Identify which critical supplier could stop your operation, how many days you'd survive if it goes down, and where to diversify to lower the risk.
Demand and margin
Monthly aggregate volume of critical SKUs and margin per unit (what you lose on stockout).
Critical suppliers (3)
The three suppliers covering ~100% of volume. Rename them and tune each risk profile.
Σ 0%
Supplier A
Supplier B
Supplier C
Inventory policy
Current vs target safety stock. The simulator calculates how far this buffer takes you in a disruption.
Dual-sourcing and expedite
% of SKUs with active backup supplier, premium paid to backup, and expedite capacity in crisis.
Stockout impact
How much margin you truly lose (the rest is captured late) and daily reputational penalty.
Saved scenarios
Fill in your data to see the report
This simulator only generates a diagnosis, charts and recommendations when it has your real business values. Fill the editor above and the report will appear automatically.
Required data
Monthly volume in units
Margin per unit
Suppliers list
Want to explore it first?
Load a realistic case to see how the report looks. You can edit any field afterwards.
Score is directional: it does not replace a full BCP/DRP.
Sources
Sheffi, Y. — The Resilient Enterprise (MIT Press) — TTR / TTS framework.
BCBS-189 — Basel III: International framework for liquidity risk and credit IRB.
Internal editorial estimate based on industry best practices.
How it works
1. Declare your 3 critical suppliers
Volume share, lead time, variance, disruption probability, duration and country risk. Flag those with qualified backup.
2. Inventory policy and contingency
Current vs target safety stock, holding cost, dual-sourcing coverage, expedite capacity and cost.
3. TTR, TTS, HHI and expected cost
The simulator computes resilience gap per scenario, decomposes risk into typical disruptions and recommends mitigation.
Frequently asked questions
1What exactly is the Resilience Gap?
It is the difference between TTS (Time to Survive — how many days of inventory you have) and TTR (Time to Recover — how long it takes to restore supply after a disruption). Positive = you survive. Negative = stockout is unavoidable in a major disruption. The framework comes from Yossi Sheffi and David Simchi-Levi (MIT), used by Apple, Ford and many Fortune 500 since 2015.
2Why does HHI concentration matter so much?
HHI (Herfindahl-Hirschman) measures how concentrated your sourcing is. If one supplier has 60% (HHI ≈ 0.40), losing them is a catastrophic event. Below 0.25 is considered diversified. Many companies don't measure this until the crisis hits — the simulator gives it to you in real time.
3When does dual-sourcing pay off?
Rule of thumb: dual-source if expected annual stockout cost exceeds 2× the premium you'd pay to the backup. If gap is negative or HHI > 0.3, it likely pays. If your chain is diversified and lead times are short, the premium may not justify itself — the simulator shows it with numbers.
4How is expected stockout cost calculated?
Per supplier: probability × (TTR − TTS if negative) × share × daily demand × margin × % of margin actually lost. Plus daily goodwill. It is an approximation — it doesn't capture long-term reputational damage or contract loss. Treat it as a floor, not a ceiling.
5What do I do if the simulator says my gap is very negative?
Three actions ranked by cost-benefit: (1) Qualify a backup for your dominant supplier — cheapest and fastest. (2) Raise safety stock to cover 80% of weighted TTR (check holding cost against expected stockout cost). (3) Renegotiate lead time with your critical suppliers — sometimes cutting 10 days off lead time equals 10 extra days of TTS, with no capital tied up.
The ability of a supply chain to resist, adapt and recover from disruptions without operational collapse. Measured by indicators like time-to-recover (TTR), supplier diversification index, safety stock adequacy and resilience score. Post-2020 it became a strategic CFO KPI, not just a procurement director metric, after pandemic, Suez Canal, Russia-Ukraine and Red Sea 2024 shocks.
2What is dual-sourcing?
Qualifying at least two suppliers per critical category, ideally in different geographies. Typical incremental cost 3-8% over single-sourcing from less scale economy and managing two relationships, but reduces exposure to specific disruptions. Toyota implemented it on 1,200 tier-2/3 components after Fukushima 2011 — automotive reference case and post-2020 standard in mature manufacturing.
3How do I calculate safety stock?
Safety stock = Z × σ × √(lead time), where Z is the service level factor (1.65 for 95%, 2.33 for 99%), σ the standard deviation of demand per period, and lead time in matching units. Example: daily demand 200 units, σ=45, lead time 14 days, Z=1.65 (95%) → Safety stock = 1.65 × 45 × √14 = 278 units. Reorder Point would be (200 × 14) + 278 = 3,078 units.
4What is the bullwhip effect?
A small variation in final consumer demand amplifies upstream until it generates massive oscillations in orders to the primary supplier. In consumer goods, a ±5% variation in retail demand can generate ±30-50% in orders to the tier-2 supplier. Causes: batch ordering, price speculation, variable lead time, lack of visibility. Mitigated with VMI, CPFR, shared visibility and ordering discipline.
