Frugal Engineering - The Theme for Engineers' Day 2013 in India.
Frugal Engineering is the theme for Engineers' Day 2013 in India. The theme was declared by Institution of Engineers India. Hope Indian Engineers know about Frugal Engineering in course of the year and implement it in economically efficient design of products and processes
Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, famously coined the term “frugal engineering” in 2006. He was impressed by Indian engineers’ ability to innovate cost-effectively and quickly under severe resource constraints. Any engineering methodology emerged out of this like value engineering that emerged from L.D. Miles?
And under Ghosn’s leadership , Renault-Nissan has proactively embraced frugal engineering and become one of the world’s leading producers of both electric cars as well as low-cost vehicles — two of the fastest growing and most promising market segments in the global automotive sector.
What is Frugal Engineering?
Frugal Engineering is the philosophy, approach and process of solving a deep-rooted problem in an innovative yet cost effective manner. The game changing aspect of Frugal Engineering is in the net cost impact for the customer. An optimally frugal engineered solution can be defined as:
Focused in solving the central problem with great effect
No frills and fancies
Based on and deriving from existing solutions
Solution attributes combining uniquely with a high degree of innovation
The primary critical success factor in Frugal Engineering is the uninhibited ability to define a seemingly impossible or even ridiculous target. This requires blanket support by top management. Another critical success factor is the courage to question set processes, HR Automation norms and status quo.
India is fast becoming the global headquarters for Frugal Innovation and Frugal Engineering. Frugal Engineering is core to TenXLabs ethos and permeates across all disciplines.
Six Underlying Principles of Pillars of Frugal EngineeringNirmalya Kumar and Phanish Puranam
1. Robustness: For India, products have to be more robust because the environment is harsh and huge variations occur in operating conditions.
2. Portabilility: Transportation also occurs in harsh conditions and roads are poor especially in rural areas, so products have to designed and packaged to withstand harsh transportation conditions.
3. Defeaturing: Defeaturing is feature rationalization. The market cannot buy feature rich and costly products. Designers have to understand the price points at which the product would be sold in adequate numbers and design the product by questioning every feature that is present in product selling in developed countries. A cost-conscious design-to-cost philosophy has to be used.
4. Leapfrog Technology: Still India needs latest technology and companies should not think in terms of old and obsolete technologies. They have to use modern technology to create low cost products that work without the infrastructure present in developed countries.
5. Megascale Production: Megascale production is possible in India provided the firms understand the scale economies properly and estimate costs. Many activities can be done at much lower costs in India due to one billion + consumers.
6. Service Eco-System: Create product differentiation using services also apart from the product. Financing is one such service. Find out the needs of potential buyers and arrange differentiated services for them.
Frugal Engineering - A Radical Rethinking of Product DevelopmentFrom Strategy-Business.com (Booz & Company)
Frugal engineering requires “clean sheet” approach to product development and it is simply not cost cutting from existing products made for the developed world. Cost discipline is an intrinsic part of the process, but rather than simply focusing on cutting existing costs, frugal engineering has to avoid needless costs also in the redesign of the product. It recognizes that merely removing features from existing products to sell them cheaper in emerging markets will be a losing strategy. That’s because emerging-market customers have unique needs that usually aren’t addressed by mature-market products, and also because the cost base of developed world products, even when stripped down, remains too high to allow competitive prices and reasonable profits in the developing world. So stripped down products from developed markets are neither effective nor price-efficient for developing markets.
The target market for frugal engineering is the billions of consumers at the bottom of the pyramid who are quickly moving out of poverty in China, India, Brazil, and other emerging nations. They are shopping for the basics at prices they can pay . According to C.K. Prahalad, author of The Fortune at the Bottom of the Pyramid (Wharton School Publishing, 2005), this target market is “unserved or underserved by the large organized domestic private sector and multinational firms.” The size of market is 4 to 5 billion people of the 7 billion people on Earth. Although the purchasing power of a consumer in this market is low, in aggregate this market is nearly as large as that of the developed world. Hence by not serving this market, the business sector is ignoring a very big business opportunity.
