Assessing the Risk of Product Substitution
- Precise definition of the scenario to be compared: The product used for a specific application is defined and compared with an alternative product that could be used for a similar application. Any differences in the quantities required should be considered in the comparison.
- Accurate definition of framework: Having the products made comparable, the raw materials or procurement markets need to be examined to decide whether the production chain is comparable. Where relevant, processing chemicals and by-products may need to be identified.
- Evaluation of the overall production chain: Calculations are carried out for individual production and processing steps using the common methods (see e.g. the competition analysis method). This step includes defining market size and production scale. Depending on the assignment, it may make sense to look at both the current state-of-the-art and possible bulk production in the future.
- Risk/reward analysis Potential for improvement as a result of ongoing development should be included in the evaluation, especially if the substitution product currently has drawbacks. In such cases, the technical feasibility (probability) and the related cost and work should be taken into account.
- Identification of substitution barriers and accelerators. Particularly non-technical factors should be taken into account here. A systematic evaluation is carried out e.g. using the Bayer Eco-Check.
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