Bottleneck identification in supply chain networks

In supply chain risk management, it is essential to identify firms that induce high losses due to supply chain disruptions in a focal firm or the supply chain network as a whole (bottlenecks). In this article, we describe supply chain networks as complex systems of firms and their suppliers. We revisit some established network measures and compare their predictions with a new methodology for detecting bottlenecks. In this bottom-up approach, production disruptions on the firm level are modelled with stochastic point processes, and a mechanism for the propagation of losses through the network is defined. The individual firms' emerging loss contributions to the total losses of the focal firm provide, then, an alternative risk-adjusted measure. Our methodology and findings enable more informed and transparent decisions to be made for optimal supply chain network design.