocks like water scarcity, financial
options, etc (Abu Hatab, Hess, 2013).
So many of these SMEs faced few challenges during the lockdowns, lack of work force,
transportation and other issues, and after Government granted softened, roughly 3% ceased such
business activities. for cereals, the most important product for Egypt and among “their strategic
group of commodities”.
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Food imports
Soon after WHO announced global pandemic government authorities to respond to their national
strategic covid-19 response plan, amongst them is ban of global exports over more than 150
countries put trade measures into forces, such measures led to severe issues in terms of global
food price as well as insufficient supply, (Anania, 2013).
as food importing countries were negatively affected by the food exporting countries, Egypt
implemented different strategies to make sure food availability, these include, the importation of
substantial quantity of wheat, increase the country’s storage capacity, increase domestic
production (HEICS, 2015).
The figure below shows how price went up.

Fig 3: change of food price


Note: Source international monetary fund primary commodity prices, Jan 2000-Feb 2022.
Note: the food index contains, cereals, cooking oils, meat, seafood, sugar, and other foods.

Romania one of Egypt’s main supplier of wheat initially banned exports of wheat outside the EU,
but there a wheat shipment already sold to Egypt held up by new restrictions roughly 7.59m tons
of wheat (Anania 2013).
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SECTION B.
Egyptian’s initiatives to mitigate supply chain disruptions during the Russia-Ukraine war.
Overall concept
As mentioned earlier Egypt is the world’s biggest wheat trader in 2022 alone an estimate of
13Million tones were imported, this similarly corresponds to the wheat consumption in Egypt is
relatively increasing yearly and estimate of 20.8 Million tons were used compared to 21.1million
tones in 2022 alone, the government’s effort in the area is to increase domestic production of
wheat rather than foreign dependency. (FAO, 2022).

Fig 4 importation of wheat by Egypt from various sources


Note: the figure shows distribution of wheat imports by Egypt measured in Mt during 2017-2020
period. Source Agri links.
The figure below shows the import of wheat from Russian-Ukraine compared to the entire world.
Russia, Ukraine and Kazakhstan known as RUKs are closest compared to other parts of the world
producing wheat, if prices remain the same, they reach Egypt with higher transportation costs.
Egyptians always adjust their wheat prices within the world market and searches where is the
lowest and perfect quality, Russia established a stable position in Egypt, when US dominance of
wheat price peaked, and 2013 when Ukraine commenced wheat importation to Egypt.
Egyptian authorities are responding in both fiscal and financial system to stabilize the wheat
crisis, provided that 300,000 tons of Ukraine wheat under Egyptian contract have already been
stranded in Ukrainian ports in five different cargoes, (FAO, 2022)
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Increase of Government aid package.


Egypt’s main land is 95% desert and roughly 5% is cultivated on main crops wheat, rice and vegs
the most important food in Egypt is the wheat with a population of 105 million and consume
roughly 18.5mt per year (McGill et al. 2015), after the R-U war the government an approximate
of 63.5Million people depend on government subsidies (AAbdalla et al., 2022).
The government aid package also reached more vulnerable people, tax relief for firms, farms and
salary increase of civil servant (science direct).
The tamween program requires about 9Mmt of wheat annually that is about half of 21.3mmt of
wheat consumption in Egypt annually, soon after the Russian-Ukraine war wheat price run into
the sky (Capmas, 2022).
Increase local production
The local procurement of wheat from domestic market encourages local farmers increased
production of wheat as it is essential of Egyptian food, the government offered a higher price for
all wheat farmers (Science Direct).
Egyptian wheat production is one of the main priority goal of increasing food production in order
to cover a huge gap between imports and consumption annually (A.S. Morsy et al,. 2021).
With this gap Egyptian farmer can produce 10t/ha, and the farmer’s actual yield is 6t/ha, the
government of Egypt can increase local production.
Egyptian’s expansion on it wheat domestic production by the Toskha project in the southern
valley in Aswan province, it is expected to a relative increase of wheat production, Egypt expects
to yield 4 Millions of tons of wheat locally harvested from April 2023, (El Safty S et al., 2023).
There are major issues affecting Egyptian local production of wheat amongst them are climate
change, water storage, and crop variability, lowest fertile land all threaten Egypt’s Agri-sector.
(Gado TA et al., 2021) all these threaten to Egypt even at Global price shocks.
To control the risk of round flat bread gaps and social dissatisfaction, the Egyptian authorities
must maintain to reduce wheat dependency on either Russia or Ukraine and enhancing by
obtaining other sources of international wheat and most importantly their local productions of
wheat (CAPMAS, 2022).
As the country’s fertile land is quite limited the government has to increase the storage silos for
wheat.
Below are top highest Egyptian governorates by supply rate.
 Sharqiya Governorate with roughly 700,000mt
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 Beheira Governorate with 320,000mt


 Minya Governorate with 300,000mt.

Figure 5 Egyptian local productions.


