Responsible Supply Chain Management

At Airtel, our business strategy revolves around fostering mutually beneficial relationships with all our stakeholders, one of which is suppliers. We have designed an effective supply chain strategy, which is crucial to meet our business objectives, serve the customer better and stay ahead of competition.

Our strategy hinges on collaboration with suppliers who can help us secure competitiveness by driving brilliant customer experience, while at the same time ensuring cost-efficiency and prudent risk management. Therefore, as part of this strategy, our priorities include partnering with suppliers who provide goods/services at supreme quality and competitive cost, in addition to a short lead time. Furthermore, they must also have a strong focus on innovation, risk mitigation and agility to evolve with the dynamically changing customer needs. In doing so, we consistently strive to maintain an efficient procurement process operating under sound governance and ensure compliance to all applicable laws and regulations.

Supplier Selection & Categorization

Sustainable supply chain management is one of our key material issues. We adopt a long-term approach to managing and maintaining supplier relationships through a robust set of business procedures which guide supplier screening, selection and engagement.

Our suppliers undergo screening prior to selection through a due diligence process to ascertain the commercial feasibility of collaboration, ensure compliance to all applicable laws and regulations (such as the labour laws) and evaluate the suppliers on parameters such as quality, price competitiveness, response time etc. Besides this, all suppliers are required to adhere to Airtel’s Supplier Code of Conduct, which consists of various ESG (environmental, social and governance) related guidelines. The Code defines minimum ESG requirements or thresholds for all our suppliers, that span across following major areas:

1. Human Rights: This includes guidelines for suppliers around ensuring labour rights and embracing employment practices that are consistent with applicable labour laws as well as ILO conventions and Modern Slavery Laws.
2. Workplace Health and Safety: This includes guidelines for suppliers to ensure healthy and safe working conditions, in order to maintain a workplace that is free from recognized hazards and prevent any workplace injuries or ill-health.
3. Environmental Management: This includes guidelines for suppliers to implement environmental standards and adopt production processes that promote energy and resource efficiency, environmental protection and reduction of carbon emissions.
4. Data Privacy: This includes guidelines for suppliers to ensure data confidentiality and uphold Airtel’s privacy requirements.
5. Supplier Management: The includes guidelines for suppliers to ensure the adoption of similar ESG standards in their own supply chain.

The Code has been designed to reduce environmental, social and governance related risks that can arise in our supply chain. Therefore, it outlines such ESG practices for suppliers, that are paramount to ensure our business sustainability and also enable us to contribute towards sustainable development. Hence, we outline such contract clauses before enlisting any supplier and target to empanel 100% suppliers through these contract clauses in 2023 as well.

Further, we encourage our suppliers to adhere to international sustainability standards such as ISO 14001, ISO 45001 and ISO 27001. Currently more than 80% of our procurement by value from critical suppliers comes from those having at least one of these ISO certifications and we target at least 85% procurement by value from such suppliers by 2024.

We conduct a spend analysis in order to identify suppliers who are critical for our sustained business performance. The following table depicts the number of suppliers and share of procurement spent for major categories of our suppliers for FY2020-21

*Outside India our vendors are located at USA, United Kingdom, South Africa, Sri Lanka, China, France, Singapore, Egypt, Canada, Germany, Australia, Israel, France, Ireland, Switzerland, United Arab Emirates, Indonesia, Germany, Australia and Spain.

Critical suppliers, by the virtue of goods/services they provide, have a significant impact on our competitive advantage and market success. These include suppliers supplying

1. High Value Goods & Services
2. Critical/Core Products & Services

Therefore, these are suppliers providing network, IT equipment and other key services with overall individual expenditure greater than INR 100 Mn. In 2020-21, Airtel engaged with 2686 tier-1 suppliers, out of which 174 were critical suppliers. We spent a total of INR 265,349 Mn on procurement of goods and services
in FY2020-21.

Airtel also promotes local procurement from India based suppliers which constituted 96.16% of total suppliers in FY2020-21, accounting for 89.8% of our procurement spent. In order to optimize resources, reduce environmental footprint and promote indigenous entrepreneurship, we target to ensure the share of local suppliers to atleast 92% by value of procurement spent, by 2024.

Supply Chain Risk Assessment

Risk identification and assessment in our supply chain, is imperative for us to ensure the sustainability of our business operations.

Our approach to risk identification and assessment is depicted below:

Some of the identified potential ESG risks include risks related to human rights, carbon emissions, health and safety, data privacy etc., guidelines for which have been outlined in our Supplier Code of Conduct.

Further, Airtel has a framework in place to assess the ESG performance of our suppliers. Information is sought from suppliers on how they manage the social and environmental issues associated with their business as a standard part of our tender process and regular reviews are conducted. This includes assessing how suppliers identify and manage risks to their business, whether they have systems to minimize their environmental impact, details of their employment practices, health and safety practices and whether they engage with their internal management, customers and community. Further, we conduct survey of our suppliers to assess risks related to human rights and modern slavery. This includes engaging with our suppliers, especially focused on the areas of highest risk to human rights and modern slavery.

Any non-compliances identified are addressed through implementation of corrective action plans, which are then periodically reviewed. In order to ensure prudent risk mitigation and drive our agenda of sustainable development, we target to assess 90% of our critical suppliers by value by 2024.