Managing supplier management and supply chain law from a single source

The Supply Chain Due Diligence Act (LkSG), which was passed on June 21, 2021, presents many companies with new challenges. For companies with 1,000 employees or more from 2024, statutory due diligence obligations now apply to ensure human rights and environmental standards along the entire supply chain. In addition to the directly obligated companies, the LkSG also indirectly affects many medium-sized suppliers, who must ensure transparency and responsibility for LkSG-compliant customers. For many, this is a heavy burden, but the law also offers opportunities for a sustainable and digital transformation of supplier management.

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LkSG compliance: more than just an obligation

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The implementation of the LkSG requires companies to fulfill specific due diligence obligations, which include regular risk analyses and preventive action management. Companies that systematically implement these requirements can achieve long-term competitive advantages, as a sustainable supply chain is increasingly becoming a criterion for customers and partners.

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The LkSG requirements include:

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• Establishment of a risk management system: Companies must identify, assess and communicate risks along the supply chain.

• Implementation of preventive and remedial measures: Coordinated measures to identify risks at an early stage and prevent breaches.

• Documentation and reporting: Complete documentation is required to prove compliance with the LkSG and to submit reports to the Federal Office of Economics and Export Control (BAFA)

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Digitalization as a response to the Supply Chain Act

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Digital supplier management can significantly facilitate the implementation of LkSG requirements. With a suitable software solution, compliance requirements can be managed centrally and efficiently. For medium-sized companies in particular, this can be a solution for mastering the complexity of the law without tying up excessive human resources.

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Advantages of a digital LkSG solution:

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• Automated risk analyses: System-supported identification and monitoring of potential risks along the supply chain.

• Central management and tracking of measures: Digitalized action management ensures that preventive and remedial measures are implemented consistently.

• Transparent documentation and reporting: All compliance measures are automatically documented and can be verified at any time.

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Tacto as a partner for SMEs

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With Tacto, medium-sized companies can fully implement the LkSG and at the same time optimize their supplier processes in the long term. The solution offers:

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• Efficient supplier management: From queries to the storage and tracking of important documents - everything is centralized in one place.

• Preventive action management: Structured implementation of measures to ensure compliance with due diligence obligations.

• Sustainable supplier development: Building a resilient and transparent supply chain that meets the requirements of the LkSG and also sets standards for sustainability and quality.

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Conclusion: The LkSG as an opportunity for sustainable and digital transformation

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The Supply Chain Duty of Care Act poses challenges for many companies, but it also offers an opportunity to future-proof the supply chain and digitalize processes sustainably. Companies that invest in a comprehensive compliance and supplier management solution now will secure long-term competitive advantages and an improved position on the market.

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For more details on implementing the LkSG and digitizing your supplier management, download our white paper "Managing supplier management and supply chain law from a single source".

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