How R&D Can Unlock Productivity While Protecting Product Quality and Consumer Value

Innovation does not always require a new product. Some of the most attractive value opportunities in FMCG already exist inside the products and processes a company operates every day.

Formulations evolve over time.

Raw material markets change.

New technologies become available.

Manufacturing conditions shift.

Specifications accumulate.

As a result, established products can contain significant untapped opportunities for improvement.

Look at the Complete Product-Cost System

Cost optimization is sometimes reduced to finding cheaper ingredients.

That approach can create significant risk.

A formulation change can influence taste, texture, shelf life, processability, line efficiency and consumer acceptance.

True value engineering therefore looks at the complete system:

Product + Raw Materials + Process + Manufacturing + Quality + Consumer Experience

The objective is not simply to reduce cost.

It is to improve total value.

Small Changes Can Create Significant Value

In high-volume FMCG products, seemingly minor changes can have meaningful annual impact.

Opportunities may include:

• optimizing ingredient ratios,
• alternative raw material specifications,
• supplier diversification,
• local sourcing,
• reducing formulation complexity,
• improving yield,
• reducing process losses,
• or redesigning products around more efficient manufacturing conditions.

The financial value of each individual change may appear modest.

At scale, it can become significant.

Process Optimization Is Part of Product Optimization

The recipe cannot always be separated from the process.

Temperature profiles, mixing conditions, residence time, moisture, pressure, cooling, baking parameters and equipment settings can all influence product performance.

Before reformulating a product, companies should therefore ask:

"Is the formulation really the constraint — or is the process creating the problem?"

Often, the answer involves both.

Protect What the Consumer Values

The most dangerous productivity program is one that delivers savings while gradually weakening the product.

Consumer-relevant attributes must therefore be identified before optimization begins.

These may include taste, texture, appearance, aroma, portion size, or shelf-life performance.

Successful value engineering protects these critical attributes while challenging everything else.

Build Productivity Into R&D

Cost excellence should not be a one-off reaction to inflation or margin pressure.

Leading organizations treat productivity as an ongoing R&D capability.

This means continuously reviewing formulations, technologies, specifications and manufacturing processes as markets and capabilities evolve.

Innovation and Productivity Belong Together

There is sometimes a false distinction between innovation and cost optimization.

Both require the same fundamental capabilities:

deep product understanding, technical creativity, disciplined experimentation and strong commercialization.

The best R&D organizations therefore do not ask whether they should focus on growth or productivity.

They build capabilities that deliver both.

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Arda Diribaş — Founder & Principal, DERAS Globe