SUPPLY CHAIN MANAGEMENT, AFFIRMATIVE ACTION & CSR
Presentation By: Soumitro Chakraborty CEO, Fiinovation
ABOUT FIINOVATION
Fiinovation has been successfully bridging the gap between businesses and communities through value based sustainable corporate social responsibility (CSR) initiatives.
Fostering connection between corporations and CSOs to create value based CSR initiative and amalgamate the objectives of corporations with their social objectives.
Fiinovation is the pioneer to form Asia's first proposal research laboratory wherein research is focused primarily on four sectors, which include Health, Education, Livelihood and Environment.
AGENDA OF THE WEBINAR
Affirmative Action - Introduction and Analysis
Introduction to Supply Chain Management
Supply Chain Management- Indian and Global Context
Role of corporates in promoting Supply Chain Management
Integrating Affirmative Action with the Supply Chain Management
How the integration of supply chain management and affirmative action will benefit socially backward communities
Way Forward
CORPORATE SOCIAL RESPONSIBILITY
Coined in 1953 with the publication of Bowen's 'Social Responsibility of Businessmen', which posed the question ‘What responsibilities to society can business people be reasonably expected to assume’. In 1960s, ambit expanded, suggesting beyond legal obligations companies had certain responsibilities to society In 1990s companies started integrating social and environmental concerns in their business operations and interactions with their stakeholders
Definition: A strategic business management concept to obtain a balance of economic, environmental and social imperatives
Related Concepts: Triple Bottom Line, Strategic Philanthropy, Shared Value, Corporate Sustainability, Business Responsibility
AFFIRMATIVE ACTION ( ORIGIN )
Is an outcome of the 1960's Civil Rights Movement, intended to provide equal opportunities for members of minority groups and women in education and employment.
In 1961, President Kennedy was the first to use the term "Affirmative Action" in an Executive Order directing government and contractors to take "Affirmative Action” to ensure that applicants are employed, and that employees are treated equally during employment, without regard to their race, creed, colour, or national origin.
The Executive Order also established the President’s Committee on Equal Employment Opportunity on July 2nd 1965, now known as the Equal Employment Opportunity Commission (EEOC) worldwide.
INDIA’S experiment with affirmative action is one of the oldest in the world. Known locally as “reservation” policy it is an elaborate quota system for public jobs, places in publicly funded colleges.
AFFIRMATIVE ACTION ( GLOBAL CONTEXT )
CANADA
Employment Equity Requires employers to engage in proactive employment practices to increase the representation of four designated groups: women, people with disabilities, Aboriginal peoples, and visible minorities
USA
Affirmative Action Focus on issues such as education and employment, specifically granting special consideration to racial minorities and women who have been historically excluded groups
UK
Positive Action Promotion of people based on belonging to non majority identity groups in the workplace, educational institutions and positions in society
AFFIRMATIVE ACTION ( THE INDIAN CONTEXT )
In India it is locally known as “reservation” policy. It is an elaborate quota system for reserved positions in public jobs, publicly funded colleges and in the elected assemblies for SC and ST communities.
An action favouring those who tend to suffer from discrimination i.e. positive discrimination.
Affirmative Action “reverses” longstanding discriminatory tendencies in the society for people of a certain caste, gender, race or ethnic background.
Affirmative Action provides supposedly fairer conditions and corrects past injustices.
Upliftment of SC and ST communities, underpivledged and weaker sections of society through quota reservations in government skills development programmes, government positions, and creating skilled workforce through government-public partnership skills development programmes and initiatives.
WHY AFFIRMATIVE ACTION & CSR There is a need for affirmative action & CSR because data suggests that those who are historically marginalised are majorly below the poverty line.
As per the erstwhile Planning Commission, ST population below poverty line came down from 47.4% in 2009-10 to 45.3% in 2011-12 in rural areas.
In urban areas, it declined from 30.4% in 2009-10 to 24.1% in 2011-12.
Census 2011 revealed that the situation of non-workers among total ST population (i.e. 42.0%) was not dismal as compared to SC (i.e. 52.2%) and all other social groups (53.3%)
Percentage of ST non- workers declined from 50.9% in 2001 (Census 2001) to 42% in 2011 (Census 2011) at all India level.
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According to Socio-Economic Caste Census-2011 (SECC), 133.5 mn households (74.5% of the total; 84% for SC and 87% for ST households) have a monthly income where the highest earning household member earns less than Rs 5,000, whereas households with any one of the seven deprivations is only 86.9 mn.
As per National Sample Survey, 34% of SCs and 46% of STs households were in selfemployment in 2004-05 in rural areas as compared to urban proportions with 29% and 26% respectively.
As per the erstwhile Planning Commission, ST population below poverty line came down from 47.4% in 2009-10 to 45.3% in 2011-12 in rural areas.
