More than 20 years of experience in project management roles with + 200 (sub-) projects. Many years of management and management consulting practice in the healthcare industry with a focus on process optimization, strategy & business development, transformation, competence development, sustainability and regulation
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Understanding the German Supply Chain Due Diligence Act: A Guide for Managers
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Navigating the German Supply Chain Due Diligence Act
Greetings, Managers in the Life Sciences and MedTech industries!
As of the dawn of 2023, the German Supply Chain Due Diligence Act has emerged as a critical framework for ensuring transparency and responsibility across supply chains. Starting in 2023 companies located within Germany with more than 3.000 and from 2024 on with more than 1.000 employees came under the umbrella of the law. Let’s delve into the essentials of compliance and the necessary steps for implementation.
3000
More than 3000 companies in Germany will be subject to LkSG reporting obligations.
1000
Companies with more than 1000 employees need to comply with the law.
For the practitioners up front
First implementation steps
As soon as your legal reporting obligations towards the Federal Office for Economic Affairs and Export Control (BAFA) start there are three major tasks that must be fulfilled, and the respective structures need to be in place:
- issuing of a policy statement
- designation of a responsible person or persons within the enterprise
- establishing of a complaints procedure.
Lessons learned from implementation projects
Thoroughly reviewing and defining your own business area is key to a comprehensive risk assessment and a major management task. Risk assessment itself can be handled manifold but it is highly recommended to utilize dedicated software and implement associated software supported processes. This, combined with the set-up of a passionate team that can make decisions, will boost the successful implementation of due diligence requirements of the Supply Chain Act within your company.
Diving into the basics
Understanding Compliance Requirements
In essence, the German Supply Chain Due Diligence Act demands rigorous diligence from companies operating within Germany, mandating transparency and accountability throughout their supply chains. This entails thorough documentation, risk assessment, and proactive measures to mitigate potential risks.
Documentation and Record-Keeping
One of the cornerstone requirements involves comprehensive documentation. Compliance and risk managers must maintain detailed records of their supply chain processes, including supplier information, transaction history, and risk assessments. Robust documentation serves as a crucial tool for demonstrating compliance and addressing any inquiries effectively.
Risk Assessment and Mitigation Strategies
Ensuring compliance requires identifying and mitigating risks. Supply chain managers must assess geopolitical, labor, and environmental risks and implement strategies to strengthen supply chain integrity and sustainability.
Supplier Engagement and Audits
Effective collaboration with suppliers is instrumental in upholding the principles of the German Supply Chain Due Diligence Act. Supply chain managers should engage with suppliers transparently, fostering open communication channels and promoting shared accountability. Regular supplier audits serve as proactive measures to evaluate compliance and address any areas of concern promptly.
Training and Education
Empowering personnel with the requisite knowledge and skills is fundamental to successful implementation. Companies should invest in comprehensive training programs, equipping employees with insights into compliance requirements, risk management strategies, and ethical considerations. Cultivating a culture of compliance and accountability strengthens organizational resilience in navigating evolving regulatory landscapes.
Conclusion
In conclusion, compliance with the German Supply Chain Due Diligence Act is not merely a regulatory obligation but a testament to organizational integrity and ethical stewardship. By prioritizing transparency, diligence, and collaboration, companies in the Life Sciences and MedTech industries can navigate the complexities of supply chain management with confidence and resilience.
Let us embark on this journey together, inspired by the pursuit of excellence and guided by the principles of responsibility and accountability.
Useful sources:
Frank Roth
Principal
With over two decades in healthcare- and project-management roles, on the corporate side and as a management consultant, I am committed to driving business development, innovation and sustainable strategies. My focus lies in enhancing regulatory compliance and developing business models that adapt to evolving environmental, social, and governance obligations.
Frank Roth
Principal
Professional Experience
Consulting Focus @ CBR
Regulatory, commercial and technological expertise in the healthcare industry
Development and implementation of sustainable business strategies in the course of existing and upcoming “ESG obligations”
Implementation of regulatory frameworks and ensuring of compliance (EU taxonomy, CSRD, LkSG, net-zero approaches, green energy and raw materials requirements, etc.)
Education
EMBA -Executive Master of Business Administration-, Kellogg School of Management at Northwestern University / WHU Otto Beisheim School of Management
Dipl.-Ing. (FH) – Biomedical Engineering, University of Applied Sciences Gießen
Certified business trainer & coach (dvct standard)
