Engineering in India –
Cost Arbitrage to Cost Innovation
Dr. V Sumantran
Executive Vice Chairman – Hinduja Automotive Ltd...
180
179
160
Globally, Demand and Capacity
are Moving East
140
120
2006
Production Growth
2
1.5
1
-1
USA
France
U...
India: A manufacturing destination
• India in 4th place 2013 Global Manufacturing
Competitiveness Index, projected to reac...
Near-shore example of Cost Arbitrage - Mexico
India: A manufacturing destination
6
India: Losing the labor cost advantage
•
•
India's cost advantage as an offshoring destination, its trump card, has
dropp...
We need a sustainable Advantage
Cultural inspiration for Innovation
Cultural inspiration for Innovation
Can India make Cost Innovation a strategic platform ?
Most of the Growing Economies have constrained Affordability
The Affordability Challenge
Globally, there is demand for Cost Innovation
New Cars Increasingly Out of Reach for Many
Ame...
What is Cost Innovation ?
Cost Innovation is more than Jugaad
Cost Innovation Requires special skills
To design a desk that may cost $1000
is easy for a furniture designer but to
desi...
Cost Innovation is hugely challenging
Cost Innovation does not mean complexity
Cost Innovation does not mean complexity
Cost Innovation may require changing rules of business
Passengers
6
Speed
430 kts
Range
3000 km
5
400 kts
2600 km
...
Cost Innovation may require changing rules of business
Cessna CJ1+ Cockpit
•
•
•
•
•
Two pilot cockpit configuration
W...
Cost Innovation is aided by minimalism
Cost Innovation means defining the requirements clearly
Euro-4
European CRDi System
• 4 cylinder -- 2 bank concept for
i...
Cost Innovation can mean intelligent re-use
 New Rules
 New Thinking
 Re-Use
 Minimise Complexity
 Challenging Goals
 Downsizing
 Requirements Driven
Recognition
“Frugal engineering is achieving more with fewer
resources. The cost of developing a product in the
West is h...
Recognition
“ As a group, we have said that is strategically
important for us to be in the low-cost vehicle
market and the...
Hinduja Automotive Landscape
Exhaust System
Technology
Foundry Business
Engines & Gensets
Medium & Heavy CV
Defence Mo...
Jan-Bus : Cost Effective Flat Floor BRT Bus
Changing LCV cost of ownership
35
Copyright 2012 © Defiance Technologies Limited
24 October
Technology driving cost
advantage
Competition
Weight
Cost
Lighter
Cost Effective
Philosophy and Inspiration
“ Engineering is a combination of
Brains and Materials……….
Charles “Boss” Kettering
Philosophy and Inspiration
“ Engineering is a combination of
Brains and Materials……….
…. the more the Brains, the less
th...
Thank you
NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Exe...
NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Exe...
NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Exe...
NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Exe...
NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Exe...
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NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Executive Vice Chairman, Hinduja Automotive Limited, UK

Keynote: Breaking the barrier from cost arbitrage to value engineering Future of Engineering, where is the engineering is heading to Dr. V Sumantran, Vice Chairman, Ashok Leyland, Executive Vice Chairman, Hinduja Automotive Limited, UK
Published on: Mar 3, 2016
Published in: Technology      Business      
Source: www.slideshare.net


Transcripts - NASSCOM Engineering Summit 2013: Cost Arbritage to Cost Innovation - Dr. V Sumantran, Vice Chairman, Ashok Leyland and Executive Vice Chairman, Hinduja Automotive Limited, UK