The central tenet behind frugal engineering is maximizing value to the customer while minimizing nonessential costs. The term frugal engineering was coined in 2006 by Renault Chief Executive Carlos Ghosn to describe the competency of Indian engineers in developing products like Tata Motors’ Nano. There may be no better example of frugal engineering than the Nano, The Nano is not a stripped-down version of a traditional, more expensive car design. It is based on a bottom-up approach to product development and totally a new product.
A successful approach to frugal engineering involves new ways of thinking about customers, innovation, and organization.
Initiatives in Frugal Engineering
Understanding the Customer
The ultimate goal of frugal engineering is to provide the essential functions people need at a price they can afford. Critical attention to low cost is always accompanied by a commitment to maximizing customer value. Assessment of the required trade-offs requires close, careful observation on the part of marketers and designers if they are to arrive at a deep understanding of the ways a product fits (or doesn’t fit) into bottom of the pyramid customers’ lives.
Bottom-up innovation is a value engineering technique. Value engineering recommends that a function is selected and a low cost implementation of the function anywhere in any technical system is to be located. Then redesign of a component, feature or subassembly or even the product starts from that lowest cost solution.
When Tata Motors engineers began creating the Nano, they were inspired by the three-wheeled vehicles known in India as auto-rickshaws than by any existing car models in Tata Motors’ lineup. Building up from the bare minimum enabled the engineers to achieve their cost (and price) targets without compromising the essential functions of the car. Instead, if the Tata Nano had been designed on the platform of evem the cheapest Tata car, it would have been twice the price. Thus Tata Motors used the value engineering approach to desing Nano. In frugal engineering value engineering is an important component. Value engineering technique of blast, create and refine provide a great redesign opportunity to reduce cost without reducing performance. For example, if you asked designers to come up with a low-cost wiper system for cars, it’s unlikely they would challenge the fundamental architecture of two wiper blades. But it would be cheaper to place one blade in the center that sweeps from end to end. India’s auto-rickshaws have a single blade and using that idea, now, so does the Nano.
Frugal engineering requires certain changes or innovations in organizational structure and processes.
1. Cross functional team: Design has to be given to a cross-functional team.
2. Supply chain thinking: Frugal engineering has to treat the suppliers as an extension of the enterprise. Frugal engineering is based high levels of cost transparency right from the design stage. A frugal development team must look beyond the usual, approved list of suppliersand develop suppliers who meet the requirements for cost, quality, and timeliness of delivery. Suppliers have to involved in development projects. OEMs and suppliers team up to set cost targets and a cost structure for the entire product as well as components. They have focus on individual components as well as on the optimization of the entire system.
3. Top-down support: Every project looks like a failure in the middle. Top management has to take time, understand and approve a frugal engineering project. Once the project is in implementation, it must do its best to facilitate the design team to overcome obstacles and challenges and make the project a success.
Frugal Engineering - Sources for This Article
Frugal engineering - six pillars - Nirmalya Kumar and Phanish Puranam
Frugal Engineering - Bibliography
The Irrestible rise of frugal engineering - KPMG E Book
Chapter 1: Frugal engineering: Introduction
Chapter 2: The threat comes with a familiar face
Chapter 3: Addressing the ideological challenge
Chapter 4: Education and the Indian red herring
Chapter 5: The scale of the threat laid bare
Chapter 6: So what happens next?
Frugal Engineering in Embedded Systems and Chips
Akash - The Frugally engineered tablet in India
Frugal Reengineering - AT Kearney paper
Frugal engineering explained - 2010 Business Line article
More Frugal Engineering - Articles and White Papers by Global Consultants and Media
Frugal Engineering - Case Studies
In product terms, the darlings of the frugal engineering scene are: the Tata Nano, Unilever’s Pureit water purifier, GE’s MAC400 handheld electro-cardiogram, Godrej Appliances’ Chotukool mini-fridge, Nokia’s 1100 mobile phone.
Frugal engineering is being championed by some of the world’s leading brand names. They have got themselves ahead of the game by building up R&D capability in emerging markets and developing products for the bottom of the pyramid.
Frugal Engineering - Case Study Collection
Frugal Engineering and Innovation - Research Papers
Frugal Engineering and Innovation - Research Papers