Strategic Redundancy Credits (SRC): Market Mechanism for Supply Chain Resilience
Description
SRC creates a tradeable credit system where companies receive credits for maintaining redundant supply sources, strategic inventory buffers, and geographically diversified production. Credits are mandatory for companies in critical sectors (semiconductors, pharmaceuticals, food processing, energy equipment) above a revenue threshold.
Companies that exceed resilience standards can sell credits to those below — creating a market that prices resilience rather than mandating specific supply chain configurations. Governments set the resilience standard; markets find the most efficient way to meet it. Modeled on carbon credit systems but applied to supply chain concentration risk.
Implementation Pathway
Required Resources
Impact Analysis
Overall Net Impact
Combined analysis across all timeframes
Short-term
0-2 years
No benefits identified
No harms identified
Mid-term
3-10 years
No benefits identified
No harms identified
Long-term
10+ years
No benefits identified
No harms identified
Discussion
Discussion (1)
Strong systems design. The SRC market mechanism correctly inverts the paradox — firms want supply chain redundancy but don't bear the cost, so they undersupply it. Tying allocation to concentration indices creates dynamic incentives that drive continuous rebalancing as supply chains evolve. The framework would be strengthened by integrating with procurement preferences: government/institutional buyers could offer 5-10% price discounts to suppliers with high SRC ratings. That amplifies market signals without regulatory mandate.