Using the Supply Chain Act as an opportunity for procurement instead of seeing it as a cost factor
published on
30.11.2023
🏗 Industry: Mechanical engineering
🗺 Company headquarters: Waldmössingen (Germany)
🧍 Employees: ~ 1200
Schwäbische Werkzeugmaschinen GmbH, SW for short, is a classic medium-sized company and the world market leader in the field of multi-spindle machining centers. The company specializes in machining centers, automation and system solutions in the automotive industry, in the agricultural and construction machinery sector, as well as in hydraulics and pneumatics.
"After our analysis, Tacto was the only provider that fits the requirements in the medium-sized industrial sector and at the same time is a long-term partner for our digitalization strategy in procurement. The tool offers a fully comprehensive solution that covers the requirements of the Supply Chain Act and enables us to set up procurement more strategically piece by piece." - Matthias Schlotter, Procurement Manager
SW is already indirectly affected by the German Supply Chain Act (LkSG) through customer requirements and will be directly affected by regulatory requirements from 2024. As a leading supplier to the automotive industry, SW has customers that employ over 3,000 people and will therefore already have to comply with the obligations of the Supply Chain Act from January 2023. These customers already pass on due diligence compliance to SW via ESG questionnaires, contractual assurances and benefits in awards. For Mr. Schlotter, the omens were clear that Supply Chain Act and ESG issues would have to be implemented by everyone in the future. That's why he wanted to take care of this at an early stage in order to position himself future-proof both on the customer side and internally in front of the management.
From 2024, SW will also fall directly under the regulatory requirements of the Supply Chain Act with over 1,000 employees in Germany. As a traditional medium-sized company, the additional administrative effort represents a major challenge, as qualified personnel is hard to find, more and more regulations (keyword REACH, RoHS) have to be complied with, and the procurement market has been tense in recent years anyway.
"Already at the beginning of this year, I noticed that the Supply Chain Act is an important and acute topic with a need for action. Every supplier, no matter how small, who is in some way part of a multi-stage supply chain will come into contact with it sooner or later, whether or not they are subject to regulatory obligations. It was therefore important for us to address the requirements at an early stage with little additional effort and at the same time to use the opportunity to set up our supplier management digitally and strategically."
Mr. Schlotter wanted to meet the requirements of the Supply Chain Act quickly & easily, but at the same time, of course, be 100% compliant so as not to risk penalties of up to 2% of sales in any case. At the same time, as little capacity as possible was to be taken up by employees and, above all, also by the heavily utilized IT. As a rapidly growing company, SW wanted to set up supplier management more strategically anyway, i.e. automate administrative requests & compliance and control suppliers in a more data-based manner. The Supply Chain Act was therefore also an opportunity: the topic is relevant for the entire company, especially also the management, and must be implemented. From a procurement perspective, Mr. Schlotter was able to take advantage of the challenge with Tacto to easily meet the regulatory requirements while further systematizing supplier management.
"Without the tool, we would have had to hire additional staff for the Supply Chain Act topic. At the same time, I didn't want to introduce another isolated solution just for the topic of Supply Chain Act, as we have automation potential in quite a few supplier processes and generally want to position ourselves more strategically."
It was also important for Mr. Schlotter that SW present itself to suppliers professionally with one face ("One Face to the Supplier") in order to increase acceptance among suppliers. In other words, he didn't want one tool for the Supply Chain Act, one for the Minimum Wage Act, and one for supplier evaluation - no supplier in the midmarket would play along with that, IT would have a huge workload, and employees would have to be trained everywhere.
Meet Supply Chain Act requirements quickly & efficiently while being 100% compliant.
Avoidance of a stand-alone Supply Chain Act solution, but rather exploitation of the entire automation potential in a number of supplier processes, and thus also a face to the suppliers, in order to increase acceptance on the supplier side.
No raising of new capacity to meet the requirements of the Supply Chain Act.
Tacto was therefore a perfect fit for Mr. Schlotter's requirements: the supplier base could be loaded into the tool with an IT effort of less than 2 days and then procurement could manage the tool itself. The Supply Chain Act can be fully covered - from organizational requirements to risk management and documentation - and SW has hardly any additional effort, as most process steps are automated and the useful information (e.g. risk analyses) is reused internally (e.g. for management reports).
"We looked at several ESG and Supply Chain Act solutions on the market. The problem was actually always that the systems are designed for the requirements of corporations with huge IT, complex structures and an entire department that does nothing but risk analyses all day. At the same time, as a medium-sized company, supplier relationships are much more partnership-based, i.e. acceptance is very important. According to our analysis, Tacto was the only provider that fits the requirements in the medium-sized industrial sector and at the same time is a long-term partner for our digitalization strategy in procurement."
The supplier database as well as the cross-vendor acceptance of proofs such as certificates also significantly reduce the effort for suppliers. The tool is modular, so it can be started with the Supply Chain Act, but at the same time all other relevant supplier processes can be mapped over time - without data and process gaps. At the same time, Tacto's focus on medium-sized businesses has major advantages for SW: simple processes for employees, little IT effort and, above all, high supplier acceptance.
"The tool offers a fully comprehensive solution that covers the requirements of the Supply Chain Act and enables us to set up procurement more strategically step by step. Our suppliers accept the tool well, as Tacto makes a point of creating as little effort as possible for suppliers. It's the first tool our employees have asked me for access to, and even our IT is impressed with the speed of the project - you can't get better praise than that."
A personal customer advisor and experts on the Supply Chain Act are available to SW at any time. As a partner, Tacto also offers best practices, experts and procurement knowledge in the Tacto Community - from medium-sized companies for medium-sized companies. Another positive effect of the introduction of Tacto is the increase in the status and professionalism of procurement. Mr. Schlotter uses the clear management reports for both management and supplier visits. Together with Tacto, SW has thus used the Supply Chain Act issue as an opportunity to set up procurement in a future-proof manner.
Fully comprehensive solution that covers the requirements of the Supply Chain Act and makes it possible, piece by piece, to set up procurement more strategically
Very little IT effort (not even 2 days) to enter the entire supplier base into the tool
High acceptance of the tool by employees in procurement as well as by suppliers due to its intuitive usability
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