Impact of Traceability Technology Adoption in Food Supply Chain Networks

Management Science (Forthcoming)

65 Pages Posted: 21 Nov 2019 Last revised: 4 Apr 2022

See all articles by Lingxiu Dong

Lingxiu Dong

Washington University in St. Louis - John M. Olin Business School

Puping (Phil) Jiang

Washington University in St. Louis - John M. Olin Business School

Fasheng Xu

Syracuse University - Whitman School of Management

Date Written: April 4, 2022

Abstract

Improving traceability in food supply chains has been a big part of ongoing effort to reduce contamination risks and food waste. Recent technology advancement such as blockchain technology has propelled innovative retailers to promote food traceability system adoption in their supply chains. We develop a three-tier supply chain model with multiple upstream (tier-2) suppliers to investigate: how traceability technology adoption affects incentives of supply chain members, and whether and how its anticipated benefits can be realized. We find that full traceability brings direct revenue benefit to every supply chain member by saving uncontaminated food from disposal (pure traceability effect), but also leaves each tier of the supply chain vulnerable to its immediate downstream buyer’s exploitation through strategically lowering the purchasing price (strategic pricing effect). The interplay of the two effects may result in some of the supply chain members (even the retailer) being worse off with traceability adoption, and the system being exposed to higher contamination risk; the latter is due to the weakened upstream supplier’s incentive to exert contamination risk-reduction effort. Moreover, we find that the supply chain network structure also influences the benefit distribution of traceability adoption: The retailer always benefits from traceability adoption in network structures where the tier-1 supplier’s strategic pricing power is eliminated or weakened; all supply chain members benefit from traceability adoption in a network with a large number of tier-2 suppliers. Finally, we show that alter-native risk-mitigation schemes such as tier-2 coordination can diminish the value of traceability adoption, and partial traceability enabled by tier-1 product inspection can be more beneficial to the retailer than full traceability.

Keywords: Traceability, technology adoption, multitier food supply chain, food contamination

Suggested Citation

Dong, Lingxiu and Jiang, Puping (Phil) and Xu, Fasheng, Impact of Traceability Technology Adoption in Food Supply Chain Networks (April 4, 2022). Management Science (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3484664 or http://dx.doi.org/10.2139/ssrn.3484664

Lingxiu Dong

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1156
St. Louis, MO 63130-4899
United States

Puping (Phil) Jiang

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Fasheng Xu (Contact Author)

Syracuse University - Whitman School of Management ( email )

721 University Avenue
Syracuse, NY 13244-2130
United States

HOME PAGE: http://www.fashengxu.com

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