Technical article
Building a Sustainable Supply Chain Through Supplier Audits
The Bundestag has decided: the Supply Chain Act is coming! And now for the good news: there is a standardized approach to supplier auditing, aimed at creating a sustainable supply chain across all pillars of sustainability for every company with supplier relationships. We’ll explain it here.
The pressure on companies is mounting
Stricter regulations, public pressure, and internal motivation: there is no longer any way around creating a sustainable supply chain. Sustainable supply chains are a challenge for all companies.
How can sustainability be ensured in the supply chain?
Most companies don’t even know where to start. They are faced with confusing regulations, inconsistent standards, and a variety of certification options. To ensure that all pillars of sustainability—the environmental, economic, and social pillars—are taken into account in the supply chain, companies must address the following factors, among others, along the value chain:
- CO2 emissions vs. the full range of greenhouse gases expressed inCO2 equivalents.
- Country-specific legislation and varying certification systems around the world (e.g., for green electricity).
- Respect for workers' rights and promotion of employee health and diversity.
Using Standardized Audit Logic for a Sustainable Supply Chain
Auditing suppliers against environmental, economic, and social sustainability criteria creates transparency throughout the value chain from the outset, while simultaneously identifying initial opportunities for optimization toward a sustainable supply chain. The goal is clear: a system is needed that can be implemented immediately, saves time and resources, and evaluates suppliers transparently and impartially based on clearly defined KPIs.
A standardized audit process meets these objectives and can be applied uniformly to all suppliers with whom a business relationship exists, regardless of location, size, or product. The collected data can be used to categorize and analyze suppliers in a target system, so that, in the event of significant deviations from targets, a tracking system for corrective actions can be implemented—actions that might include, for example, reducing emissions or improving workplace safety. In this regard, corresponding accompanying action monitoring is recommended, particularly in cases of significant deviations from the target state. This allows risky suppliers to be identified early on and monitored using a risk radar. Disruptions and failure risks are thus actively counteracted.
The Audit Logic in Detail
- Five categories
- Questionnaire-based
- Pre-Audit Self-Assessment for Suppliers
- Final evaluation based on external assessment
- Classification of suppliers by criticality
- Management Summary of All Suppliers
Standardized audit procedures thus help prevent production downtime, crisis situations, fines, and reputational damage resulting from non-compliance with sustainability regulations, such as those set forth in the CSR Directive Implementation Act (CSR-RUG) or the Supply Chain Due Diligence Act (LkSG).
KBC draws on many years of experience in the field of supplier auditing. This experience enables us to support you in establishing a sustainable supply chain. Please feel free to contact us if you have any questions on this topic.
