The expected value of the traceability information

Abstract

Recent regulations on agri-food traceability prescribe traceability throughout the entire supply chain, in order to ensure consumers’ safety and product quality. This has led producers and retailers to consider the opportunity to improve the firm’s reputation and consumer confidence through the implementation of traceability systems designed not only to satisfy the legal requirements, but also to track the quality of the products through the supply chain for optimization purposes. However the actual implementation of such systems depends on the possibility of gathering specific information related to the product quality. Nowadays, innovative and non invasive technologies such as the Radio Frequency Identification (RFID) allow the automatic real time collection of data, thus enabling the development of effective traceability systems. In such context the expected value of traceability is a fundamental issue concerning the economic analysis of costs involved in such an investment and the optimal granularity level of implementation. This paper aims at evaluating the expected value of the implementation of traceability systems for perishable products like fruits and vegetables, and its profit. The study presents a mathematical stochastic approach for optimizing the supply chain profit and establishing the optimal granularity level (namely the Economic Traceability Lot) when a RFID solution is adopted. In particular, the supply chain profit in the presence of RFID traceability system has been calculated and compared with the expected profit in absence of such a system, and the results confirm the importance of the specific characteristics of the supply chain in determining the optimal configuration of the traceability system