SupplyChainTalk: Building stronger supply chains through due diligence and resilience

On 26 February 2025, SupplyChainTalk host Ana Maria Velica was joined by Nanda Kishore, VP of
Sourcing, Evoy; Federico Marchesi, Chief Supply Chain Officer, Haier Europe; and Ty Francis MBE, Chief Advisory Officer, LRN.

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Human rights and environmental due diligence (HRDD or “HREDD”) requirements introduced or proposed in several European countries in recent years – particularly the German Supply Chain Act which came into force last year – pose unprecedented compliance challenges for multinational companies. Further, businesses active in individual industry sectors must now comply with far-reaching additional due diligence obligations, such as the Battery Regulation and Deforestation Regulation.

In Norway, The Transparency Act has already been in force since the middle of 2022 enabling companies to access information on their suppliers’ labour practices down to level three or four.

The UK tends to be a late adopter of regulations enacted in the US or the EU, so the prospect of the UK enacting supply chain due diligence legislation is a positive development.

 

Training your suppliers to be compliant

There are certainly challenges to auditing due diligence compliance, as a high number of companies have no visibility of their multi-tier supply chains and therefore aren’t aware of the risks. There is, however, a positive shift in companies’ attitudes to sharing information with suppliers, as they realise that it’s key to running ethical supply chains, with some companies even creating digital twins that simulate the operation of their suppliers.

 

Another approach is to share information about supply chains between businesses, their suppliers and customer to identify areas where better efficiencies can be reached. By training suppliers you can help them understand how you as a company operate but also how they can better comply with regulations. Business must see to it that their suppliers work along the same values and measure their adherence to them. With data analytics or a large-scale training solution you can see which vendors are slow to do the training and then you can start risk profiling them. Stress tests will show to what extent the company can serve its customers when there is an issue, as well as how much it will cost to sustain the business operation and keep serving customers when some disruption hits. Suppliers contingency plans must also be assessed. Supply chain management is a balancing act between building resilience and optimising the cost of ownership.

 

The panel’s advice

• Due diligence is not a one-time check but an ongoing monitoring effort.
• Sharing data along the supply chain – both longitudinally and with peers – can mitigate risksconsiderably.
• Rather than relying on certifications, due diligence is best done by the company representatives themselves.
• Effective training for suppliers must be tailored and risk based.
• Make sure you have the right skillsets in your organisation for times of disruption, prepare your people for managing these difficulties and stock extra inventory to help manage a difficult situation.
• Supply chain resilience isn’t just risk mitigation, it’s a competitive advantage.