Return policy selection and blockchain technology adoption decision in a supply chain with quality information disclosure

Distrust in product quality increases customers’ perceived risk and the likelihood of product returns. Lenient return policies and blockchain technology (BCT) are two key strategies for mitigating this distrust. However, the strategies incur high implementation costs. Therefore, making strategy decisions on return policy and BCT adoption is crucial for optimizing supply chain performance. This study develops analytical supply chain models involving a manufacturer and an online retailer, where the manufacturer decides whether to adopt BCT, and the retailer selects between a no-return policy and a money-back guarantee (MBG). Consequently, four cases are explored in this study. We derive the optimal decisions and corresponding profits for each case and find that customer trust in product quality increases the profits when BCT is adopted. Comparing these cases, the results suggest that the no-return policy and the MBG may incentivize the manufacturer to adopt BCT because BCT enhances product quality transparency and strengthens supply chain trust. Furthermore, the combination of BCT adoption and an MBG is optimal strategy when the quality cost coefficient is low and the net return value is positive, as the strategy simultaneously enhances customer trust and reduces the risks and costs associated with returns. Conversely, when the quality cost coefficient is high and the net return value is negative, the optimal strategy shifts to no BCT adoption and a no-return policy. Additionally, several extensions are discussed to check the robustness of the findings.