Extension of geopolitical supply risk methodology: Characterization model applied to conventional and electric vehicles

Abstract

The diversity of materials employed in modern products and the complexity of globalized supply chains raise the importance of assessing supply risk of commodity inputs to product systems. Therefore, this article extends the Geopolitical Supply Risk methodology by proposing a characterization model to quantify product supply risk in relation to a functional unit under the Life Cycle Sustainability Assessment framework. The characterization model is based on a socio-economic cause-effect mechanism drawing upon supply chain resilience concepts. Supply risk – or “criticality” – of a given “intermediate product” is defined as the multiple of probability of supply disruption and vulnerability to supply disruption. Two embodiments of the characterization model are proposed, each supplementing the previously developed probability indicators with different indicators for vulnerability. They are demonstrated with a comparative case study of an electric vehicle and internal combustion engine vehicle. The results are highly sensitive to how vulnerability is measured, and a number of methodological complications arise. The most promising embodiment of the characterization model “cancels out” the amounts of commodity inputs, as it can be strongly argued that every input to the product system is equally important for product performance as expressed by the functional unit. Thus, the Geopolitical Supply Risk characterization model shows the importance of integrating raw material criticality considerations into Life Cycle Sustainability Assessment to better inform management decisions at a product level.