A study on adapting advanced traceability system between feed manufacturer and salmon farmer in a farmed salmon supply chain

Abstract

Adopting an advanced traceability system in a supply chain is crucial to solve food safety issue. It is certainly important for firms to improve their traceability to deal with potential recalls but it is up to the firms’ choice 'How much traceability' they want and on 'What level of granularity'. The purpose of this thesis is to investigate how different actors in a real farmed salmon supply chain perceive benefits of implementing the advanced traceability system and how to design optimal chain traceability systems to reduce the product recalls, e.g. reduce recall scale. We investigated the presence or absence of internal and chain traceability between the two different actors, a feed manufacturer and a salmon farmer, in the farmed salmon supply chain. What the current optimal ID technology and granularity level of the two parties and what the ideal ID technology and granularity level of the two parties to achieve the chain traceability are studied. Cost-Benefit analysis of implementing different degree of traceability system is conducted to derive how costs and benefits are distributed between these two parties. Traceability’s critical importance, from a recall liability perspective, decreases as we move from the salmon farmer to the feed manufacturer in the supply chain. When there is a choice among implementing the different traceability levels in the supply network, the salmon farmer has higher incentives to invest in the advanced traceability system. When the salmon farmer’s interests in improving chain traceability system are not perfectly aligned with the interests of the feed manufacturer, how the salmon farmer can motivate the feed manufacturer to participate in improving the chain traceability by exploiting interest-sharing mechanism is studied. Our analysis shows that it would be difficult for whole supply chain to achieve a chain traceability, if 1) Each party has their own optimized internal traceability system, 2) The costs of implementing an advanced traceability is larger than its benefits, 3) Proper incentives is not given to improve it.