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Nitin Kalothia, Director—Sustainability Initiatives Practice, Frost & Sullivan

Image: Frost & Sullivan

Sustainable Manufacturing “Adoption of sustainability practices in India has increased over last few years”

Aug 9, 2017

…says Nitin Kalothia, Director—Sustainability Initiatives Practice, Frost & Sullivan. In this interaction with Megha Roy, he shares his recommendations for an effective implementation of sustainability practices amidst the various challenges faced in the Indian manufacturing industry. Excerpts…

How do you overview the potential of technological advancements in the current manufacturing ecosystem of India? Can you highlight some of the emerging trends witnessed on this front?

Indian manufacturing companies have come a long way in the last two decades, with some companies matching the global standards on technology adoption. While such companies are few, their number has been increasing every year. The use of manufacturing execution system integrated with machine data interface and ERP is a new trend in the country. The system helps real-time data capturing, analysis and shorter response time. Use of RFIDs, automatic storage and retrieval system, automatic guided vehicles, and a warehouse management system (WMS) are some of the technologies used in improving warehouse performance. Robotic arms installation for high precision welding, painting and other critical applications are widely seen in Indian manufacturing plants. The focus will continue to be on adoption of technologies which is a necessity, rather than luxury.

Embracing technology-driven transformation, innovating new business models and leveraging engaged workforces are laying the groundwork for a new era of greater productivity in manufacturing. What are your views on this?

In this competitive world, productivity and efficiency improvement will be the driver for cost competitiveness. The foundation has not been set today, but has been there for almost over a decade now. Many companies have doubled their productivity in the last 10-15 years through implementation of Lean manufacturing, TQM and TPM principles. Indian companies are making calculated investment into technology and only necessary technology projects are funded. The trend will continue in the near future too. In a low-to-medium cost manufacturing country, luxury of high-end technology and automation does not exist, so it is going to be a slow but sustainable journey. It may also be noted that small and medium enterprises are yet highly dependent on manual processes and their focus on productivity and efficiency improvement has been quite low. Since MSMEs contribute significantly to industrial output, there is an untapped opportunity sitting in this segment of the industry.

What are the major challenges faced in the Indian manufacturing industry for the adoption of sustainability initiatives?

Adoption of sustainability practice in India has increased over the last few years driven by increasing awareness, regulatory requirements, new reporting frameworks and business benefits gained by organisations, though not at a pace one would have liked to see. India continues to remain a low to moderate cost manufacturing hub, and with low ROI on sustainability programmes, investments in these projects continue to be a challenge. Though awareness levels and funding mechanisms have increased, these are still not adequate to make a big impact. However, the outlook is positive and we expect to see investment in sustainability programmes increasing.

How would you define sustainability-based management system? What are the associated business values with it?

Organisations that have adopted sustainability framework are better placed to sustain their performance over a longer period. Adoption of sustainability is also driving innovation in areas of environment management, CSR, employee development, etc. In addition to cost savings, these companies have benefits of a better regulatory compliance, governance structure, risk management and brand image. Some of the surveys also indicate that employees prefer to work for organisations that have adopted sustainability programmes.

What is the prime need to inculcate sustainability initiatives within organisations today? What are the major innovative technologies on green energy used across Indian industries?

Adoption of sustainability is important to look beyond the regular financial risks and opportunities. Sustainability initiatives are helping organisations identify and mitigate long term non-financial risks, such as, environmental, societal, employee diversity, retention, skill development, etc. Some of the innovative practices used by industries include use of alternate fuels (like waste from other industries that have calorific values are used as fuels) in boilers and cement kilns, waste heat recovery systems, tri-generation (power, steam and chilled water generation together to maximise fuel efficiency), energy storage during non-peak hours and usage during high tariff timing to reduce the total energy cost.

Currently, SMEs are more compelled to manage their impact on the environment. What would be your recommendations to them on sustainability manufacturing practices?

SMEs have their own challenges for managing business growth without adequate resources (infrastructure, skilled manpower and financial strength), so investment into low ROI sustainability projects is a bigger challenge. One of the suggestions for starting the journey is to identify projects that will require low investment but will give returns in a short period. Energy audits, waste reduction and efficiency improvements could be a good starting point. These projects can be funded internally or through green bonds or by partnering with customers who invest and share the savings. The money saved from these projects can be used for funding bigger projects. The suggestion is to start small and identify projects that will create business benefits for organisations.

Lastly, where do you see India standing today amidst the changing scenario of the global market? What are the major drivers that can help India become a global manufacturing hub?

Even today, India is one of the global manufacturing hubs primarily driven by Indian companies focusing on quality and delivering high-quality products at a competitive price. India’s focus on skill development to ensure availability of skilled manpower, infrastructure development to improve supply chain efficiency, adoption of technologies to stay competitive and investment into research & development will be crucial to enhance our global manufacturing competitiveness.

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