Measuring the structural resilience of supply network and critical nodes

As supply networks are becoming increasingly complex and uncertain, the importance of reliability of supply network has been increased. Supply risk occurring within an individual supplier does not stay in this individual supplier, as they have consequences for other companies throughout the supply chain. Thus, to insure the stability of the supply network, it is necessary to measure the structural reliability of both the supply network and the individual companies constituting the supply network. Therefore, this paper aims to develop indices to evaluate the structural resilience of supply networks and individual suppliers. Towards this purpose, the paper firstly models a diffusion process of supply risk through the supply network, before moving to develop indices which measure the overall level of supply risk amplification in the supply network and at the final assembly company. The developed network level indices can be converted into node level indices to assess the risk amplification of individual suppliers. Subsequently, node level indices can identify which suppliers need to be managed to mitigate the overall supply risk in the supply network or at the final assembly company. Experiments were conducted on various types of supply networks, and managerial implications are discussed.