Optimal Decision and Coordination of Organic Food Supply Chain from the Perspective of Blockchain

Abstract

Driven by the pain points of the organic food supply chain, which has been plagued by counterfeiting and difficulties in pursuing accountability, this paper investigates a secondary organic food supply chain consisting of suppliers and retailers and establishes two supply chain models under the traditional model and in the blockchain traceability context. In order to effectively solve the problem of unrealized Pareto improvement in organic food supply chain after applying blockchain, a new hybrid contract based on benefit-sharing and cost-sharing is designed to coordinate the supply chain and realize Pareto improvement, and this solution is gradually applied to organic food enterprises. Based on the fact that blockchain can improve trust in the supply chain and eliminate counterfeiting of organic food, the relationship between the rate of genuine products and market demand and the cost of blockchain is established, and then the analysis is developed using the Stackelberg game. We compare the traditional model with the model in the blockchain context and analyze the optimal profit of each supply chain entity, comparing the change in optimal profit before and after the blockchain implementation, and clarifying the cost threshold of the blockchain technology input application. We find that: (i) The adoption of blockchain can not only improve the authenticity of products and combat counterfeit and shoddy organic food, but at the same time, the improvement of organic level in the context of blockchain will also attract some consumers to buy organic food, which will increase the main body of the supply chain and the overall profit. (ii) Blockchain-adopted supply chains are consistently more profitable for all parties and overall than traditional supply chains. The main contribution of this study is that in the organic food supply chain under the application of blockchain technology model, by introducing revenue-sharing and cost-sharing contracts, the profit between each member of the organic food supply chain is further improved than the traditional model, and also, all of them are optimized, which further improves the stability of the supply chain and brings the supply chain to a coordinated state. Finally, in this context, the obtained results show the effectiveness and realistic operational efficiency of the proposed approach for companies compared to traditional single revenue-sharing covenants. A combination of revenue-sharing and cost-sharing covenants is the best approach to solve such problems. In conclusion, it should be noted that the analysis presented in this study will help decision makers choose the most appropriate option among the possible solutions according to their criteria. This proposed framework can also be extended in various cases where profits are out of balance in the organic food supply chain, such as safety and value gain.