Fit for the New Supply Chain Act through Digitalization

The Supply Chain Act has overcome its final hurdle, reports F.A.Z., and can now be passed. According to the amendment proposal available to F.A.Z., a classic compromise has been reached. It is set to come into force in 2023. Germany is not alone in this; a supply chain law is also planned at the EU level, and new regulations will come into effect in Switzerland this year.

(Munich) Tradeshift is already supporting companies early on in improving their procurement processes. To comply with the requirements of the Supply Chain Act, the digitalization expert relies on a two-step approach: digitizing procurement processes and increasing stability and transparency across the entire supply and value chain.

Digitizing the Supply Chain Step by Step

With the Tradeshift platform, companies can shift their procurement processes to a decentralized network. Buyers and suppliers operate through a digital platform. A supplier-centered, open, and decentralized B2B marketplace is created, where all relevant company information is stored, and product inquiries, orders, shipping information, and invoicing processes occur in real-time. Over 1.5 million buyers and suppliers worldwide use the Tradeshift trading technology platform to gain access to supply chain payments, B2B marketplaces, and apps.Enterprise buyers have more options to conduct their activities instead of struggling to find what they need within a limited pool of suppliers. They can identify supply bottlenecks or disruptions in the supply chain more quickly and take timely countermeasures, such as switching to other suppliers. “To know and regularly check the working conditions of your suppliers, you need to keep an eye on all of them. This is best achieved by digitizing all processes along the supply and value chain. This way, they can effectively implement the supply chain laws from Germany, the EU, and Switzerland,” says Mikkel Hippe Brun Thonig, Co-Founder & Senior Vice President, Greater China at Tradeshift.

Transparency Across the Entire Supply and Value Chain

Processes that are still documented via PDF and paper in procurement today are digitally available on the Tradeshift platform, making them more timely manageable, always accessible, and usable for real-time analyses. Companies can track their supplier relationships across all sub-supplier levels and verify compliance with sustainability guidelines. The Tradeshift network platform operates with a flexible app structure. Depending on the area of responsibility, apps can be added to the user dashboard. For example, apps that allow companies to track and monitor social risks at every level of their supply chain, from raw materials to finished products. Here, additional providers brought on board regularly check the workplaces on-site. Or analysis apps that consider the CO2 footprint based on invoice data across the entire supply chain. Companies can create their own apps, integrate them into existing legacy systems, or choose from various app providers.

Automating with Artificial Intelligence

ADA from Tradeshift is the industry’s first AI-based automation layer. It bypasses older technologies like RPA and instead uses network-based data analysis. This allows the system to make real-time decisions about transactions and automate actions such as invoice approvals.

Stabilizing the Supply Chain through Early Payments

Tradeshift has also developed an early payment model. The Tradeshift model aims to pay suppliers within two days. The analysis of invoice history is used to calculate the risk of default and the discount for early payment (Early Payment Discount). This way, companies can strengthen supplier loyalty, consider more suppliers, and gain additional benefits over traditional supply chain financing programs (Supply Chain Finance, SCF).
Photo: © Loginfo24/Adobe Stock
Source References:

• https://www.faz.net/aktuell/wirtschaft/das-lieferkettengesetz-nimmt-die-letzte-grosse-huerde-17361179.html
• https://bdi.eu/artikel/news/auf-dem-weg-zu-einem-europaeischen-lieferkettengesetz/
• https://www.nzz.ch/wirtschaft/konzernverantwortung-neuer-zugzwang-fuer-die-schweiz-ld.1623637
• tradeshift.com/de