Cities can benefit from complex supply chains

Abstract

Supply chain complexity is perceived to exacerbate the supply disruptions or shocks experienced by a city. Here, we calculate two network measures of supply chain complexity based on the relative number—horizontal complexity—and relative strength—vertical complexity—of a city’s suppliers. Using a large dataset of more than 1 million annual supply flows to 69 major cities in the United States for 2012–2015, we show that a trade-off pattern between horizontal and vertical complexity tends to characterize the architecture of urban supply networks. This architecture shapes the resistance of cities to supply chain shocks. We find that a city experiences less intense shocks, on average, as supplier relative diversity (horizontal complexity) increases for more technologically sophisticated products, which may serve as a mechanism for buffering cities against supply chain shocks. These results could help cities anticipate and manage their supply chain risks.