India’s manufacturing sector is enjoying a massive boom. Between FY 2023 and FY 2022, there was a whopping 21.5% increase in total output from industries (Ministry of Statistics and Programme Implementation, 2024). The explosive boom is supported by robust supply chains designed to optimize operational efficiencies.
However, this trend has raised a key challenge for business leaders – expediting the integration of ethics in supply chains. Beyond moral considerations, doing so is integral because of reasons like compliance with regulatory standards, long-term profitability, and improving brand reputation.
The Key Challenges with India’s Manufacturing Supply Chains
The integration of ethics within supply chains is not an unprecedented practice. Global industries have been doing this for years. Despite steady progress, significant challenges still remain when it comes to establishing ethical supply chains in India’s manufacturing sectors.
Some of them are:
Labor Practices: Labor is a key link in the supply chain. Ethical practices should be in place to ensure dignity and fairness to all employed individuals. Issues like child labor and inadequate working conditions continue to persist, requiring urgent redressals.
Environmental Concerns: Manufacturing processes often contribute to environmental degradation. They discharge pollution and consume resources in an unsustainable manner. The adverse effects generated thereby create the need to adopt sustainable practices.
Supply Chain Transparency: Supply chains should be transparent. There should also be systems of accountability in place. However, persisting opaque supply chains often conceal unethical practices. This restricts compliance and requires urgent attention from leaders.
Strategic Solutions for Ethical Supply Chains
The following strategies can be considered to mitigate the above-listed challenges:
Implement Rigorous Human Rights Due Diligence (HRDD): HRDD practices are vital for identifying and fixing the negative impact of the supply chain on human resources. These guidelines provide a framework to guide businesses in their endeavors.
Invest in Sustainable Practices: Transitioning to environmentally friendly manufacturing processes is vital. It indicates a company’s strategic move for building an ethical supply chain. These practices mitigate environmental risks and also align the company’s operations with global sustainability trends.
Enhance Supply Chain Transparency: Businesses can take corrective actions to improve their line-of-sight. Many companies utilize technologies such as blockchain to provide real-time tracking of goods and materials. This guarantees transparency and accountability at each stage of the supply chain.
Engage in Capacity Building: Capacity building equips suppliers with the training and tools needed to adopt ethical practices. This helps suppliers meet compliance standards and align with global expectations.
Adopt Ethical Sourcing Policies: Raw material sourcing is a fundamental component of the supply chain. Organizations must guarantee ethics here by ensuring that all partners adhere to their ethical standards. One way to achieve this is by establishing and enforcing supplier codes of conduct.
Conclusion
The manufacturing sector of India is seeing positive growth year-on-year. It is likely that the positive trend will continue, given the rapid expansion of companies operating in the industry.
Supply chain and ethics are two fundamental aspects of manufacturing. Today, companies need to acknowledge the need to integrate the two. This mandates the adoption of sustainable practices. After that, firms will be poised to achieve operational excellence while also securing a competitive position in the global market.
References
Ministry of Statistics and Programme Implementation. (2024). Annual Survey of Industries (ASI) Report - 2022/23. In Ministry of Statistics and Programme Implementation. https://pib.gov.in/PressReleasePage.aspx?PRID=2060292
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