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Research: Supply Chain Performance, Not Profitability, Behind Food Firms' Traceability Schemes

Image Credit: Houstons Farm

According to a new study by the University of Milan, voluntarily implemented food traceability schemes are linked to a motivation to enhance information, safety and quality management with supply chains rather than a need to maximize profits.

Do motivations affect different voluntary traceability schemes? An empirical analysis among food manufacturers explores links between the motivations leading firms to adopt quality certifications and the kinds of voluntary traceability implemented to comply with such requirements. The core of the study was focused on the voluntary traceability implemented to accomplish certification requirements addressing environmental and social responsibility.

In a survey of 131 Italian food firms, researchers found that most of the motivations related to sustainability certification were statistically linked to the level of traceability complexity implemented. Businesses working towards sustainability certification were more likely to actively reorganize relationships and activities to achieve a more integrated supply chain. Firms adopting quality certifications to increase financial performance, on the other hand, implemented traceability efforts with a low level of complexity.

“The results show that most of the motivations related to the adoption of sustainability certifications are statistically linked to the level of traceability complexity implemented. More precisely, confidence-related and supply chain motivations are positively related to the level of traceability complexity, whereas profitability related motivations are negatively associated,” the paper’s authors explained.

Small businesses were also found to be more likely to implement a high level of traceability complexity. This is thought to be associated with their low bargaining power within the supply chain, which spurs them to adopt rules and procedures that protect them from the opportunistic behavior of economic agents.

“Complex traceability implies a higher transparency and, thus, a higher probability of conducting transactions fairly and defending firm reputation towards retailers and consumers.”

In the European Union, food traceability is obligatory under Regulation 178/2002 and this new research fills in an information gap surrounding traceability schemes. However, the report does not reveal whether one strategy is more advantageous than another.

“A simply traceability will allow the firm to adapt to changing market conditions and to modify firm marketing objectives to maintain profitability,” says the report.

“Firms implementing complex traceability implies a reorganization of supply chain relationships and activities. In this case, firms will implement traceability capable of enhancing the information, safety and quality management within the food supply chain.”

The survey was conducted through an ad hoc questionnaire during the period of January 2015 to June 2015. The questionnaire focused on the Roundtable on Sustainable Palm Oil (RSPO) certification, Fair Trade, Friend of the Sea, British Retailing Consortium (BRC) and Food Safety System Certification Scheme (FSSC22000).

From the sample survey, 88 percent represented seven sectors: fruit and vegetable (28 percent), wine (18 percent), confectionary (12 percent), backed products (11 percent), processed seafood (9 percent), processed meat (5 percent) and dairy (5 percent).

The survey featured questions related to the environmental and social food-related aspects of certification, such as management of natural resources, effective energy use in food processing, the reduction of food waste and the minimization of environmental costs linked to the transport of agri-food products.

Issues of food safety and quality, supply chain practices that protect small producers and the provision of equal opportunities for workers were also included.


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