The Importance of Digitalization for the Sustainability of the Food Supply Chain

Abstract

This paper aims to define the negative impact of various indicators on the sustainability and functioning of the traditional food supply chain (FSC) in the segment of wholesale and retail activities and to propose a set of measures and incentives for the digitalization of its business processes. After a systematic review of the literature, the most common indicators significant for the functioning of the FSC were defined, primarily in the segment of wholesale and retail activities. Empirical research examined the influence of given indicators on the FSC. The obtained results showed that indicators such as poor coordination and transfer of information among FSC participants, food loss, economic performance, transaction costs, external elements, chemical and microbial contamination, and control of raw material, food, and waste flows significantly complicate the sustainability and functioning of the FSC. Based on the obtained results, a set of measures and incentives is proposed that the management of the supply chain should undertake to digitalize business processes, primarily in the segment of wholesale and retail activities. This paper also lists shortcomings of the research and gives guidelines for future research.

Analysis of Food Supply Chain Digitalization Opportunities in the Function of Sustainability of Food Placement in the Western Balkans Region

“…Based on the literature review and analysis of academic studies, as the most significant indicators for the implementation of the FCS digitalization process, the following were identified: the application of Blockchain Technology (BT) [32], the use of modern IT solutions for traceability [33], the implementation of the Internet of Things (IoT) [34], the introduction of Artificial Intelligence (AI) [35], the development of a system for electronic food placement [36], the implementation of standards, measures, and procedures for regulating the digitalization process [37], continuous training of employees [38] and economic and financial measures and incentives [1].…”

“…It includes a whole range of economic and financial measures and incentives for all those who invest in the digitalization of work processes, such as credit lines (lower interest rates, longer grace period, extended repayment period), direct benefits and incentives for employees and new hires, deferred payment, tax incentives (exemption from income tax, VAT on digitalization equipment), participation in national and international co-financing programs (IPA funds, national programs, EU projects), etc. [1].…”

“…Numerous academic research on the topic of retail [1], logistics [2], sustainability [3], and supply chain in recent years emphasized the increasing necessity for complete digitalization of the Food Supply Chain (FSC) [2]. This process was influenced by the turbulence that occurred on the world market and the substantial gaps that appeared on the demand side for food products caused by the COVID-19 pandemic and the Ukrainian-Russian conflict [1].…”

“…Numerous academic research on the topic of retail [1], logistics [2], sustainability [3], and supply chain in recent years emphasized the increasing necessity for complete digitalization of the Food Supply Chain (FSC) [2]. This process was influenced by the turbulence that occurred on the world market and the substantial gaps that appeared on the demand side for food products caused by the COVID-19 pandemic and the Ukrainian-Russian conflict [1]. There are problems regarding sustainability, the continuous placement of food, safety, and security of shipments, shortages of essential food products such as grains, meat and meat products, inflexibility and non-transparency of the FSC, etc.…”

“…Previous experiences have shown that the speed with which uncertainties occur in the market is inversely proportional to the speed with which FSC management reacts and eliminates the consequences of those uncertainties [1]. Conventional FSC is robust, dysfunctional, and non-transparent, with weak information flow within the FSC itself and between the FSC and the environment [12], all this with a low rate of integrated digital systems and processes [13].…”