Supply Chain Management
What does "Supply Chain Act" mean?
The term "supply chain management" is a compound term. It consists of the terms: Supply + Chains + Management. This is understood to mean the monitoring of supply chains in companies. A supply chain (cf. § 2 paragraph 5) includes all steps at home and abroad that are necessary for the manufacture of products and the provision of services, from the extraction of raw materials to delivery to the end customer. It refers to the own business unit, direct suppliers and indirect suppliers.
The Supply Chain Act is also known as the Supply Chain Sourcing Obligations Act, LkSG. It aims to improve the international human rights situation. The law sets requirements for responsible supply chain management for companies. It creates a legal framework for the fulfilment of companies' human rights due diligence obligations, adapted to internationally compatible requirements. The Supply Chain Act contains a catalogue of internationally recognised human rights conventions and "translates" them into behavioural requirements for companies. A catch-all clause covers unlawful violations.
Duties of care - corporate duties:
Risk management, preventive measures, remedial measures, risk analysis, complaints proceduresDocumentation and reporting obligations
Which companies are affected?
- Companies domiciled in Germany: Head office, principal place of business, administrative or statutory seat.
- Companies domiciled abroad with a branch office in Germany
In the long term, there is no way around the Supply Chain Act for YOU as a company. It must be proven that production, manufacturing of products in compliance with human rights and environmental standards is sustainable and fair.
Figure 1: TQG businessApp platform® for supply chain management (dashbaord is exemplary)
Supply chain management as part of a digital platform?!
Supply chain management and the corresponding requirements can be mapped very well with the TQG businessApp platfom®. The platform has an intuitive user interface and can be used globally in numerous languages. There are options for product viewing, file viewing, controlling and a process for supplier self-disclosure.
- Task & function: digital whistleblower and complaint platform.
- Target group: Medium-sized companies & large corporations.
- Advantages: Preserve human rights, prevent scandals, protect whistleblowers, reduce lost sales, meet legal requirements (EU Whistleblowing Directive and Supply Chain Act), approvals through an electronic signature.
Figure 2: TQG businessApp platform® for supply chain management (dashbaord is exemplary)
What is the current legal status of the Supply Chain Act in germany?
On 11 June 2021, the Federal Government passed the draft law on the Supply Chain Act. On 25 June 2021, the Federal Council approved the law. It strengthens the protection of human rights in global supply chains and ensures compliance with basic human rights standards.
Businesses must ensure respect for human rights throughout the supply chain.
They must, among other things, set up grievance mechanisms and report on their activities.
From 2023, the law will apply in Germany to companies with more than 3,000 employees.
From 2024, the law will apply to companies with more than 1,000 employees.