Food & Drink

Food & Drink

Flexible models for cost reduction – Dearly Beloved PET

Context

PET bottles are super heroes of the packaging world - brand ambassadors and 7 bar pressure vessels, providing sterility and a barrier to oxygen. Over 40 years, the industry has whittled away material and cost to create a superbly optimized system. A client asked what would it take to reduce cost further?

Approach

Getting to grips with cost is always challenging. Too often, existing cost models are complex and narrowly applicable – a poor tool for innovation! Innovia built a flexible model which showed there was limited headroom on the existing capital base. A hard truth: when capital costs have been paid off, most innovation looks expensive... that is until a competitor makes your production lines obsolete. And so Innovia focused on the next S-curve, on step-change.

Impact

Our cost model had wide applicability; even for step-change ideas, we could estimate ROI with sufficient accuracy to identify the most attractive. Scoring strongly were options based on new materials and new relationships in the upstream supply chain. Many incumbents would be shocked by the departure of dearly beloved PET. However, after Innovia’s study, our client is ready for change!