Innovator's Edge in Supply Chain Transparency and Food Waste Reduction

70 Pages Posted: 6 Dec 2024

See all articles by N. Bora Keskin

N. Bora Keskin

Duke University - Fuqua School of Business

Chenghuai Li

Duke University - Fuqua School of Business

Jing-Sheng Jeannette Song

Duke University - Fuqua School of Business

Date Written: November 18, 2024

Abstract

New digital technologies are transforming fresh produce retail, enabling real-time freshness tracking and allowing retailers to share valuable information—like sustainability certifications—directly with consumers. These innovations promise not only to streamline supply chains and reduce food waste but also to redefine competitive advantage. In a duopoly with freshness-sensitive demand, we explore whether an innovator—the unique adopter of supply transparency technology—gains a competitive advantage over a follower who adopts the technology when her competitor has adopted it. Our analysis reveals that the innovator can achieve higher profits, reduce food waste, enhance consumer satisfaction, and increase demand fulfillment. When consumers value transparency, the innovator’s advantage grows, reshaping the market in her favor. Notably, the innovator curbs more food waste through a "market shrinkage" effect, where the competitor’s market share contracts, easing supply-demand imbalances and mitigating the risk of excess inventory. Meanwhile, the follower's gains are limited, as the non-adopter passively benefits from the innovator’s proactive choices.  We also find that markets with fewer competitors are more inclined toward industry-wide adoption, suggesting that mergers in grocery retail could further amplify food waste reduction and consumer demand satisfaction. Finally, we extend our findings to cases involving freshness-based discounts and sequential technology adoption.

Keywords: fresh produce retail, competition, technology, transparency, innovator's advantage, food waste

Suggested Citation

Keskin, N. Bora and Li, Chenghuai and Song, Jing-Sheng Jeannette, Innovator's Edge in Supply Chain Transparency and Food Waste Reduction (November 18, 2024). Available at SSRN: https://ssrn.com/abstract=5024943 or http://dx.doi.org/10.2139/ssrn.5024943

N. Bora Keskin (Contact Author)

Duke University - Fuqua School of Business ( email )

100 Fuqua Drive
Durham, NC 27708-0120
United States

HOME PAGE: http://faculty.fuqua.duke.edu/~nk145/

Chenghuai Li

Duke University - Fuqua School of Business ( email )

Durham, NC
United States

Jing-Sheng Jeannette Song

Duke University - Fuqua School of Business ( email )

100 Fuqua Drive
Duke University
Durham, NC 27708
United States

HOME PAGE: http://people.duke.edu/~jssong/

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