Increase transparency in your supply chain and improve your performance

Where do my raw materials come from and which partners do my suppliers work with? Answers to these questions are becoming increasingly important for companies for at least two reasons. Firstly, various laws stipulate how transparent a company's supply chain must be. And secondly, transparency is becoming a decisive competitive advantage. If you know your suppliers, you can strengthen your position vis-à-vis manufacturers and make supply chains more robust. 

In recent years, legislative changes and new regulations have been introduced to advance the development of transparent supply chains. At the beginning of 2023, for example, the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz) came into force in Germany, which obliges companies to check whether business partners comply with human rights, for example.

The Corporate Sustainability Due Diligence Directive announced by the European Union is expected to make tier-n transparency the new standard. Tier-n transparency refers to transparency along the entire supply chain from the origin of raw materials to the consumer. Depending on the distance of one's own company, suppliers will be designated as Tier-1 to Tier-n.

In our white paper "From Compliance to Performance", you will learn how your company can achieve full supply chain transparency and which processes should be adapted for this purpose. In three chapters, we describe the starting situation for many companies and then explain how to formulate target images and create operational prerequisites so that supply chains can become more transparent. We also describe how business partner risk analyses can be usefully supplemented. 

Companies that want to make their supply chains as transparent as possible should proceed in three steps to do so. 

1. Formulate strategy
   Here, among other things, existing technologies should be checked to see whether they can carry out certain data collections. It is also important for companies to formulate what requirements they have for their data sets. 
2. Develop Target Operating Model
   The focus here is on adapting and changing databases and data collection processes. Old contracts with suppliers should also be renewed and clauses adapted to the new laws. It makes sense to set up a timetable for implementation. 
3. Implement process and create transparency in the supply chain
   The last step is to maintain and evaluate the collected data and draw the appropriate conclusions. For example, to classify the suppliers or to request missing information from them.

In the white paper, we go into detail about each of these steps and describe how companies can adapt their processes. We also give an example of how a target operating model can be tested and checked for gaps before implementation. 

The white paper makes it clear that in the future it will be essential for companies not only to comply with regulatory requirements, but also to act with foresight in order to secure competitive advantages. It is advisable to pursue ambitious goals right from the start and to build up holistic tier-n transparency in order to achieve sustainable value enhancement potential along the entire supply chain and to position companies securely and fit for the future.