Abstract
PurposeCurrently, digital technology has been proposed as a new archetype for developing an effective traceability system in the perishable food supply chain (FSC). Implementation of such a system needs significant investment and the burden lies with the members of the supply chain. The purpose of this paper is to examine the impact on the profit of the supply chain members due to the implementation of an effective traceability system with such a large investment. The study also tries to explore the impact of the implementation of such a system by coordination among the members through a cost-sharing mechanism.Design/methodology/approachA two-level supply chain that comprises a supplier and retailer is analyzed using a game-theoretic approach. The mathematical models are developed considering the scenario for an individual, centralized and both members invest using a cost-sharing mechanism. For each of the models, the impact of product selling price, information sensing price and quality improvement level on profit is analyzed through numerical analysis.FindingsThe study reveals that consumer involvement can be a strong motivation for the supply chain members to initiate investment in the traceability system. Further, from an investment perspective cost-sharing model is beneficial compared to the individual investment-bearing model. This mechanism can coordinate as well as benefit the FSC members. However, the model is less beneficial to the centralized model from profit and quality improvement levels.Practical implicationsFood wastage can be less from supplier and retailer perspectives. Moreover, consumers can purchase food items only after verifying their shipping conditions. Consequently the food safety scandals can be reduced remarkably.Originality/valueDigital technology adoption in the perishable FSC is still considered emerging. The present study helps organizations to implement a traceability system in the perishable FSC through consumer involvement and a cost-sharing mechanism.
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