Improving supply chain transparency with blockchain technology when considering product returns

Abstract

Blockchain technology is commonly used in many industries. One current application is that providing supply chain transparency, sellers can disclose product information to consumers for authentication and certification. To examine the supply chain blockchain based transparency‐level strategy and its interact with different refund policies, in a two‐echelon supply chain, we consider a supplier decides on the transparency level and wholesale price, and a retailer decides on retail price and provides full refund (policy F), or partial refund (policy P), or no refund (policy N) policy to consumers. We find the refund policy choice and the transparency‐level strategy have a mutual influence. A lenient refund policy (a higher refund) can generate more demand, which makes the supplier to provide a high transparency level, whereas a high consumer's transparency awareness also promotes the retailer to choose a more lenient refund policy. We find Pareto improvement exists under a cost‐sharing strategy, and the retailer is willing to share part of the adoption cost only when the efficiency of improving the transparency level is moderate. Otherwise, the retailer adopts blockchain technology only when there is no cost sharing. Further, different shipping cost bearers can change the sensitivity of refund policy choice, and the supplier prefers to provide a high transparency level when the retailer covers the shipping cost. When the retailer becomes more socially responsible, the supplier is more willing to provide a higher transparency level, and the retailer is more willing to provide a partial refund policy.