The new supply chain law obliges German companies to check both direct and indirect suppliers according to certain criteria and to initiate remedial measures in the event of violations. From 01/01/2024, companies with at least 1,000 employees will also be affected. This also includes foreign companies with a second branch in Germany. The number of employees is calculated per employee, no distinction is made between full-time and part-time. The number of temporary workers who have been employed by a company for at least six months is taken into account.
Supply chain law – what risks and penalties threaten
The authorities will check compliance with the law in the future. In the case of incidents that violate the obligations, fines of up to two percent of global sales are threatened, which the authorities can adjust according to the severity of the violation. In addition, the law provides for these companies to be penalized by excluding them from public tenders for a period of up to three years. In addition to the high penalties, there is also a risk of damage to the company’s image if the law is not complied with.
Impact on business and corporate competitiveness
Fulfilling the law will involve additional work. These compliance requirements require ensuring clean supply chains. This requires appropriate staff and processes, including a risk management system with risk analysis that determines where problems can arise in the supply chains. The associated costs are expected to be reflected in the price development. In addition, there is competitiveness, since foreign competitors without a branch in Germany are not affected.
How companies can implement the supply chain law
Many companies are now faced with the question of how these new legal requirements can be implemented and whether there are already established standards, norms or technical solutions. Solutions such as EDI (Electronic Data Interchange) and MDM (Master Data Management) can already help to comply with the Supply Chain Act.
In the webinar “The Supply Chain Act: Securing through the use of IT“On September 9, 2021 from 10:00 am, Paula Müller and Michal Kacperek, Consultants at Comarch, the subject of the supply chain law in detail. The two speakers are experts in international management, law and electronic data exchange. They explain the legal pitfalls lurking and show ways in which companies can implement the resulting obligations. (sg)
Also read: Supply Chain Act: Milestone with need for improvement