Mitigating triple-marginalization in a multi-tier product tracking system: blockchain application and real-data validation

Most of product waste is due to label problems and handling errors, some retailers try to use blockchain-based system to tackle food waste. However, blockchain adoption requires the participation of all supply chain members (e.g. suppliers and logistics service providers) while their incentives remain unclear. Considering a multi-tier system comprising a supplier, a retailer and a logistic service provider, we solve a multi-stage optimisation problem when the products stored in advance are subject to shelf-life due date risk while the real-time order is subject to upstream responsive pricing threat. We evaluate the effectiveness of product tracking system based on blockchain applications. Both real-data validation and game theoretic analysis reveal the stakeholder’s participation incentive conflicts and the dark side of triple-marginalization. However, a sequential co-opetition mechanism is capable of coordinating the stakeholders’ preferences for the product tracking system. We further find that saving waste and balancing the advanced and real-time orders do not necessarily indicate improvement of environmental sustainability. We suggest that: Retailers should carefully judge the product tracking system because of the potential lose-lose situation for profitability and sustainability. But once retailers can profit from blockchain adoption, suppliers are likely to profit from joining the blockchain.