Frugal Engineering, first coined by Chief executive of Renault, Carlos Ghosn, is a process where basically frugal engineering is used to deliver the superior value of the products to the consumer for the best minimum possible price by cutting the cost as much as possible without much change in the quality of the end product.
As in this process, not only the manufacturing team or only R&D department work on the project, but the cross functional teams is used so that a team is directed towards the objective of the task, that includes keeping the cost low, but using of such cross functional teams is not that easy because maintaining coordination among the employees is difficult. A new supply chain management should be formed where the suppliers are treated as a business partner and cost transparency is expected as well the supplier are worked as group with production team so that the cost is kept under control by compensating from one component with another. A huge support from the top management is expected to get the things done and come out, so the commitment should be very high from the top management first. 
A rethinking on product design and engineering for cost cutting at the same time not compromising with the quality of the product is the main objective of frugal engineering. The engineering approach is not limited to automobiles or only consumer products; it is even applicable to medical devices.
Frugal Engineering is carried with a view to deliver the good to the largest segment in population where there is a huge scope as per C.K.Prahalad theory. Basically, to target the Bottom of the Pyramid, where billions of consumer expect for a better product for cheaper price where they can afford to.
Meeting the customer’s needs and maintaining the production cost at lower is not that easy task for any company, even with the multinational company or other companies from developed countries. The best example for Frugal engineering is Tata Nano, Nokia 1100, Godrej’s ChotuKool, in India, where products has been produced for least possible cost to serve the specified customer need with meeting the global standards on quality.
Cutting down the cost is not frugal engineering; it’s the changes in the whole process and then controlling the cost is Frugal Engineering. The company has to put a lot of efforts in innovation, rethinking all aspects for the end product, should invest more time, and money.
The main challenges faced by the organization are three things, usage of cross functional teams, supply chain problems, and top level commitment.
As in this process, not only the manufacturing team or only R&D department work on the project, but the cross functional teams is used so that a team is directed towards the objective of the task, that includes keeping the cost low, but using of such cross functional teams is not that easy because maintaining coordination among the employees is difficult. A new supply chain management should be formed where the suppliers are treated as a business partner and cost transparency is expected as well the supplier are worked as group with production team so that the cost is kept under control by compensating from one component with another. A huge support from the top management is expected to get the things done and come out, so the commitment should be very high from the top management first. 
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