Supply Chain Superintelligence: October 2024

Welcome back! Two critical topics dominated supply chain compliance and resilience this month. Read on to learn more about:

• The effects of the US port strikes and how your business can stay resilient.?
• The evolving regulatory landscape, including strategies for CSRD, CSDDD, and LkSG.

U.S. Port Strikes

The Need for Resilient Supply Chains

By Marco Felsberger

When did you first hear about potential strikes at U.S. East and Gulf Coast ports? When headlines started circulating or on social media? When it was too late to prepare effectively?

Prewave customers knew much earlier. Alerts on the potential strikes were first issued seven months ago, with regular alerts and increasing warnings to help customers assess exposure, calculate revenue at risk, and implement mitigation strategies.

With strikes behind us, the full impact on global supply chains is clearer, even if delays are still affecting businesses worldwide. The event exposed vulnerabilities for some companies, while others, with proactive resilience strategies, could mitigate disruptions. So, what did we learn?

U.S. Port Strikes: Lessons Learned

1. The global impact on supply chains is huge. One day of port inaction led to nearly five days of backlogs. Companies operating just-in-time models, often in automotive and manufacturing, faced major operational disruptions and had to pay high premiums for alternate shipping routes.
2. The disruption may continue for a while. The October strikes are the latest in a series of U.S. port disruptions. History shows us how easily global trade can be impacted: 1977 ILA Strike: U.S. trade ground to total standstill. 2002 West Coast Lockout: 10-day standoff caused billions of dollars in disruptions, with over 100 days of backlog. 2014-15 Slowdowns: Disruptions caused $7 billion in direct losses, with even more significant indirect costs across industries.
3. Global trade is vulnerable to port disruptions. Preparation is key: companies with robust contingency plans could stay ahead of the chaos, those without, suffered.
4. More strikes may follow. While mediation and union negotiation shortened the strike’s duration, its underlying issues remain unresolved. If wages and automation are not addressed in the long term, Businesses should prepare for continued volatility.

How to Build Proactive Resilience in Supply Chains

Proactive resilience – including advance risk assessment, diversification, and full supply chain visibility – was key to managing the strike effectively. Here are the key elements:

1. Conduct continuous risk assessment and scenario planning. Identifying potential disruptions in advance helps you anticipate disruptions and activate contingency plans.
2. Diversify logistics and supply chain partners Over-reliance creates weak points in supply chains. While some businesses rerouted through less congested ports, those with pre-established alternative routes adapted faster. Having options in place helps you react faster when disruptions arise, rather than scrambling for solutions in a crisis.
3. Invest in real-time supply chain visibility and monitoring. You need to be able to make data-driven decisions without delays. From the Prewave platform, you get visibility into supplier risk, helping you respond to issues before they escalate. During the strike, our customers could reroute shipments, adjust timelines, and inform stakeholders quickly and easily – helping them navigate the disruption.
4. Prioritise clear stakeholder communication. Sharing real-time updates, and explaining your response strategy helps avoid panic that blocks essential decisions.

Managing Post-Strike Delays: The Shipment Delay Estimation Tool

Our Shipment Delay Estimation Tool helps your business predict post-strike delays and plan accordingly. Across multiple scenarios, the tool factors in:

• Strike duration
• Port capacity and rerouting options
• Shipping season
• Cargo type
• Current supply chain conditions

Get ahead of future disruptions. Explore our Shipment Delay Estimation Tool.

Final Thoughts: Build Resilience for the Future

The October U.S. port strikes may be over, but the lessons are clear: companies that invest in proactive resilience will be better equipped to thrive in the face of uncertainty. Get in touch with a Prewave expert today to learn how you can mitigate the impact of future disruptions.

Navigating Complex Compliance

Aligning Strategies for CSRD, CSDDD, and LkSG

By Alice Gumppenberg

The Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and German Supply Chain Due Diligence Act (LkSG) rely on interconnected principles. A proactive, aligned approach can save resources and help you stay ahead of regulatory demands.

What is the CSRD?