In urban areas, it declined from 30.4% in 2009-10 to 24.1% in 2011-12. Census 2011 revealed that the situation of non-workers among total ST population (i.e. 42.0%) was not dismal as compared to SC (i.e. 52.2%) and all other social groups (53.3%).
DIFFERENT APPROACHES TO AFFIRMATIVE ACTION
Recruiting employees or providing opportunities in the recruitment process for SC/ST communities
Procuring from SC/ST vendors and entrepreneurs
Devising policies to address the needs and challenges of the SC/ST communities
Implementing CSR Activities as per Schedule VII of The Companies Act, 2013
Targeting SC/ST communities for social upliftment
SC/ST INCOME IN RURAL HOUSEHOLDS Income Source and Landholding among Rural Households (In Percent) All India
Dependent on Manual Casual Labour
There are 46, 844 villages in the country having more than 50% SC population
From the SECC covered 24.39 crore households across the country 7.91 crore are rural households
21.53% of rural households belong to the Scheduled Caste/Scheduled Tribes
SCs 70%
67% 51%
56%
Landless Household
ENTRPRENEUR PERCENTAGE OF SC/ST COMMUNITY IN INDIA As per MSME Report 2014-15
7.83% of the enterprises were owned by Scheduled Caste entrepreneurs 5.76% by Scheduled Tribe entrepreneurs 41.94% by entrepreneurs of Other Backward Classes Percentage Distribution of Enterprises by Social Group of Owner
50 40 30 20 10 0
SC ST OBC Others Not Recorded Percentage Distribution of Enterprises by Social Group of Owner
UNEMPLOYMENT RATE OF SC/ST COMMUNITY IN INDIA RURAL Year
URBAN ST
SC
OBC
Others
Total
Rural Male
Year
ST
SC
OBC
Others
Total
Urban Male
2011-12
1.3
2.0
1.7
1.8
1.7
2011-12
3.4
3.2
2.5
3.4
3.0
2009-10
1.7
1.7
1.4
2.0
1.6
2009-10
4.4
3.1
2.8
2.7
2.8
2004-05
1.1
1.7
1.5
2.0
1.6
2004-05
2.9
5.5
3.3
3.7
3.8
Rural Female
Urban Female
2011-12
1.1
1.4
1.7
2.4
1.7
2011-12
4.8
4.5
4.7
6.3
5.2
2009-10
0.9
1.5
1.4
2.5
1.6
2009-10
4.3
4.2
6.2
6.2
5.7
2004-05
0.4
1.4
1.9
2.9
1.8
2004-05
3.4
4.6
6.7
8.5
6.9
ORG./POLICIES SUPPORTING SC/ST POPULATION
All India Confederation of SC/ST Organization was created in 1997 under the flagship of Dr. Udit Raj, who is the National Chairman of confederation that works for government reservations, ban on contract system, promotion among other things.
All India SC & ST Railway Employees Association
Tribal Cooperative Marketing Development Federation of India Limited (TRIFED)
National Rural Employment Generation Act (NREGA) is an important Central law having a large demographic and geographical spread. It assures livelihood guarantee to the entire population above 18 years of age residing in rural areas of the country. The act gives the right for 100 days of guaranteed employment in manual/unskilled work in rural areas. During 2008-09, Rs. 27,137.87 crores was spent creating 216 crore days of employment for 4.5 crore rural households. Of all the wage seekers, there are 29% SC and 26% ST community members.
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National Skill Development Agency (NSDA)- An autonomous body, (registered as a Society under the Society's Registration Act 1860) was created with the mandate to co-ordinate and harmonise the skill development activities in the country, is part of the Ministry of Skill Development & Entrepreneurship (MSDE) has incorporated the policy to ensure that the skilling needs of the disadvantaged and the marginalized groups like SCs and STs are taken care of.
National Skill Development Corporation (NSDC)
National Council for Vocational Training (NCVT)
Corporations can invest their CSR funds to establish social enterprises addressing social issues & also generating income for a particular community.
CII CODE OF CONDUCT FOR AFFIRMATIVE ACTION
The Company affirms the recognition that its competitiveness is interlinked with the well being of all sections of the Indian society.
The Company believes that equal opportunity in employment for all sections of society is a component of its growth and competitiveness. It further believes that inclusive growth is a component of growth and development of the country.
The Company affirms the recognition that diversity to reflect socially disadvantaged sections of the society in the workplace has a positive impact on business.
The Company will not practice nor support conscious discrimination in any form.
The Company does not bias employment away from applicants belonging to disadvantaged sections of society if such applicants possess competitive skills and job credentials as made public.
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The Company’s selection of business partners is not based on any considerations other than normal business parameters. In case of equal business offers, the Company will select a business partner belonging to a socially disadvantaged section of society.
The Company has/will have a written policy statement on Affirmative Action in the workplace.
