Vertical Coordination and the Design Process for Supply Chains to Ensure Food Quality

There is growing interest in vertical integration and supply chain management in the food system. Several dimensions of supply chain performance have been analyzed such as logistic efficiency, quantitative input control, risk reduction. This paper focuses on supply chain design strategies for ensuring food quality. We present a series of brief descriptions of food supply chains in the U.S. and Europe. These help illustrate both the common features and the diversity of emerging supply chains in the food system. We review key theories that can serve as the conceptual foundation for supply chain analysis and design, including transaction cost economics, agency theory, property rights theory, and the resource-based theory of the firm. We assess the usefulness of these theories in explaining similarities and differences in the illustrative supply chains with respect to chain leadership, choice of mechanisms for quality assurance, the distribution of margins among chain participants, and adaptability in the face of change. In our concluding remarks, we look ahead to challenges and opportunities for future work on supply chain design in the food system.