The CSRD broadens the scope of EU corporate sustainability reporting, replacing the Non-Financial Reporting Directive (NFRD) and introducing stricter guidelines. About 50,000 companies across the EU will be required to report on double materiality, disclosing:

• How their operations impact environmental and social factors, and
• How these sustainability factors affect their business.

What is the CSDDD?

The CSDDD shifts the focus from reporting to due diligence, with a focus on human rights and the environment. Companies must actively identify, prevent, mitigate, and address negative impacts throughout their value chains, committing to stakeholder engagement, establishing grievance mechanisms and formulating climate action plans.

Comparing the CSRD and CSDDD

The CSRD helps companies communicate their sustainability performance, while the CSDDD ensures they have the necessary systems and processes to act on risks. Both regulations are rooted in the same principles of sustainability, transparency, and accountability.

• CSRD (Focus on Reporting): Companies must disclose detailed information on sustainability practices regarding environmental, social, and governance (ESG) issues. This involves identifying ESG topics, managing risks, and reporting to stakeholders.
• CSDDD (Focus on Due Diligence): Companies must implement actionable due diligence processes, including preventive measures and mitigation strategies across their supply chains.

Where does the LkSG fit in?

The LkSG, which affects German companies, already requires annual reports on human rights and environmental risks in supply chains. It shares similarities with the CSDDD, making compliance easier for companies already adhering to the LkSG.?

However, the CSRD introduces more comprehensive reporting obligations, such as disclosing KPIs, risk assessments, and stakeholder engagement. By aligning their LkSG practices with CSRD requirements, companies can streamline compliance efforts.

How CSRD, CSDDD, and LkSG Align

1. Double Materiality and Due Diligence: Both the CSRD and CSDDD require companies to assess and act on ESG factors (CSRD) or supply chain due diligence (CSDDD). As the LkSG demands human rights due diligence, it’s an ideal foundation to build on.
2. Stakeholder Engagement: The CSRD and CSDDD emphasise stakeholder engagement (CSDDD more explicitly). From community feedback to grievance handling, stakeholder transparency is crucial for all three regulations.
3. Grievance Mechanisms: Both the CSRD and CSDDD call for clear processes to handle complaints. Companies must report outcomes and the financial impacts of grievances. This transparency strengthens accountability and aligns with LkSG principles.

Take a Holistic Approach to Compliance

Rather than approaching directives in isolation, you can integrate your compliance strategy.

1. Adopt a risk-based approach. This should include due diligence (CSDDD and LkSG) and reporting requirements (CSRD) and serve as a framework for the continuous identification, mitigation, and reporting of risks.
2. Integrate your reporting and action plans. Use the reporting mechanisms of the CSRD to track and measure your CSDDD due diligence efforts. Reporting KPIs tied to material risks and action plans can streamline stakeholder management too.
3. Use Prewave’s risk monitoring tools. We can support you with real-time monitoring of supply chain risks. Prewave’s data-driven insights allow companies to identify emerging risks early and ensure compliance with due diligence and reporting standards.?
4. Use your experience. If your company already complies with LkSG, streamlining CSRD and CSDDD compliance is easier. Build on existing risk management systems to meet expanded reporting and due diligence requirements more efficiently.

Final Thoughts

The key to holistic compliance is to streamline your efforts. By leveraging existing processes, you can keep the focus on continuous improvement as you address sustainability challenges.

Eventually, your integrated approach will yield reduced complexity, greater stakeholder trust, and stronger resilience against future risks. With Prewave, you can stay compliant, avoid disruption, and achieve full transparency in your sustainability efforts.

We hope you enjoyed this edition of the Supply Chain Superintelligence newsletter! For more updates, follow us on LinkedIn or visit us at prewave.com.

About Prewave

Our mission has always been clear: to make the world's supply chains more transparent, resilient, and sustainable. Since our inception in 2017, Prewave has become synonymous with supply chain risk management excellence. Today, we are the world's leading end-to-end supply chain risk management platform, ensuring transparency, visibility, and compliance—all in a single platform.