Creating a Resilient Supply Chain: Modeling the Impact of New Sourcing Markets on Key Performance Indicators

Abstract

In recent years, global supply chains have become increasingly exposed to disruptions caused by geopolitical tensions, wars, and other external uncertainties. At ASSA ABLOY's Business Segment Pedestrian (BSP), this has led to a need to reassess the current sourcing strategy, particularly within inbound logistics, where a strong dependence on a limited number of sourcing locations has created vulnerabilities. To address this, BSP is considering expanding its supplier base to new sourcing markets. However, such changes introduce trade-offs related to cost efficiency, tied-up capital, and environmental impact, requiring a more structured decision-making approach.

The analysis shows that increasing the number of sourcing markets can enhance supply chain resilience by reducing dependency on single-sourcing regions and mitigating trade-related risks. However, the impact varies across KPIs. Total landed cost is driven by purchase price, tariffs, and transportation costs, with tariffs emerging as a particularly influential and volatile factor. Diversification may lead to higher short-term costs, especially at low order volumes, but these effects decrease over time as economies of scale are achieved. Material throughput time (MTPT) reflects tied-up capital and is primarily influenced by lead times and goods in transit, while CO$_2$ emissions are driven by transport distance and item characteristics. Although emissions currently have a limited influence on decision-making, their importance is expected to increase in the future.

The study also identifies key enablers for a successful transition, including strong supplier relationships, effective use of third-party logistics providers, and digital tools. While advanced technologies such as AI tools offer significant potential, their effectiveness depends on data availability and organizational maturity. The developed model demonstrates how relatively simple tools can enhance decision-making and transparency.

Overall, this thesis provides practical insights into how global companies can evaluate sourcing and logistics strategies under increased complexity. The findings and model can support organizations in balancing resilience, cost efficiency, and sustainability, while future research could expand the model to include additional variables and more advanced data capabilities.

Popular Abstract

What if a decision made overnight could suddenly make your entire supply chain more expensive, less reliable, or force a complete redesign? This is a reality for global companies today. While global supply chains deliver efficiency, they also create hidden vulnerabilities. When tariffs shift, organizations that depend heavily on a single region can face rising costs and growing uncertainty almost instantly. This raises a key question: how can companies reduce these risks, and what does that mean in practice?

Global supply chains are built to optimize cost and access to capabilities, but they often rely heavily on specific regions. When tariffs change, this dependence becomes visible. Costs rise, margins shrink, and companies are forced to reconsider long-established sourcing strategies. One way to respond is to increase prices, but a more structural solution is to reduce reliance on a single region by diversifying sourcing.
However, shifting sourcing is not without consequences. Expanding into new sourcing markets can reduce tariff exposure, but it introduces new trade-offs. Purchasing costs may vary across sourcing locations, transportation costs can increase due to reduced economies of scale, and longer or less predictable lead times may result in more capital tied up in inventory. At the same time, growing external pressure on EU companies to reduce emissions makes environmental impact a key factor when evaluating alternative supply routes.
These challenges are particularly evident in the context of the U.S.-China trade relations. China has long been a key sourcing hub, especially for complex and cost-efficient components. Its combination of scale, expertise, and advanced manufacturing capabilities makes it difficult to replace. As tariffs on Chinese goods have increased, companies have been pushed to explore alternative sourcing locations, but finding suppliers with comparable capabilities is not straightforward.

Nearshoring has emerged as one potential strategy, offering shorter transport distances and improved resilience. Yet, it may limit access to specialized suppliers and can come at a higher cost. As a result, companies must carefully balance cost efficiency, resilience, and sustainability when redesigning their supply networks.

Managing this transition requires strong enablers. Close collaboration with new suppliers supports smoother ramp-up in the sourcing regions and increases transparency. Logistics partners, such as third-party logistics providers, help handle the added complexity by offering flexible transport solutions and access to global networks. Digital tools play a critical role by structuring data and providing insights into how different sourcing decisions impact key performance indicators. Together, these enablers allow companies to better navigate uncertainty and respond more quickly to changing conditions.

Ultimately, reducing tariff exposure is not just about changing suppliers, it is about understanding and managing the trade-offs that come with a more resilient, yet more complex, global supply chain.

• author: Peyron, Karin and Widström, Saga
• supervisor: Eva Berg
• organization: Production Management; Engineering Logistics
• course: MTTM05 20261
• year: 2026
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: Supply Chain Resilience, Global Sourcing, Strategic Sourcing, Inbound Logistics, Decision-Support Model, Supply Chain Key Performance Indicators.
• other publication id: 6059
• language: English
• id: 9235783
• date added to LUP: 2026-06-11 14:50:23
• date last changed: 2026-06-11 14:50:23