LkSG compliance: How RATIONAL masters the challenge with VERSO
With the VERSO Supply Chain Platform, RATIONAL increases transparency across the supply chain and thus creates an optimal communication channel for integrating suppliers into risk management.
The challenge at RATIONAL
RATIONAL has stood for responsible and sustainable action since the company was founded. For RATIONAL, sustainability means giving equal consideration to economic, environmental and social aspects in the processes, thereby doing the best possible justice to the interests of all the Group’s stakeholders and maintaining RATIONAL’s future viability.
The company will be subject to the Supply Chain Due Diligence Act (LkSG) from 2024. The particular challenges in RATIONAL’s supply chain include the high proportion of purchased parts (87%) and the high single-source rate among suppliers. The main products purchased are stainless steel, electronics and plastic. There are also external factors such as natural events, wars, changes in the market, technological progress and, in particular, the Covid-19 pandemic. These have made it clear how RATIONAL can be affected by delivery difficulties and supply bottlenecks.
“It is extremely important for us to carry out a risk analysis in the supply chain and to learn more about the general risks in the industry and the monitoring of human rights at our suppliers. This is an ideal basis for supplier dialog,” says Isabella Stohr, Strategic Purchasing at RATIONAL.
RATIONAL has already carried out risk analyses in the past, but these were mainly business-oriented. Together with VERSO, risk management at suppliers has now been further developed towards ESG criteria, all in line with upcoming regulatory requirements such as the LkSG.
As part of a pilot project, nine suppliers were invited to the supply chain platform and asked to provide information on their sustainability activities via the standardized maturity assessments. And the test phase convinced everyone: RATIONAL and suppliers. “The VERSO platform is user-friendly, intuitive to use and clearly and comprehensibly structured,” says Isabella Stohr. She cites the clear presentation of the results, the risk analysis by sector and country, the technical depth of the assessments, the good cooperation with the VERSO team and the excellent support for suppliers as further advantages.
The request for ESG information is often met with a certain degree of skepticism by suppliers. However, the VERSO Supply Chain Platform quickly won them over with its ease of use. “With VERSO, we have found the optimal communication channel to successfully integrate our suppliers into our risk management,” explains Melanie Binder, ESG Regulatory Affairs at RATIONAL.
Within three months, 80% of suppliers had already connected with RATIONAL via the platform. 67% of them had already made their sustainability management system transparent to RATIONAL via the Maturity Assessment. In addition to the high level of user-friendliness, suppliers benefit from the uncomplicated assessments and the fact that using the platform is free of charge for them and that they can share their data with several customers and update it in real time.
RATIONAL chose a multi-stage approach to connect with suppliers via the platform: First, 200 series suppliers were targeted. In the case of indirect suppliers, the invitation to the supply chain platform depended, among other things, on the purchasing department’s assessment of strategic relevance and country risk.
RATIONAL initially carried out a fully automated assessment of the country and sector risks of its suppliers. On this basis, RATIONAL identified suppliers for whom an assessment of risk prevention measures (e.g. occupational health and safety, human rights) was required. The evaluation was carried out using the platform’s standardized assessments. In addition, all suppliers were asked to list their production sites so that a differentiated analysis of country risks could be carried out.
The VERSO Supply Chain Platform enables RATIONAL to efficiently and automatically collect data and assess risks for the LkSG. It also provides a solid database for reporting as well as the documentation and management of measures. “The process and the supply chain platform have further increased transparency about our suppliers. That was a great benefit for us,” says Melanie Binder.
The next step is now to use the VERSO platform to create the LkSG report for the Federal Office of Economics and Export Control (BAFA). In addition, with the VERSO Supply Chain Platform, RATIONAL is also prepared for all future regulatory requirements on sustainability in the supply chain arising from the CSRD and the EU supply chain law CSDDD.
Advantages in brief
- High level of user-friendliness, quick familiarization
- High acceptance among suppliers
- Automated risk analysis
- Efficient data collection for LkSG reporting
- Documentation and control of measures
- Outstanding support for customers and suppliers
- Compliance with current and future regulatory requirements
- Professional and uncomplicated assessments