Technological Solutions for Supply Chain Compliance: From organizing Data to AI usage
In the following interview with the magazine “ESG – Journal for Sustainable Corporate Management” Dr. Roman Zagrosek explores how technological solutions support compliance with the German Supply Chain Act (LkSG).
The key roles of various corporate sectors are considered in this process, from data organization to risk analysis.
Interview with Dr. Roman Zagrosek, LL. M. (Berkeley)
How do technological solutions support adherence to the requirements of the German Supply Chain Act (LkSG)?
“IT solutions facilitate compliance with the German Supply Chain Act (LkSG) by organizing data and being fundamental for business decisions, action management, and reporting.”
What should be considered when implementing technological solutions?
“When implementing technological solutions, it is crucial that they are integrated seamlessly into an organization’s existing business processes. Additionally, they should be tailored to their specific needs, starting with proven, cross-industry components and employing an intelligent, risk-based approach as a key to success.”
How does a technological solution enable the effective implementation of a risk-based approach?
“A risk-based approach requires effective prioritization, where powerful technological solutions help set these priorities according to the German Supply Chain Act (LkSG) correctly and simplify complex business processes into user-friendly, step-by-step workflows.
These solutions provide automated and customizable interfaces that reduce the need for repeated data entry, supporting an agile and continuously adaptable approach.“
How can the use of Artificial Intelligence (AI) help implement the requirements of the German Supply Chain Act (LkSG)?
“Artificial Intelligence (AI) is used in IT solutions to meet German Supply Chain Act (LkSG)requirements by processing large amounts of data quickly, recognizing patterns, and thus enhancing risk analysis. Natural Language Processing assists in text analysis, while algorithms accurately recognize different writings of different business partners.
However, one should remain realistic and view AI expectations cautiously, especially regarding the automatic identification of high-risk suppliers. Transparent and interpretable AI models are essential to make decisions understandable and avoid unwanted side effects. Combining AI with human expertise is crucial for achieving efficient results and continuously improving systems.”
Which department in a company usually leads the introduction of technological solutions to meet the requirements of the German Supply Chain Act (LkSG)?
“In practice, the issue of the German Supply Chain Act (LkSG)implementation is often led by Compliance/ESG, supported by internal IT. Although primarily responsible, the Purchasing department faces challenges such as extra workload and heightened bureaucracy.
Therefore, a holistic Compliance/ESG strategy with IT integration is advisable, utilizing a comprehensive platform for compliance requirements like whistleblower systems, business partner verification, and risk management. This enables synergies through shared databases, uniform permissions, central reporting, data protection, and efficient AI deployment through high-quality data.”