Only every third company is well prepared for the new supply chain law

According to the study “From sustainability to digitization: Challenges 2022”, only 35 percent of German companies are convinced that they will be able to implement the obligations under the new supply chain law on time.

Overall, the need for action on the subject of the supply chain is great. Three out of four companies are currently struggling with significant delivery bottlenecks. For the study, the product innovation platform Aras interviewed more than 130 top executives from German companies with sales of at least 100 million euros.

Whether due to the corona pandemic or a container ship wrecked in the Suez Canal: “The past two years have shown how vulnerable the supply chains in world trade are to unforeseen events,” says Andreas Müller, Senior Vice President at Aras. But long delivery times, bottlenecks and rising raw material prices have sharpened the awareness of the problem in many companies. Three quarters of the decision-makers surveyed consider the requirements of the supply chain to be one of the most important challenges facing their company this year. Especially with regard to the supply chain law.

From 2023: New due diligence requirements along the supply chain

“For years, the global procurement channels were trimmed for efficiency. When examining the supply chain, many companies are now realizing that they need to be questioned with regard to resilience and sustainability,” Müller continues. Half of the companies plan to pay attention to the proximity to the sales market when selecting production sites in the future. However, the supply chain law forces them to initially comply with their due diligence obligations along their current supply chain.

From 2023, companies with more than 3,000 employees should first ensure that their international suppliers respect human rights, comply with occupational safety and environmental protection requirements. A year later companies with more than 1,000 employees followed.

Supply chain law: risk management for hazard identification

“In order to integrate the requirements of the supply chain law into their processes, companies have to implement a number of organizational and technical measures,” says Aras expert Müller. However, for many of those surveyed, sluggish processes in their own company and outdated IT systems are major hurdles to legally compliant implementation. In two out of three companies there are therefore clear doubts as to whether the obligations can be fulfilled on time.

“Companies must not postpone preparing for the new law any longer in order to be able to implement the requirements of the Supply Chain Act in good time,” says Andreas Müller with certainty. “What many now need is risk management to identify and respond appropriately to human rights and environmental hazards along the supply chain.”

About the Challenges 2022 study:

For the study “From sustainability to digitization: Challenges 2022”, the product innovation platform Aras surveyed more than 130 owners and top managers of German companies with a turnover of at least 100 million euros in December 2021. The participants came primarily from the automotive industry, aviation, mechanical engineering, medical technology and the chemical and pharmaceutical sectors.