Note: shows the domestic production of cereals the highest is the wheat, source (Yigezu et al.,
2021).
Diversification of wheat imports
As Egypt has suffered lots of gaps in wheat supplies as major sources are in conflicts and over the
last 5 years, 82% of Egyptian wheat originated from Russia and Ukraine, but Egyptian authorities
secured supply from diverse markets via international tenders, in mid last year Egyptian
government procured some 4.1mmt, at this has resulted that no wheat, flour, bread shortage was
observed in bakeries, Egyptian explored new markets in Mid-2022, Egypt received a consignment
from India purchased by private sector.( United states department of Agriculture).
Egypt has been trying to obtain different sources of wheat suppliers like India (Gulf news, india in
talks with Egypt in 2022), while at the same time India announced to cease of exporting wheat in
2022, while Egypt has secured some shipments before this announcement is made (Barnes J et
all., 2022).

Initiatives taken by Egyptian flour mills during the R&U war.

Egyptian Agri-food deserves much attention when Government plans intervention like Covid-19
pandemic as they contribute a higher percentage to the country’s GDP.
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While restriction was a common, however farm and food industries restrictions were lowered as
they contribute a bigger for the country’s export and Domestic use.
The government buys imported and locally produced wheat and distributes to the Mills in each
governate and the produced flour is distributed to the bakeries” (the national Business news of
Egypt)

Example Al-hazaa Investment Group


Al-hazaa Investment Group works for various sectors and food industries, from grain storage,
plastic industry, Pasta production, Grail milling faced challenges during Covid-19 crisis, “they
had to reduce the number of workers per shift to make sure staff safety, that reduced bit of their
products in the market, though their supply was not disturbed by the lockdown, they also
upgraded their online business by increasing home delivery.
In fact, there were challenges during the pandemic not only the lockdown, but also global supply
shortage, followed by countries banned exporting wheat to under developing countries, as well as
evergreen mega ship stuck in Suez channel for a week, Al-hazaa Investment Group increased its
inventory stock of wheat and used its silos to their fullest capacity, energy price also hiked. Al-
hazaa used their solar plant that started operation earlier 2017.

Section C
Technological advancement in supply chain
During covid-19, the world has experienced a large disruption of supply, namely, labor shortages
social distancing, lack of transportation due to lockdowns, introduction of technological
integration have become more effective and efficient, fourth industrial revolution or Industry 4.0
has transformed the supply chain and warehousing as well as manufacturing sector by
interconnecting different departments of the supply chain, and Industry 5.0 has also played a
greater role in crop quality, harvesting, watering etc.
the automated production system APS with the combination of production system, require higher
connectivity, flexibility.(Ungerean et al., 2014)
Egyptian introduced Hudhud smart assistant project for the farmers to take a picture of infested
plant and send it to Hudhud so that the clearer instruction will follow. (farmers review in Africa),
several techs were used in precision farming like remote sensing RS, (CRC, Press Taylor and
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Francis Group in 2011), GPR, Geographical information system and the most important part is
that generation of the maps of the soil.
It is greatly noticed that the Industry 4.0 can significantly increase food production as well the
entire FSC, from harvesting, through production and processing as well as proper warehousing
and highly standardized means of transportation to retailer (Kayikci et al., 2021).

The importance of AI in food industries


An AI-aided supply chain helps systematically develop in its structure and network resilient
supply chain in complete settings like during covid-19 are capable of sensing risks, realistic
customer demands etc, (S. Modgil et al,. 2021).
Similarly the food industry is not a simple sector to produce enough food supply for the
population and export, the food industry is always a complex business operational network from
production to consumption, to be on top of such supply chain, the need to involve in such latest
technology is necessary to increase productivity of the food industry, predict crop yields, to
determine irrigation system as well as soil contents, it can also be used like a video surveillance
and robots that can monitor crop quality, detect insects, etc. (Beciuliene et al,. 2020).
The biggest role of AI in food industry mainly farming is that, it can monitor factors affecting the
food supply chain, food quality management and food safety management, as mentioned above,
AI can regulate the number of pesticides in food, reduction of human error, use of robots in
warehouse for food quality monitor, humidity and temperature record.
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Conclusion
This report has outlined Egyptian food industry, how the Covid-19 affected the food supply chain
and food industry plus, how Egyptian’s food supply chain has been disrupted by the covid-19
followed by the Russian-Ukraine war, the mitigation measures put forward by the Egyptian
authorities, to tackle the situation, the report also captures the food production of Egypt compared
to the their annual consumption, food price subsidies, restrict on food exports imposed by the
Egyptian authorities on farmers has played a significant role to tackle the global food crisis due to
Russian-Ukraine war.
The report also captures Egyptian’s production capabilities, as the country’s food mainly depends on
wheat imports from Russian-Ukraine, and 5% fertile land of Egypt is far away to cover the food gaps,
which on the hand meaning that Demand is much higher than domestic supply.
Egyptian government has to amend its strategic plan of wheat policy, increase government aid
package of wheat price subsidies, increase domestic increase of production of wheat, obtain and
diversify its global wheat suppliers and expand its irrigation system to make deserts fertile lands
the latter is subject to an agreement to make by Egyptians and Ethiopians over GERD water
system.
As Egypt’s wheat import depends on how the Russian-Ukraine war ends and effects exports of
the coming months, Egypt’s wheat will also depend on how other big wheat suppliers respond to
the vacated wheat global markets.
As mentioned Egyptian government need to discover more options on reducing this huge gap of
domestic production, global import vs domestic consumption., few takeaways are shown below.
 Increasing domestic wheat production.
 Reduction of high consumption of wheat (more than global average per capita per
annum).
 Improving the effectiveness of Tamween food policy.
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