Implications of Shipment Monitoring Technologies on Supply Chain Management and Food Waste

Modern sensor technologies enable supply chain firms to proactively manage the risks of shipment spoilage and damage. In this talk, I will present two papers motivated by two different proactive measures enabled by monitoring technologies. In the first paper, we consider a firm selling a fresh produce product to two destination markets.  Post-harvest processes render a proportion of the product likely to spoil in transit. The longer the transportation distance, the higher the spoilage risk. With monitoring technologies, the firm can allocate the product based on the conditions of each shipment unit and the transportation distances. We formulate the firm’s problem as a two-stage optimization and show that monitoring technologies, despite being advocated for the potential to reduce food waste, may adversely increase the total waste. In the second paper, we study a supply chain consisting of a firm and two competing suppliers. One supplier has a long transportation lead time and is prone to in-transit spoilage; the other supplier has a short lead time and is not prone to spoilage. With shipment monitoring, the buyer can possibly place an emergency order with the latter supplier if its initial order is detected to be damaged. By analyzing a game-theoretical model, we find that shipment monitoring may or may not benefit the buyer because it softens supplier competition despite its informational value.