- proALPHA study: about one third of the respondents (33 percent) fear increased labor costs and reporting efforts while investments are reduced
- 33 percent see Germany's position in international competition at risk
- 24 percent consider relocating their production abroad
Weilerbach, March 21, 2024 – NAfter weeks of debate, the majority of EU countries have declared themselves in favor of a common European Supply Chain Act. The approval of the European Parliament, which is still pending, is considered certain. However, according to a recent study by the ERP+ expert proALPHA, more than half (59 percent) of the small and mid-sized enterprises in Germany expect this new law to have a strong impact on their organization and overall economic development.
Although the EU Supply Chain Act is initially intended to apply only to companies with 1,000 employees or more, smaller and medium-sized companies are indirectly affected since they are also a part of the supply chain defined and regulated by the Act. Therefore, they too will have to meet the new requirements for supply chain transparency.
Fear of added burdens, decreased investments and impediments to innovation
31 percent of respondents expressed concerns about their growth and expansion being slowed down, while one third (33 percent) feared that Germany would lose its leading position in international competition. Another 33 percent expect a lot of reporting effort for their company. For 32 percent of the surveyed companies, the new law also makes it necessary to hire further employees, and the same number of companies (32 percent) expect to postpone their planned investments.
More than a quarter (28 percent) also stated that they would first need to build up or acquire the necessary expertise in light of the upcoming Supply Chain Act. Almost a quarter (24 percent) of the surveyed SMEs see the EU Supply Chain Act as an impediment to innovation in their industry. The same number (24 percent) even consider relocating their production abroad.
"Both Germany's and the EU's upcoming Supply Chain Act not only affect large companies. Smaller companies also have to prepare themselves to provide the partner companies directly affected by the Act with supply chain-related information," says Asina Leist, CEO of DIG GmbH, a company of the proALPHA Group. "Solutions for e-procurement and strategic supplier management increase transparency in the supply chain. When combined with an ERP system, relevant supply chain information becomes readily available."
The complete proALPHA study "Deutscher Mittelstand im Regulierungskorsett" (roughly: "German SMEs in the Regulatory Stranglehold") can be requested here (available in German only).