The Company has/will have an employment policy that is in the public domain. It may place such policies and employment opportunities on its website to encourage applications from socially disadvantaged sections of society.
SUPPLY CHAIN MANAGEMENT ( CONCEPT )
In general, Supply Chain Management (SCM) is the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole. The supply chain links a firm and its distributive and supplier network with its end customers.
Supply chain management (SCM) is the streamlining of a business' supply-side activities to maximize customer value and to gain a competitive advantage in the workplace. It represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible. Supply chains cover everything from production, to product development, to the information systems needed to direct these undertakings.
For example, a shirt manufacturer is a part of a supply chain that goes upstream through the weavers of fabrics to the manufacturers of fibers, and downstream through distributors and retailers to the final consumer. Each of these organizations in the chain is dependent upon each other.
SUPPLY CHAIN MANAGEMENT ( AN OVERVIEW )
WHY SCM ? SCM's impact on business is significant and exponential. It affects business In the following way: Boosts Customer Service - SCM impacts customer service by making sure the right product assortment and quantity are delivered in a timely fashion. Those products must be available in the location expected by customers and additionally customers should also receive quality after-sale customer support. Improves Bottom Line - SCM has a tremendous impact on the bottom line. It decreases the use of large fixed assets such as plants, warehouses, and transportation vehicles in the supply chain while increasing cash flow as product delivery is expedited leading to profits. Supply chain management encompasses collaboration with suppliers, intermediaries, third-party service providers, and customers, and includes: Manufacturing and assembly
Sourcing raw materials and parts
Warehousing and inventory tracking
Delivery to the customer
Order entry and order management
SOME OF THE COMPANIES WITH EFFECTIVE SCM SYSTEM INDIAN
Flipkart Tata Motors Maruti Suzuki Ashok Leyland BEHL Larsen & Toubro
GLOBAL
Amazon Wall-Mart Dell Coca Cola 3M Nike Nestle Pepsi Amazon Glaxo Smithkline
PROBLEMS IN SUPPLY CHAIN MANAGEMENT IN INDIA
The strategic importance of SCM is not well understood. Big corporations need to understand the economic and social power of SCM.
Inexperienced or under skilled leadership, high staff turnover and lack of motivation.
Lack of suitable equipment, facilities and infrastructure such as computers with dependable internet connections; or information, such as databases giving up-to-date details of available products and services.
Lack of clarity about the roles and responsibilities giving gives rise to allegations or instances of corruption.
Policies and regulations are often confusing and cumbersome.
SCM practitioners frequently do not have the skills, knowledge and experience that they need.
POLICIES SUPPORTING SUPPLY CHAIN MANAGEMENT
As per MSME Development Act 2006, the Central Government may provide funds for the purposes of promotion and development and enhancing the competitiveness of micro, small and medium enterprises.
The government may support development of skill in the employees, management and entrepreneurs, provisioning for technological upgradation, marketing assistance or infrastructure and cluster development of MSMEs with a view to strengthen backward and forward linkages.
The government also provides guidelines for buyer supplier disputes as per the MSMED Act, 2006.
As per SEBI, under a Business Responsibility Report, a company is expected to list all the activities that it is undertaking and the processes it has put in place to encourage its supplychain partners to embrace practices such as fair and minimum wages, employee health and safety and reduced environmental footprints.
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The Public Procurement Bill, 2012, introduced in the Indian Parliament on May 14, 2012, seeks to regulate the award of government contracts above 5 million (approximately US$100,000) in order to ensure “transparency, accountability and profitability” in public purchases, codifies basic norms governing public procurement and places statutory obligations on procuring entities and bidders to comply with these norms.
The Central Government has reserved all items of hand-spun and hand-woven textiles (Khadi goods) for exclusive purchase from Khadi & Village Industries Commission (KVIC).
India’s public procurement regime, except for a limited degree of preference for micro and small enterprises/public sector enterprises, maintains non-discrimination between domestic and foreign suppliers. This basic feature of the regime has not undergone any change in the procurement Bill.
The National Manufacturing Policy leverages public procurement to stimulate manufacturing in India – to raise its present share of about 18 percent of the GDP to 25% by 2025.
INITIATIVES IN SCM SECTOR
CIL (CII Institute of Logistics) - Established in 2004 by CII to sharpen India Centre of Excellence in logistics and supply chain.
National Skill Development Corporation - To develop skills of 500 million people in less than ten years in India.
Pradhan Mantri Kaushal Vikas Yojna - Targeted to create a skilled workforce of 4-5 crores to work abroad.
Stand Up India Initiative- Finance minister Arun Jaitley has allocated 500 crores to develop 2.5 lakh entrepreneurs by providing financial support for setting up new ventures to develop job and income generating opportunities.
