Propagation of disruptions in supply networks of essential goods: A population-centered perspective of systemic risk

TL;DR

This paper introduces a data-driven simulation method to quantify how disruptions in supply networks of essential goods propagate and impact populations, demonstrated on a large European food supply network, aiding policy and crisis management.

Contribution

It develops a novel, empirical simulation approach to measure population vulnerability to supply network disruptions, focusing on critical premises affecting large population segments.

Findings

Identified around 30 critical premises whose failure causes significant shortages.

Demonstrated the method on a large European food supply network with detailed data.

Provided a policy-relevant systemic risk index for supply chain resilience.

Abstract

The Covid-19 pandemic drastically emphasized the fragility of national and international supply networks (SNs),leading to significant supply shortages of essential goods for people, such as food and medical equipment. Severe disruptions that propagate along complex SNs can expose the population of entire regions or even countries to these risks. A lack of both, data and quantitative methodology, has hitherto hindered us to empirically quantify the vulnerability of the population to disruptions. Here we develop a data-driven simulation methodology to locally quantify actual supply losses for the population that result from the cascading of supply disruptions. We demonstrate the method on a large food SN of a European country including 22,938 business premises, 44,355 supply links and 116 local administrative districts. We rank the business premises with respect to their criticality for the districts' population with the proposed systemic risk index, SRIcrit, to identify around 30 premises that -- in case of their failure -- are expected to cause critical supply shortages in sizable fractions of the population. The new methodology is immediately policy relevant as a fact-driven and generalizable crisis management tool. This work represents a starting point for quantitatively studying SN disruptions focused on the well-being of the population.