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Compliance purchasing: definition, important compliance guidelines & methods for ensuring compliance
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What is compliance in purchasing?
Compliance refers to adherence to laws, guidelines and internal company codes of conduct to avoid breaches of rules and legal risks. In purchasing, it ensures the integrity of procurement processes and protects the company from corruption, fraud and reputational damage through compliant supplier relationships.
Contents
Why is compliance important for purchasing?
Compliance plays a crucial role in procurement in order to avoid financial losses, legal sanctions and reputational damage. By integrating compliance principles into the procurement process, companies can reduce risk analysis, ensure fair competition and build sustainable business relationships. In addition, a strong compliance culture strengthens the trust of customers, investors and supplier management.
- Risk minimization: avoidance of legal violations and financial sanctions
- Reputation protection: maintaining a positive corporate image
- Increased efficiency: optimization of processes through clear guidelines
- Sustainability: promoting ethical and ecological standards in the supply chain
The most important compliance guidelines in purchasing
- CBAM (Carbon Border Adjustment Mechanism): An EU mechanism for CO2 pricing of imports from non-EU countries. Importers have had to report on the imported quantities and their embedded CO2 emissions since 2023 and purchase corresponding certificates from 2026.
- REACH (Registration, Evaluation, Authorization and Restriction of Chemicals): The EU Chemicals Regulation obliges companies to register chemical substances and to pass on information in the supply chain. Substances of very high concern (SVHC) are subject to strict documentation and notification obligations.
- LkSG (Supply Chain Due Diligence Act): Since 2023, German companies with more than 3,000 employees (from 2024: 1,000 employees) must review their entire supply chain for human rights and environmental risks and take appropriate measures.
- Conflict Minerals Regulation: The EU regulation obliges importers of tin, tantalum, tungsten and gold to check their supply chains in order to prevent the financing of armed conflicts through the raw materials trade.
- RoHS (Restriction of Hazardous Substances): This EU directive restricts the use of hazardous substances in electrical and electronic equipment. Companies must ensure compliance with the limit values for heavy metals and other substances.
- Modern Slavery Act: Legislation in various countries (UK, Australia) requires companies to disclose measures against modern slavery in their supply chains. This requires regular audits and reporting.
- ISO 37301 (Compliance Management Systems): This international standard provides guidelines for the implementation of an effective compliance management system. It requires the systematic identification and assessment of compliance risks and their continuous monitoring.
Methods for ensuring compliance
- Compliance Management System (CMS): A systematic approach to organizing and monitoring compliance activities. The system should include clearly defined processes, responsibilities and escalation channels and be regularly reviewed through internal audits.
- Regular training courses: At least annual, mandatory training for all purchasing employees on relevant compliance topics and current changes to the law. These should be documented by means of knowledge tests and certificates of attendance.
- Supplier due diligence: Systematic review of new and existing suppliers using standardized questionnaires, certificate checks and, if necessary, on-site audits. The results should be documented in a central database and updated regularly.
- Contract management: Integration of compliance clauses in supplier contracts and purchasing conditions that define audit rights, reporting obligations and sanction mechanisms. This should be supported by a digital contract management system.
- Risk management system: Continuous assessment of compliance risks in the supply chain using defined criteria such as country risks, product risks and supplier history. The results should be incorporated into regular risk reports.
- Whistleblower system: Establishment of an anonymous reporting system for compliance violations that is accessible both internally and externally. The system must guarantee confidentiality and define clear processes for handling reports.
- Documentation system: Implementation of a central digital system for managing all compliance-relevant documents such as certificates, training certificates and audit reports. This enables seamless tracking and a rapid response to inquiries.
- Regular monitoring: Establishment of a systematic monitoring process for compliance KPIs and early warning indicators. Monthly or quarterly reporting to management should be standardized.
- Supplier code of conduct: Development and implementation of a binding code of conduct for suppliers that defines minimum requirements for compliance standards. Compliance should be regularly reviewed and documented.
Compliance purchasing: from manual processes to digital compliance management
Building on the importance of compliance in procurement, which ensures adherence to all relevant laws, guidelines and ethical standards within procurement processes, practical implementation is crucial for companies.
Traditional methods were often characterized by manual processes and selective controls, which led to inefficiencies and increased risk analysis. In light of increasing global regulations and the need for transparency, a transformation towards modern, digital approaches is essential.
Traditional approach: Manual compliance check
In the past, compliance checks in purchasing were mainly carried out manually. Purchasing employees checked supplier evaluations and contracts for compliance-relevant aspects, often using checklists and paper-based procedures. Information was exchanged by email or fax and documentation was archived in physical folders. This approach was time-consuming and prone to human error. In addition, decentralized data storage made it difficult to maintain transparency and respond quickly to compliance violations.
New: Digital compliance management
Modern companies rely on digital compliance management systems (CMS) to make compliance in purchasing efficient and effective. These systems integrate seamlessly into existing ERP solutions and enable automated monitoring of compliance requirements. By using technologies such as AI in procurement and data analytics, risks are identified and reported at an early stage. This leads to a reduction in manual checks of up to 70% and faster decision-making. In addition, digital platforms promote transparency by providing real-time insights into supplier relationships and contract terms.
Practical example: Automotive industry
In 2023, a leading automotive manufacturer introduced a comprehensive digital compliance management system (CMS) in its purchasing department, which awards contracts worth 350 million euros annually. Prior to the implementation, compliance checks were largely carried out manually, which took around 40 working hours for an average of 50 new contracts per year.
The new CMS automated central processes: The initial check of new suppliers was reduced to 12 working hours, as the system automatically checks commercial register excerpts, sanctions lists and sustainability certificates. Continuous monitoring of the 2,000 existing suppliers enables compliance risks to be identified immediately. In the first year, 15 critical incidents were identified at an early stage, which previously might only have come to light after the damage had occurred.
The financial impact was considerable: legal costs for compliance audits fell by 180,000 euros per year. The improved risk identification prevented potential contractual penalties and reputational damage - the avoided legal disputes alone saved an estimated EUR 3.5 million. The average response time to compliance incidents was reduced from 15 to 2 days, which further minimized the risk of damage.
Suppliers also benefited: the standardized, transparent processes reduced their documentation effort by an average of 30%. The lead time to supplier approval was reduced from 8 to 3 weeks, which enabled faster business relationships. The increased level of trust led to longer contract periods and more intensive development partnerships. Small and medium-sized suppliers in particular appreciated the clear requirements and support in meeting compliance standards, which strengthened their competitiveness.
Conclusion on compliance in purchasing
Compliance in procurement is an indispensable part of modern corporate management. The consistent implementation of compliance guidelines not only protects against legal and financial risks, but also strengthens the competitive position and the trust of stakeholders. Success lies in the systematic integration of compliance measures into existing processes, continuous training of employees and the use of modern technologies for monitoring. Despite initial investments and challenges, the long-term benefits of a robust compliance strategy clearly outweigh the costs.
