CASE STUDY 3.2: SUSTAINABILITY-DRIVEN PRODUCT DEVELOPMENT IN THE FAST-MOVING CONSUMER GOODS INDUSTRY Offering products and services with superior sustainability performance not only enables companies to make a positive impact on society and the environment but also makes good business sense. Driven by their green mission, companies such as Patagonia and Seventh Generation put sustainability principles at the center of their product and service offerings, marketing efforts, and operation of facilities while achieving huge commercial success along the way. One common feature of these companies is that they continually innovate to improve their products and services on the basis of certain sustainability criteria. For example, the product development team at Seventh Generation is focused on increasing the use of biobased or recycled content as well as improving biodegradability or recyclability of their products. In carrying out this task, Seventh Generation faces the challenging task of balancing several objectives at the same timea common struggle at most sustainability-oriented companies. The manager of R&D explains: Its not easy to change a product formula at Seventh Generation because of our exacting goals; we seek to use only safe, effective, biobased, biodegradable, and affordable ingredients. Despite challenges, organizations interest in including sustainability in product and service development is increasing. The following pilot project demonstrates how a structured method called sustainable new product development can be used to add sustainability criteria into the main stages of the NPD process at a company in the fast-moving consumer goods industry. With origins as Britains first discounter, Asda is a British supermarket retailer, second-largest in the country after Tesco. The company sells grocery and general merchandise and offers financial services in stores of various formats, serving 18 million customers every week. Asda offers a range of private-label (own-brand) products in categories such as meat, ready-to-eat meals, baby care items, pet food, produce, wine, and sports nutrition. These products are significant contributors to Asdas profitability, and the company works closely with its suppliers to bring these items to shelf. The ability to create new products and improve existing ones is vital for Asda. On the sustainability front, Asda has a number of goals related to the environment, packaging, food waste, farming, and operations. Food waste reduction is high on the companys agenda. Guided by the company motto We hate waste of any kind, Asda has committed to reduce food waste wherever it occurs in the supply chainby 20% by 2025 and 50% by 2030as well as increase transparency around it. Asda and three key suppliers took part in a pilot project that looked to develop an approach to fit sustainability into the normal NPD process. The company uses a formal stage-and-gate process for NPD. The project involved three of Asdas own-brand products: a beef hotpot ready meal, breaded fish, and a cheesecake. The project was conducted in four key phases: Inform, Assess, Innovate, and Embed. At the Inform phase, the project team reviewed Asdas sustainability goals and NPD process and researched examples of sustainable design approaches. In the next step, Assess, the team was tasked with a hot spot analysis to identify the main sustainability impact areas of the products throughout their life cyle stages. During this analysis, the team also researched consumer insights to receive feedback on the use of products and the sustainability implications. For example, for the single-serve cheesecake desserts supplied by Yeo Valley, some hot spots occurred during processing and manufacturing, where dual-ingredient processing led to 30% waste. An example of a consumer insight was that consumers preferred minimal packaging. The Innovate phase focused on generating NPD ideas that addressed the sustainability hot spots and consumer insights. This was conducted in a workshop where the team members created product design ideas with consideration of feasibility and commercial potential. Design ideas addressed goals such as sustainable packaging innovation, food waste reduction, sustainable sourcing, and product reformulation. For example, single-serve cheesecake desserts were redesigned with a dual-purpose product concept and by putting a standard flavor next to a random flavor made from overproduction. The new design provides value to customers by offering variety in consumption and reduced waste by using surplus ingredients. The project concluded with the Embed phase, during which a tool kit was built that can aid integration of sustainability-led ideas and changes in the NPD process. The pilot project was a success. It provided new product ideas, one of which was already on the shelves shortly after the completion of the project.

39 Questions What are the benefits of taking a life cycle stage view when incorporating sustainability into NPD for the type of products mentioned in the pilot project?

Considering the objectives of the pilot project, what are some suitable metrics that Asda and its suppliers can use to measure the success of a new product launch?

Companies developing new products and services are advised not to follow a launch em and leave em approach.

How can you extend Asdas sustainability NPD process to incorporate this suggestion?