  • 1. Engineering in India – Cost Arbitrage to Cost Innovation Dr. V Sumantran Executive Vice Chairman – Hinduja Automotive Ltd. Vice-Chairman – Ashok Leyland Ltd.
  • 2. 180 179 160 Globally, Demand and Capacity are Moving East 140 120 2006 Production Growth 2 1.5 1 -1 USA France UK Canada Belgium Spain Iran Thailand Germany Poland Turkey S. Korea Italy Brazil Russia -0.5 Czech Republic 0 India 0.5 Mexico 2005 Japan 2004 China 2003 Change (Million units) 80 2002 Example : Auto Industry 103 100
  • 3. India: A manufacturing destination • India in 4th place 2013 Global Manufacturing Competitiveness Index, projected to reach 2nd place in 5 years. 3
  • 4. Near-shore example of Cost Arbitrage - Mexico
  • 5. India: A manufacturing destination 6
  • 6. India: Losing the labor cost advantage • • India's cost advantage as an offshoring destination, its trump card, has dropped to 30-40% Quicker response time, better tech support and near-shore advantages are driving businesses to other outsourcing destinations Country Labor cost increase Percentage (2013) India 10.3 China 9.3 Philippines 7.2 Malaysia 6 Hong Kong 4.8 Singapore 4.7 Australia 4.2 Japan 2.4 US and UK 3 7
  • 7. We need a sustainable Advantage
  • 8. Cultural inspiration for Innovation
  • 9. Cultural inspiration for Innovation
  • 10. Can India make Cost Innovation a strategic platform ?
  • 11. Most of the Growing Economies have constrained Affordability
  • 12. The Affordability Challenge Globally, there is demand for Cost Innovation New Cars Increasingly Out of Reach for Many Americans By Paul A. Eisenstein, NBC News | CNBC – Wed, Feb 27, 2013 9:59 AM EST
  • 13. What is Cost Innovation ?
  • 14. Cost Innovation is more than Jugaad
  • 15. Cost Innovation Requires special skills To design a desk that may cost $1000 is easy for a furniture designer but to design a functional and good desk which shall cost $50 can only be done by the very best
  • 16. Cost Innovation is hugely challenging
  • 17. Cost Innovation does not mean complexity
  • 18. Cost Innovation does not mean complexity
  • 19. Cost Innovation may require changing rules of business Passengers 6 Speed 430 kts Range 3000 km 5 400 kts 2600 km Full FADEC turbofans Yes Yes High Efficiency turbofans Yes Yes Composite fuselage No Yes All Glass Cockpit No Yes Advanced Flight Controls No Yes Price USD 7 million USD 2.5 million
  • 20. Cost Innovation may require changing rules of business Cessna CJ1+ Cockpit • • • • • Two pilot cockpit configuration Warning lights for alerts Analogue and Digital equipment Potential for information loss due to minimal redundancy architecture Independent controls • Cost of aircraft: ~$7 million Cessna Mustang Cockpit • • • • • • • Owner driven single pilot configuration Glass cockpit equipped with all traditional avionics functions Two 10“ Primary Function Display & One 15“ Multi-Function Display Dual System for essential functions Built-in redundancy of system Integrated cabin pressurization system Cost of aircraft: ~$2.5 million
  • 21. Cost Innovation is aided by minimalism
  • 22. Cost Innovation means defining the requirements clearly Euro-4 European CRDi System • 4 cylinder -- 2 bank concept for injectors • Exhaust Gas After treatment System • EGR Control • Turbo charger • CAN • FR4 PCB • Glow Control • High End Microcontroller • Cost approx. 800 Euros Euro-4 Indian Low-cost CRDi System • 2 Cylinder – 1 bank concept for injectors • No ExhaustGas After Treatment • No EGR • No Turbo charger • No CAN • CEM PCB • No Glow Control • Low End Microcontroller • Cost estimated at 150 Euros
  • 23. Cost Innovation can mean intelligent re-use
  • 24.  New Rules  New Thinking  Re-Use  Minimise Complexity  Challenging Goals  Downsizing  Requirements Driven
  • 25. Recognition “Frugal engineering is achieving more with fewer resources. The cost of developing a product in the West is high since engineers there use more expensive tools. In India, they achieve a lot more with fewer resources," "They understand frugal engineering, which is something we aren't as good at in Europe or Japan," - Carlos Ghosn
  • 26. Recognition “ As a group, we have said that is strategically important for us to be in the low-cost vehicle market and there are two reasons for this: Firstly, you cannot just transfer technology X from Europe to a low-cost vehicle. You need new engineering, the intelligence to make things simple and adapt it to low cost markets. Secondly, this is valuable for our engineers who could down the line bring these ideas back to the low-end of the European market. “ – Bernd Bohr, Bosch
  • 27. Hinduja Automotive Landscape Exhaust System Technology Foundry Business Engines & Gensets Medium & Heavy CV Defence Mobility Buses Bus Engineering Manufacturing and Enterprise Services Transmissions Construction equipment LCVs 30
  • 28. Jan-Bus : Cost Effective Flat Floor BRT Bus
  • 29. Changing LCV cost of ownership
  • 30. 35 Copyright 2012 © Defiance Technologies Limited 24 October
  • 31. Technology driving cost advantage Competition Weight Cost Lighter Cost Effective
  • 32. Philosophy and Inspiration “ Engineering is a combination of Brains and Materials………. Charles “Boss” Kettering
  • 33. Philosophy and Inspiration “ Engineering is a combination of Brains and Materials………. …. the more the Brains, the less the Materials” Charles “Boss” Kettering
  • 34. Thank you

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