Schlauer Raum Blog

What the “Lieferkettengesetz” means for supply chain management in production

It has been the subject of media coverage for months: The “Lieferkettengesetz”. So far, there is no binding draft law, but the heated discussions surrounding this law are causing a stir. What would it mean for supply chain management if it came into force? And what preparatory measures can be taken?

The topic of a sustainable, responsible supply chain has become increasingly important in recent years. As early as 2011, the United Nations adopted Guiding Principles on Business and Human Rights, which set out state obligations and corporate responsibilities to respect human rights in global supply chains.

Even if it is not clear at the present time whether and with what content a supply chain law will be passed, the discussions offer sufficient reason to take a closer look at one’s own supply chain management and put it to a critical test.

Focus on transparency

The law will apply to companies based in Germany with more than 500 employees. The requirements are to be based on international standards: the UN Guidelines for Business and Human Rights and the OECD Guidelines for the Promotion of Responsible Supply Chains for Multinational Enterprises.

It is thus to be expected that the „Lieferkettengesetz“ will impose both obligations to act and reporting obligations. The focus would be on enabling companies to identify, prevent, analyse, or remedy the potentially negative effects of their actions. In the event of an infringement, fines are threatened – unless the company has fulfilled its so-called duty of effort. This means that if the company has acted within the limits of its actual or legal possibilities and damage is nevertheless caused, liability is excluded.

Even if the law has not yet been adopted, transparency is the key factor. Only those who know what is going on where and when will be able to act in accordance with the law and avoid fines and damage to reputation.

Systematic preparation instead of being left behind

A transparent supply chain strategy can not only help to avoid legal consequences, but it also provides a solid basis for sustainability commitment and economic optimisation. There are three aspects that are in focus:

1. Analysis

Supply chains are often very complex. It is almost impossible to maintain an overview – especially if the supply chain is structured globally. In order to identify risk and optimisation potential, a sound analysis is essential.

2. Real-time notifications

Due to the complexity of supply chains and their dependence on numerous factors, there is no status quo that can be considered permanently valid. Especially for a flowing production process it is imperative that events are communicated as quickly as possible.

3. Reporting

Particularly against the background of a reporting obligation, reporting is of enormous importance. A compliance-compliant recording and securing of all events not only saves time and nerves during an audit, but also enables a precise overview and long-term analysis of the supply chain.

Software-based everything at a glance

Software solutions for supply chain management enable a 360° view of the entire supply chain. Companies that have not yet considered this to be relevant for themselves should now at the latest pay attention to the discussions surrounding the „Lieferkettengesetz“.

A data-based supply chain management offers optimal transparency and planning possibilities. Intelligent software solutions usually have an ERP connection and thus provide cross-system data communication and thus a sound database.

Currently, the coming into force of the „Lieferkettengesetz“ is still a dream of the future. But only those who actively shape their future can be prepared for the future.

Prepare for the future now by dealing with the issues of tomorrow today. Software-based supply chain management not only offers advantages when the „Lieferkettengesetz“ comes into force! Find out more about it here!

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