How does the Supply Chain Law affect your supplier management?

Human rights or competitiveness? In the context of internationalization, companies are always looking for the greatest possible optimization of their supply chains. Do they thus place their profitability above human rights? Certainly not all of them, because many companies are becoming increasingly involved in basic human rights and environmental protection. But the competitor, who takes no account of this, produces more cheaply and thus gains a competitive advantage. A supply chain law is now intended to remedy this situation. 

How does this idea affect your supplier management? Seamless documentation along the supply chain is becoming more and more important and communication with all your suppliers is also essential in the context of a possible supply chain law. A software tool like lieferantenportal.de will help you with your supplier management.

What does the Supply Chain Law do?

Child labor, environmental damage and low wages - Human rights are violated in many places along global supply chains. One speaks of a global supply chain if the stages of the production process take place in at least two different countries. A legal framework for the supply chain should help to ensure that companies respect human rights and the environment. In general, Germany as a large industrial nation is intensively integrated into international supply chains, which became very clear during the COVID 19 pandemic. But Germany should also take responsibility and thus ensure that human rights and the environment are protected.

What does the Supply Chain Law entail?

To put it briefly, the Supply Chain Law is intended to ensure that human rights are respected in business. Global supply chains should be made more transparent and a fair legal framework should be created. Companies should therefore commit themselves to make the origin of their products completely transparent and to cooperate with suppliers who comply with legal regulations and general human rights. These include, for example, the prohibition of child labor and regulations on environmental protection. 

This would also create a balanced competitiveness, since companies that work in accordance with human rights currently bear higher costs. The standards along the global supply chains would be raised with a supply chain law and thus enable better conditions for local employees. In addition, those affected should be given the opportunity to hold companies accountable for violations. As Europe's largest economy and the world's third largest importer and exporter, Germany bears a great responsibility. The Supply Chain Act is therefore intended to create legal certainty and fair competition as well as sustainable supply chains. German companies should be held liable for the misconduct of producers or suppliers in the event of a violation.

Points of Criticism 

The law is controversial because companies do not want to be held liable. Within the Grand Coalition there is a debate about the number of employees in a company from which the law should take effect. 500 or 5000 employees - that is the question. The GroKo is also concerned with the liability risks and the bureaucratic burden, which could be difficult for small companies in particular to cope with. According to business representatives, it should be difficult, especially for SMEs, to monitor the individual production steps seamlessly. The large trade associations are against such a law because it is simply not practicable. In general, however, there is no question that Germany acknowledges its responsibility. But according to the critics, the observance of human rights along the supply chain is a political task and is the responsibility of the individual states. 

COVID-19 and the supply chains

Germany's dependence on global value chains has become particularly clear in recent months. As a result of the corona pandemic, for example, automotive suppliers with production facilities in China have clearly felt disruptions in their supply chains. Considerable economic burdens were and still are the result and bring with them effects that are difficult to calculate. But even the weakest members of the supply chain are hit hard. In total, around 450 million people are dependent on global supply chains. They lose their jobs or have to accept wage cuts without having social security systems. A global network connects companies all over the world, which is why the effects are also felt worldwide.

How LIEFERANTENPORTAL.DE will help you

Products usually travel long distances along global supply chains. Companies often only pay attention to producing as cheaply as possible in order to be able to make good offers to the end consumer. But global supply chains also mean global responsibility. This means: human working conditions and respect for the environment.  LIEFERANTENPORTAL.DE contributes to the transparent presentation of the routes taken by goods. For example, it is possible to track which goods have been procured from which supplier. Clear tracking up to the origin of the goods is thus given. 

One of our features allows us to map an agent/producer structure. In the supplier master data, LIEFERANTENPORTAL.DE has the agents that have different producers. In the Far East, for example, it is common that the customer orders from one agent and the agent then distributes the production of the goods to individual production companies. In this case the agent confirms the order and assigns the individual items to the producer. The goods are then finally shipped by the producer. 

LIEFERANTENPORTAL.DE also offers the possibility to exchange and view documents. This function can also be used to retrieve supplier certificates, for example. These certificates can, for example, prove that suppliers comply with certain specifications or laws. An e-mail alert informs you when a supplier's certificate expires and needs to be renewed.

The Supply Chain Law may initially appear to be a challenge for many companies. The team at lieferantenportal.de will be happy to advise you on all aspects of our tool and show you how you can stay on top of supplier management in the future. The sooner you ensure transparency along the supply chain, the better prepared you will be for the possible changes. With sustainable and transparent behavior along the supply chain, you can also gain the trust of investors and consumers. In addition, Lieferantenportal.de creates a very close relationship with the individual suppliers. These suppliers can scan the labels of the packages themselves when the goods arrive, which means that fewer staff are required and the risk of infection is reduced, which is particularly important during the Corona pandemic.

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