In coordination with DICCI and CII, the GOI has planned to develop National Scheduled Caste and Tribe hub in the MSME ministry to complete the obligations under the Central government procurement policy 2012.
PUBLIC PROCUREMENT POLICY FOR MSEs ORDER 2012
Overall procurement of minimum of 20 per cent, of total annual purchases of products produced and services from Micro and Small Enterprises (MSEs) Out of 20 per cent target of annual procurement from Micro and Small Enterprises, a subtarget of 20 per cent (i.e., 4 per cent out of 20 per cent) shall be earmarked for procurement from Micro and Small Enterprises owned by the Scheduled Caste or the Scheduled Tribe entrepreneurs Enhancing participation of Scheduled Castes or Scheduled Tribes in government procurement, the central government ministries, departments and public sector undertakings Special Vendor Development Programmes or Buyer-Seller Meets shall be conducted by the departments/public sector undertakings for SC, ST; Outreach programmes shall be conducted by National Small Industries Corporation to cover more and more Micro and Small Enterprises from SC or ST under its schemes of consortia formation; and National Small Industries Corporation shall open a special window for SCs or STs under its Single Point Registration Scheme (SPRS).
FEW EXAMPLES OF SCM
TATA Group – Tata Steel has initiated an approach to get buy-in of the SC/ST community as well as make them partner in the development work at village level. Several village level organizations have been registered as trusts and societies with the support of Tata Steel Rural Development Society, through which village empowerment and development activities are being conducted.
AMUL - Uses Softwares like ERP and SAP while focusing on efficiency during procurement of milk from dairy farmers which ultimately add monetary value to the farmers itself.
Fabindia - The supply chain process of Fabindia ensures that it brings the goods produced from its wide network of artisans, to centralized warehouses from where merchandise is supplied to its various stores.
ITC - The Supply Chain Management (SCM) Programme of ITC has trained over 25,000 business managers worldwide. Executives learn to manage the sourcing, movement and storage of goods from source of production to point of consumption. For local trade institutions, ITC is a solid partner offering best-in-class supply chain training and advisory programmes.
SCM – WHAT CAN BE DONE?
Creating Digital Supply Chain - Accenture has recently put out an amazing video describing the digital supply chain and states the following: “Digital technology is disrupting traditional operations and now every business is a digital business. The impact on supply chain management is particularly great. Businesses cannot unlock the full potential of digital without reinventing their supply chain strategy.”
Responding to Innovation & Change But with An Eye On Fundamentals - According to Grant Marshbank, COO of VSc Solutions the “Technology will only deliver the intended positive results if it is implemented with strategy and operations that adhere to best practice in supply chain management.”
Augmented Reality - DHL has introduced Augmented Reality for providing benefits such as picking optimization, facility planning, freight/container loading and dynamic traffic support in the area of Supply Chain Management.
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Artificial Intelligence - Huge investments are being made in Artificial Intelligence by many companies like Facebook, Google, Apple, and Tesla amongst many more.
Agile = The New Lean - Agile methodology is an alternative to traditional project management, typically used in software development. It helps teams respond to unpredictability through incremental, iterative work cadences, known as sprints. Agile methodologies are an alternative to traditional sequential development.
Efficient Govt. Policies – Corporations need to follow the guidelines and norms for improved supply chain management. With their investments they can improve the quality of output as per international standards.
Collaborating Efforts - Research shows that companies who have embraced digital strategies are seeing real value, boosting revenue more than nine percent, market valuation more than 12%, and profitability by over 26%.
WAY FORWARD ( ALIGNING SCM, AA & CSR )
Improving processes, rules and infrastructure to make it easier for the public sector and its private sector suppliers to transact.
Applying the concept of ‘strategic sourcing’, thereby incorporating the concepts of Affirmative Action and Corporate Social Responsibility leading to improved public image and market outreach.
Effective relationship building between public sector, private sector companies, SMEs, civil society and associations such as DICCI, CII etc. All working together towards nation building.
Encouraging corporations to invest as positive discrimination in favour of marginalised communities, who surround their operations, is in the interest of socio-economic change in the local communities.
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Increasing knowledge and skills of suppliers so that they can provide best quality product and services.
Using technology to streamline transactions and improve oversight.
Creating entrepreneurship opportunities for the marginalised sections who can become potential suppliers.
Creating a conducive environment for education, healthcare and inclusive development for the people related to the supply chain.
With the CSR funds, corporations can implement CSR initiatives in SME clusters triggering growth in the rural areas.
Incorporating ethical practices, human rights and labour laws within the business operations to promote sustainable development across the country.
Contributors to the PPT
Soumitro Chakraborty CEO, Fiinovation
Manisha Bhatia Manager – Editorials & Publications, Fiinovation
Rahul Choudhury Dy. Manager, Fiinovation
Rohit Srivastava Graphics Designer, Fiinovation