Disruption Risk Evaluation on Large-scale Production Network with Establishments and Products

Abstract: We constructed an establishment-level production network where each establishment inputs and outputs multiple products, using data that includes the firm-level production network and establishments covering nearly all Japanese entities. The network represents the manufacturing sector with 183,951 establishments across 157,537 firms and 919,982 inter-establishment linkages. A probabilistic model of supply chain disruptions was applied to this network. The key findings are as follows: (1) The establishment-level network exhibits greater shock propagation compared to the firm-level network. (2) Incorporating actual product information leads to a larger impact on propagation compared to using industry-level information. (3) Regional shock simulations reveal that while the firm-level network shows greater shock propagation when the shock originates in Tokyo, no such difference is observed in the establishment-level network.