The power of design-to-value: Increase market appeal and lower costs

05 April, 2017
Rising commodity prices, consolidating supply markets and ongoing economic pressures are making it difficult for consumer goods companies to maintain margins, according to McKinsey & Company’s paper, “Design to Value: a smart asset for smart products.” Design to value (DTV) is a multi-dimensional approach that delivers mutual customer and business benefits. Drawing on expertise from across an organisation, it creates improved consumer value and reduced costs. Even for companies that already have efficient value engineering systems, DTV represents the next frontier of excellence, according to McKinsey.

Over-engineering is a common pitfall of product design: even well-established packaging solutions can include excess functionality that raises lifecycle costs without adding real consumer value. An integrated view of business goals, along with data-driven customer and consumer insights, are the keys to profitable designs.

Design to value (DTV), which can be applied to both new and existing products, is a holistic approach that helps define ‘must-have’ versus ‘nice-to-have’ features. By removing unnecessary elements in favour of the essential, it increases market appeal and creates savings in raw materials and processes. It’s also a superb process to re-evaluate customer challenges with new technologies in mind.

Colin Reed, marketing and strategy director, Global Pharma and Medical EMEA at Amcor, says, “Through DTV we discover how the latest materials and packaging technology can enhance existing products.”
 

A cross-functional tool

A cross-functional methodology is the key to DTV, as Steve Birch, industrialization manager at Amcor Flexibles Europe and Americas, explains. Steve manages DTV processes from within R&D, but underlines the importance of its collaborative approach: “I help cross-functional teams participate in DTV, with members from R&D, procurement, manufacturing, supply chain and marketing.”

This means that goals and ideas are informed by insight from across the business, and buy-in from all key stakeholders is built into the process. It ensures that vital perspectives are not missed, enriches brainstorming and avoids unforeseen issues.

DTV is also highly adaptable. “We can use this approach whether redesigning a high end retort pouch, a barrier laminate for a sachet or a bag for confectionery,’’ Steve says.
 

Putting the customer first

“The primary drivers are the needs of our customer and their consumers,” Steve emphasises. “Understanding what they want is the first, fundamental step and the key to simultaneously driving sales and streamlining costs.” Typically, this comes from interviews and focus groups, which reveal indispensable features and enable the DTV team to fine-tune the overall value proposition.

Colin adds, “When we approach the customer, we propose a cross-functional collaboration, identifying people in a variety of functions to take part. This includes detailed interviews with the customer’s marketing team to get their take on consumer needs.”

The aim is to go beyond initial observations and get precise information on consumer pain points. Colin says, “We ask questions like ‘is there anything your consumers want that they don't currently get from your packaging?’ Through this, we might discover that, for a particular product, consumers want a smaller pack size that makes their medicine more portable and discreet.”

As part of the process it is important to confirm the focused products and their existing cost structure, the baseline, as well as the expected product volume. “This information builds and further supports the connection of the product with the target market,” Steve explains.
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DTV combines consumer, supplier, and competitive insights

 


Optimising the design

A day-long, cross-functional DTV team workshop brings stakeholders together so they can align on key findings. “The workshop centres on a brainstorming session to generate ideas and pin down the redesign,” says Steve. “Sometimes the result is a like-for-like solution that fits the current customer specifications; sometimes it’s a new structure.”

This workshop focuses on raw materials and process improvements, creating a path from the baseline to the target objective. Steve comments, “The emphasis is on adding value for the customer.’’

Re-designs produced through DTV achieve multiple goals. “For the customer who wants a smaller medicine package, we might use different materials to create a discreet, single-dose stick format,” says Colin. “For a coffee pouch, we might find we can achieve the same barrier performance in a down-gauged version, while also looking at easy opening features or how well the package stands up. So we’re addressing challenges with new techniques and materials that were not incorporated into the original design.”


In turn, a smaller, lighter package brings a lower carbon footprint, savings on raw materials and total cost for the customer. “Typically, there’s a positive effect throughout the value chain,” Colin adds.

DTV supports a proactive and innovative customer approach, with benefits that also go beyond the reappraisal of existing designs. Colin concludes, “DTV is a fantastic source of data that helps us anticipate future challenges for our customers as well as understand their current needs.”


Learn More from Design to Value Expert, Britta Lietke

Discover more about applying Design to Value to packaging from our “Big Ideas” series of expert talks and panel discussions hosted by Amcor. We invited Britta Lietke, Procurement Knowledge Expert from McKinsey to share her insights on DTV. While Britta's session is over, you can still download her presentation from our post-event page: www.amcor.com/bigideas/archives


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