Could the blockchain help track an outbreak like E. coli in spinach?

Could the blockchain help track an outbreak like E. coli in spinach?

Are new technologies like blockchain good ways to track foods through their supply chain during food contamination outbreaks? New research raises loopholes in this idea.

Outbreaks of food contamination are a frequent occurrence in the US food system and can be costly. In 2006, for example, 276 consumer illnesses and three deaths were attributed to one coli bacteria The outbreak in California, where spinach disappeared from store shelves across the country for two weeks and the state’s farmers incurred $ 74 million in losses.

To protect themselves and their customers, retailers like Walmart are promoting blockchain as a new way to track perishable foods like leafy greens as they travel through the supply chain.

But what impact does this tracking technology have, particularly on the strategic behaviors of stakeholders within the supply chain, and does it deliver on its promises of increased safety and reduced waste? The answer, Fasheng Xu, professor of supply chain, operations, and technology at Syracuse University, and colleagues found in their theoretical model, is complex and depends on the composition of the supply chain.

The biggest benefit of blockchain in this context is immediately apparent: its ability to capture, preserve, and grant access to data along the supply chain makes it quick and efficient to identify the source of contaminated spinach or other products, allowing for continued sale of unaffected products. (The researchers call this the “pure tracking effect.”)

Considering the different stakeholders within the supply chain – retailers, suppliers, and farmers – complicates the picture. “They take care of themselves, and they play games with each other to try to maximize their profits,” Xu explains. “Their strategic actions may backfire and may not lead to a mutual win but to a triple loss.” (This is called the “strategic pricing effect.”)

For example, Walmart may strategically reduce the wholesale price of spinach, leading distributors to offer farmers a lower purchase price. “The immediate consequence is that farmers will put less effort into improving the integrity of the supply chain, and therefore contamination risks will become higher after adopting this technology,” says Xu. The system and its supply chain members, including the retailer, end up in a worse situation.

However, having more growers in the system ultimately allows the benefits of pure traceability to bypass the impact of strategic pricing. “When we have a lot of farmers, it becomes better to quickly identify the farm where the pollution came from, otherwise we need to destroy the produce from all the farmers,” Xu explains.

In practice, researchers recommend that managers install the pricing system when developing tracking technology to discourage supply chain members from using strategic pricing and to ensure that the benefits of the new system are evenly distributed. “Walmart can stick to upstream suppliers saying that after they adopt this technology, it won’t change the wholesale price,” Xu says.

In fact, perfect tracking may not be the best solution. “There are many different ways to introduce alternative measures to mitigate risks, such as safety inspections in the middle of the supply chain,” says Shaw. However, the study model is applicable only to this specific case of perishable products, as it makes sure to confirm. “If you look at other types of supply chains, such as vehicle parts, that’s a different story.”

The study’s co-authors are from the John M. Olin School of Business at Washington University in St. Louis. a paper On upcoming results in the journal Management science.

source: Syracuse University

#blockchain #track #outbreak #coli #spinach

Leave a Comment

Your email address will not be published. Required fields are marked *