How cost-carbon efficient is your NPD process?

Julie Neal is a Director and Sabine Sayer is a Managing Consultant at Vendigital. They recently shared their insights with Food Manufacture.

New product development (NPD) in the FMCG sector can be challenging and often comes with high cost and carbon implications for manufacturers. With just under half of new consumer goods failing before cost-carbon efficiency has even been considered, businesses must create a holistic process that considers these aspects from ideation through to development and waste minimisation to ensure long-term, sustainable success.

Improving cost-carbon efficiency can be helpful to businesses in a number of ways. As well as ensuring a strong bottom line, it helps businesses to demonstrate progress towards their sustainability goals. However, as the race to decarbonise gathers pace, it could also have funding implications. Banks, investors and other third parties are increasingly aware of green commitments and legislation on a national and international scale and are looking to invest in businesses that are working towards a lower carbon future. Therefore, addressing this issue in the NPD process is crucial to securing and maintaining high levels of investment.

Cost-carbon efficiency is becoming more important from a consumer point of view too. Consumers are more aware than ever of the need to decarbonise and are actively seeking sustainable products at an affordable price point. While many businesses have taken initial steps to improve sustainability by making changes to packaging or raw materials, procuring or generating energy from renewable sources or upgrading fleets to electric vehicles, much more can still be done.

The NPD process for FMCG manufacturers can be quite lengthy and complex, and issues such as global instability and supply chain disruptions can bring another layer of complication. Factoring in the additional elements of cost and carbon could therefore seem daunting, however, involving the right people in decision-making from the start could create a smoother process. For example, by including procurement specialists at an early stage, R&D teams could gain insights into potential issues regarding the availability of specific raw materials or parts. This could lead to suitable alternatives being suggested quickly: preventing an expensive redirection further along the process.

Another challenge surrounding FMCG innovation is speed to market. Manufacturers should aim to be agile and understand the cost and carbon implications of each product lever from design through to its end-of-life. They should also build in customer feedback loops from the start of the process to understand what they value most and would be willing to buy.

Gaining this crucial insight into customer preferences at an early stage could help to inform simple, practical changes that could bring significant rewards. For example, it may turn out that customers are not overly attached to the current packaging of a product in terms of its look or feel, meaning that any changes to the overall design are unlikely to impact sales. Once this insight is understood, manufacturers can feel free to experiment with different ways of cutting both carbon emissions and cost. For example, reducing the packaging to remove excess air could make the product more stackable and easily transported: lowering both cost and carbon emissions as fewer trucks need to be deployed for the same amount of product.

However, it is vital to consider the implications of any changes and balance these with the ability to industrialise the product on a mass scale. Failure to consider the entire end-to-end NPD process could prove a costly mistake. For example, a packaging redesign could seem like a relatively small change to make, but what if it proves unsuitable for the production line or affects the end product’s structural integrity? Holistic consideration is therefore required for any change that is made.

For manufacturers looking to make cost-carbon efficiencies in the NPD process, having access to accurate data is paramount. At a recent webinar hosted by Vendigital in collaboration with Siemens and the Pembrokeshire Creamery, data was referred to as ‘the new gold or oil’: a vital resource that enables good decision making based on accuracy rather than assumptions.

To achieve both cost and carbon goals, businesses need to capture and understand the data they already hold; whether it is siloed between departments, held offline by experienced employees or if there is a data gap that needs to be filled. A ‘data-first’ approach will not only help when creating new products; it is also key to conducting portfolio reviews to understand how a new product affects existing best sellers and enables the business to track the impact of any changes or adaptations based on profitability. Data understanding could also facilitate greater automation or reveal areas where there is scope to improve operational efficiency.

With the push for decarbonisation gathering momentum, FMCG manufacturers have an opportunity to strengthen their product portfolios and their brand proposition by optimising cost-carbon efficiency. By making more of their data resource, proactively speaking with customers and working with peers, industry bodies and third-party organisations, businesses can ensure a decarbonised future that strengthens their bottom line.