Assessing Supply Chain Resilience upon Critical Infrastructure Disruptions: A Multilevel Simulation Modelling Approach

Abstract

Supply chain risk management (SCRM) approaches suggest that actors in a supply chain network should consider different risk scenarios to address and mitigate supply chain risks in a better way. Overall performance of a supply chain could be severely affected by disruptions that are triggered by failures or service disruptions in the critical infrastructure (CI) systems that the supply chain relies on. Interdependencies among the CI systems and supply chains, particularly the so-called Key Resources Supply Chains (KRSC) such as food, worsen the effects as disruption and consequences propagate in the network. In order to understand such interdependencies and enhance SCRM approaches with a more holistic view, this chapter introduces a multilevel modelling approach. The economic loss impact of disruptions in CI systems and the potential effectiveness of different strategies to improve resilience in KRSC are modelled and assessed. A combination of Discrete Event Simulation and System Dynamics is used at the different levels of the simulation model. The proposed approach is demonstrated with an application case addressing the vulnerability and resilience analysis of a fast moving consumer goods supply chain against disruptions in underlying CI systems. Results of the multilevel simulation offered relevant insights toward a better understanding of the strength and dynamics of the interdependence between KRSC and CI, and consequently on resilience improvement efforts. Results help supply chain managers to prioritise resilience strategies, according to their expected benefits, when making decisions on the amount and location of resilience capabilities within a supply chain. The results strongly support the implementation of collaborative and coordinated resilience strategies among supply chain actors to direct efforts where they can be most effective.