Here, the effects of localization and propagation of martensitic phase transformation on the response of \SMA\ thin structures subjected to thermo-mechanical loadings are investigated using nonlocal constitutive model in conjunction with finite element method. The governing equations are derived based on variational principle considering thermo-mechanical equilibrium and the spatial distribution of the nonlocal volume fraction of martensite during transformation. The nonlocal volume fraction of martensite is defined as a weighted average of the local volume fraction of martensite over a domain characterized by an internal length parameter. The local version of the thermo-mechanical behavior model derived from micromechanics considers the local volume fraction of martensite and the mean transformation strain. A 4-noded quadrilateral plane stress element with three degrees of freedom per node accounting for in-plane displacements and the nonlocal volume fraction of martensite is developed. Numerical simulations are conducted to bring out the influence of material and geometrical heterogeneities (perturbations/defects) on the localization and propagation of phase transformation in \SMA\ thin structures. Also, a sensitivity analysis of the material response due to the localization and the other related model parameters is carried out. The detailed investigation done here clearly shows that the localization of phase transformation has significant effect on the response of shape memory alloys.