Reshoring & Tariff Strategy worked example

Supplier Switching Cost at 69% share requiring full requalification: a worked example in reshoring & tariff strategy

This scenario runs the supplier switching cost calculation on the strong side: 69% share requiring full requalification, with every other input held at its documented default. A commodity manager builds the business case for changing suppliers by sizing the full requalification and onboarding spend.

The inputs for this scenario

  • Affected part numbers: 120 parts (unchanged)
  • Switch cost per part: 850 $/part (unchanged)
  • Share requiring full requalification: 69 % (raised for this scenario; the documented default is 60)
  • Program-level transition cost: 40,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Total switching cost ($) = affected parts x switch cost per part x requalification share% + program transition cost) to the inputs above produces each figure below.
  • At this operating point the engine returns 110,380 $ for total supplier switching cost, the number this scenario is built around.
  • At this operating point the engine returns 920 $ / piece for supplier switching cost per unit.
  • At this operating point the engine returns 70,380 $ for variable supplier switching cost.
  • At this operating point the engine returns 40,000 $ for fixed supplier switching cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where share requiring full requalification sits at 60% and the headline result is 101,200 $, this scenario comes in 9.07% above the baseline at 110,380 $.
  • Use it when building the business case for re-sourcing parts to a new or regional supplier, especially under tariff or nearshoring pressure. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total supplier switching cost: 110,380 $ (headline result)
  • Supplier switching cost per unit: 920 $ / piece
  • Variable supplier switching cost: 70,380 $
  • Fixed supplier switching cost adder: 40,000 $

Run it with your numbers

  • Every input above is editable in the live Supplier Switching Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.