Quality control in food supply chain management: An analytical model and case study of the adulterated milk incident in China

- We develop a model to analyze quality control in food supply chain management.
- We conduct case studies regarding managing food supply chain quality and risk.
- Decentralized supply-chain structure may lead to distortion in food product quality.
- The more tiers in a food supply chain, the bigger the distortion.
- Food quality distortion can be corrected by pricing and regulatory approaches.

Managing the food supply chain quality and risk has received significant attention in recent years especially in global emerging markets such as India and China. In this paper, we present a mutually supporting analytical model and exploratory case to study the managerial and policy issues related to quality control in food supply chain management with a focus on the Chinese dairy industry. Based on a general supply-chain model with acceptance sampling tests under uncertain product quality, we show that, depending on the sampling technology, the decentralized supply-chain structure may lead to a distortion in product quality. We also explore the effects of different pricing and regulatory options of vertical control on product quality and the distribution of the total supply-chain profit. In addition, we use an exploratory case study of the 2008 adulterated milk incident in China to investigate practical issues in ensuring product quality/safety in food supply chain management. Our analytical results and two comparative cases show that, instead of the common “poor quality” misperception of food products from global emerging markets, it is actually the poor vertical control strategy for managing the food supply chain quality and risk that caused the adulterated milk incident. A number of other important managerial and policy insights and implications regarding supply chain design, informational visibility, corporate social responsibility, and regulatory action in managing the global food supply chain quality and risk are also discussed.