5What is nearshoring?
Moving production or sourcing from Asia (typically China) to geographies closer to the final market — for the US and Canada, Mexico became the main destination. Between 2022-2024, Mexico received USD 485Bn in manufacturing FDI from nearshoring per Banxico. Benefits: lead time 45 days → 7-12 days, lower tariff risk, ESG alignment. Risk: many 'Mexican' suppliers still import components from China, requiring tier-2/3 audit.
6How much safety stock is reasonable?
Depends on demand variability (σ), lead time, target service level, and holding cost vs stockout cost. Typical benchmark: 7-21 days in stable categories, 30-60 days in critical with long lead time, 60-90 days on single-source high-risk suppliers. Evaluate quarterly with stress test. The 'three months' heuristic without formal calculation typically over- or under-invests meaningfully.
7What is time-to-recover (TTR)?
Days from a disruption to operation returning to pre-disruption capacity. Resilient benchmark: <6 weeks for critical categories, <12 weeks for non-critical. Measured by product category and disruption type. Formal post-mortems of executed disruptions quantify real TTR, which tends to be 1.5-2x longer than pre-event estimated TTR — classic optimism bias in planning.
What you'll see, what it prevents, and where you shouldn't trust it
Every simulator on Simúlalo ships with the same editorial structure: two hypothetical worked examples with numbers, the errors it helps you avoid, the model's declared limitations, and a visible financial disclaimer. The review is signed and dated.
Hypothetical case·Case A
A manufacturer with 4 suppliers in a single country and 0.62 HHI
An industrial electronics company had 4 'redundant' suppliers for the critical component: 60% with one, 22% with another, 12% with a third, 6% with a fourth — all in the same country. HHI = 0.62 (high concentration). Weighted TTR: 18 days. TTS (with safety stock): 22 days. The simulator models a country event (strike, regulation, disaster): all 4 suppliers fall simultaneously. The resilience gap is +4 days — barely. The decision: qualify a fifth supplier in another country within 90 days, allocate 8% of volume, push HHI below 0.50.
Illustrative figures. Does not represent a real company or an investment recommendation.
Hypothetical case·Case B
A distributor that raises safety stock 35% before re-tendering the dominant supplier
A medical supplies distributor depends on 78% of volume from a single supplier. Weighted TTR: 24 days, current TTS: 12 days. Re-tendering means 6 months of regulatory certification and $480,000 USD switching cost. The simulator proposes an alternative: raise safety stock 35% to lift TTS to 26 days — costing $145,000/year in holding cost. The resilience gap moves from -12 to +2 days. The decision: execute the stock increase and start certifying a second supplier in parallel (not as replacement, as future backup).
Illustrative figures. Does not represent a real company or an investment recommendation.
Common mistakes it helps you avoid
Things a team or decision-maker might assume that this simulator forces you to verify before committing.
Confusing 'having multiple suppliers' with 'having resilience': if all of them are in the same country, same industry, or depend on the same sub-component, the redundancy is illusory.
Ignoring TTR: a backup supplier that takes 90 days to ramp up does not protect against a 30-day event.
Optimizing safety stock by cost alone: holding cost is visible, stockout cost is diffuse (lost customers, SLA penalties, reputational damage) and is usually underestimated.
Assuming the contract covers risk: a force-majeure clause protects you legally but does not protect production or the end customer.
Model limitations
What the simulator does not do, and where you need a professional or a specialized tool.
Annual disruption probability is an assumption, not a prediction. Historically, 'once in 10 years' events have hit every 3-5 years on recent global supply chains.
Does not model cascades. If your Tier-2 falls, the impact may exceed what the simplified model shows.
TTR/TTS assume your supplier information is accurate. In practice, suppliers underestimate recovery times.
Does not replace a formal Business Continuity Plan. It is a pre-screening tool to identify where to focus deep analysis.
When NOT to use this simulator
If you operate in a regulated sector (pharma, food, defense) with formal business continuity requirements, this simulator does not substitute the BCP required by regulation. It is a tool for operations and procurement leaders who need to justify where to invest before building the formal plan with specialized consulting or your risk management team.
Financial notice
Results are illustrative estimates and do not constitute financial, tax, accounting, or legal advice. Use the results as a reference point and validate important decisions with a certified professional.
Editorial review
Reviewed by the Simúlalo editorial team
This simulator was reviewed by the people listed below before being published. The review covers the declared formula, the model's assumptions, the explicit limitations, and the absence of unsupported financial claims.
They are part of the Simúlalo editorial team, focused on building financial tools that are clear, educational, and easy to interpret.
Last updated: ·We update this page when the methodology, sources used, or simulator structure change.
This tool uses standard financial formulas and user-supplied data. To explain concepts like rates, credit, risk, or cash flow we consult public and official sources (Banxico, SAT, CONDUSEF, CNBV, Banco de España, IFRS, BIS, among others). Simúlalo is not affiliated with, sponsored by, or endorsed by these institutions.