Extenuating operational risks through digital transformation of agri-food supply chains

The increasingly unprecedented incidents (e.g. COVID-19) have made the contemporary supply chains more vulnerable to divergent risks and disruptions. Encouragingly, the recent trend of digital transformation, adoption of Industry 4.0 technologies (I4Ts), could significantly improve business processes extenuating potential risks and disruptions. Yet, there is a paucity of quantitative studies on the risk or disruption mitigation and I4Ts, specifically on agri-food industry. Using a sample of 302 firms from the Australian agri-food supply chains, we explore if the firms that adopt I4Ts experience the different impact of operational risks (supply-demand mismatch, financial and transportation) compared to others. The findings unveil that albeit such risks can significantly undermine firm performance, their negative effect is non-significant for the firms that adopt I4Ts compared to those that do not adopt. We thus suggest digital transformation as an effective way to extenuate operational risks and disruptions amid unanticipated events like COVID-19. Numerous contributions to theory and practice, plus United Nations Sustainable Development Goals (1 & 2) have been discussed.

Automated summary

This study explores the different impact of operational risks on firms that adopt Industry 4.0 technologies compared to those that do not. Using a sample of Australian agri-food supply chains, the findings reveal that the negative effect of operational risks is not significant for firms that adopt Industry 4.0 technologies.