Advice on Complying with the Supply Chain Act

What it means for supply chain management and procurement

Germany’s new law on protecting human rights in global supply chains presents new challenges to supply chain management and procurement departments. We’ve summed up the most important elements of this for you, and we can help you do your due diligence and improve your supplier and risk management.

1. What Does the Supply Chain Act Entail?

Germany’s Supply Chain Act, which came into force on January 1, 2023, obliges businesses to identify any human rights contraventions in the production processes and working conditions in their supply chains, and take action to eliminate them. This doesn’t just apply to activities within the business, but also to the business activities of suppliers and pre-suppliers at every stage of the supply chain.

2. To Whom Does the Supply Chain Act Apply?

Since January 2023: businesses with more than 3,000 employees
From January 2024 on: businesses with more than 1,000 employees. The EU Commission is already working on a draft that will include businesses with 500 or more employees

This means that many SMEs will also be affected by the law. These companies will be subject to strict due diligence and liability rules.

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3. How Should Supply Chain Management and Procurement Respond?

SCM and procurement must urgently assess their supply chains and change them if necessary, not only to meet the legal requirements, but also to fulfill consumers’ high expectations. The following steps also need to be taken:

Develop procedures to identify risks relating to human rights violations in the supply chain
Take appropriate countermeasures to prevent and remedy violations
Set upa complaints procedure
Report annually and publicly on how you prevent human rights violations

4. How Can We Help You Comply with the Supply Chain Act?

Consulting Sustainable Supply Chain Procurement Optimization

In just four project steps, we can identify and design for you suitable measures for complying with the new requirements:

Analyze all of the relevant structures and measures in your business with a view to human rights
Analyze risks at a commodity group and supplier level, then derive tailored, targeted measures
Identify and design measures, such as a joint initiative with suppliers
Plan implementation and apply the measures