Effort optimisation and performance improvement in the compliant implementation of supply chain laws

Abstract

Like other countries, Germany is now following suit and introducing a supply chain law. This type of law obliges companies to exercise due diligence towards suppliers. Compliance with human rights, environmental protection and social standards must be ensured not only for direct suppliers, but along the entire supply chain. This significantly increases the complexity of procurement and poses challenges for existing purchasing organisations. What is needed is an approach that enables the legal requirements to be met with manageable effort. This conceptual paper discusses approaches for companies to reduce the resulting effort from supply chain law initiative — especially in Germany — and even improve performance at the same time. Audits are shown to be a central means of meeting these legal obligations. This also includes so-called remote audits, which promise comparatively low-effort execution, especially in a global context. Based on the application of international standards, the paper complies with the due diligence obligations of the supply chain law. The result is an assessment of whether and to what extent remote audits are suitable for fulfilling the obligation, how they can be optimally organised in agile interaction with on-site audits and where the limits are. It is also evident that auditing of direct and indirect suppliers in the supply chain can be used to achieve performance improvements and cost reductions elsewhere. Finally, the paper summarises which accompanying measures help to further reduce the burden on companies.