Supply Chain Duty of Care Act – Benefits for Companies and Customers in a Fairer World

Adopt a proactive duty of care program now by mapping every supplier, engaging them on labor standards, and tying contracts to responsible practices. This early action creates a clear path to fair treatment across tiers and reduces risks before they escalate.

For companies, duty of care clarity translates into fewer disruptions and a stronger brand. They document due diligence, continue to improve supplier performance, and reduce the cost of non-compliance. In europes markets, early adopters report measurable benefits: Many studies show 4–9% lower supplier-related delays and a higher trust score from banking partners, while recruitment becomes easier as the attractive employer story resonates with job seekers. These efforts help increase price stability, and employee safety boosts productivity.

Customers gain from transparent due care: safer products, reliable delivery, and ethical standards across brands they trust. For sectors like medical supply chains, the protection reduces shortages and safeguards patient care. Public confidence rises when they see companies publish responsible sourcing data, and public-to-private accountability becomes tangible across disclosures.

To move from intent to impact, assemble a cross-functional task force that includes procurement, HR, legal, and compliance. Start with risk mapping of the most exposed suppliers, collect data on working hours, wages, and safety records, and require quarterly updates to leadership. Use third-party audits to verify improvements and set KPIs that shareholders can see. This providing of measurable data helps decision-makers continue their efforts and align public-to-private disclosures with customer expectations.

For teams acting now, the act becomes a platform to build a more just and resilient supply chain, inviting an explorer mindset: test new supplier models, pilot shared risk funds, and scale best practices across europes and beyond. The path is practical: start early, document progress, and keep the focus on workers, customers, and communities, ensuring that prices stay fair and every stakeholder benefits from a fairer, more accountable economy.

Supply Chain Duty of Care Act and CARES Act ERC Relief in Transportation Manufacturing

Establish a dedicated authority within your company to verify CARES Act ERC relief eligibility across suppliers and apply the relief to delivered orders.

For the Supply Chain Duty of Care Act, build a center that coordinates procurement, compliance, and operations to monitor critical risks throughout the network, especially in volatile markets; implement highly effective risk controls.

Recent data show many transportation manufacturers faced liquidity gaps as retention costs rose and disruption persisted; align payments, accounting, and ERC claims to reduce burden on cash flow across industries. Similar patterns exist in European components and energy sectors, and this largely reflects fragmented supplier bases across borders.

Map eligibility by wages and qualified health expenditures, and ensure proper accounting so your account is used for eligible costs; automate workflows to cut half of manual approvals and keep records tied to delivered shipments and periods of eligibility.

Time is critical–align with issuance guidance from Congress and regulators, and set a June deadline to finalize ERC filings for Q2 and Q3; document correspondence and maintain an audit trail for each account and supplier.

Cross-border considerations with European counterparts require harmonized documentation; ensure appropriated funds are allocated to eligible payroll and benefits while excluding non-qualified costs; address water and energy constraints at supplier sites to reduce risk to the center.

Long-term plan: combine CARES ERC relief with the Duty of Care framework to strengthen customer satisfaction, protect margins, and build resilience against future pandemic shocks and virus risks in the network.

Scope of Duty of Care requirements for supply chain actors: who, what, and when

Recommendation: Define scope by naming who is covered, specify what duties apply, and set when they take effect, with a concrete 90-day risk assessment kickoff and owner assignment for each element.

Who is covered: Direct suppliers, tier-1 and tier-2 manufacturers, distributors, subcontractors, and service providers along the chain; include employees and laborers at all levels; extend duties to workers who influence production. Ensure rights are protected throughout the network and clarify roles at each tier.

What are the core requirements: comply with health and safety standards, fair labor practices, and no forced or child labor; enforce reasonable working hours and non-discrimination; require due diligence mapping and ongoing risk assessments; maintain retention of records and deliver training; mandate remediation where gaps appear; protect water and sanitation in facilities and provide masks when needed; publish transparent reporting and apply risk-based prioritization to address critical hotspots.

When to act: The regime is underway in many regions and will come in a wave; start now with short-term actions and continue with long-term milestones over the next years. Establish a clear review cadence after major supplier changes and contract renewals to ensure continuous alignment.

Practical steps: Build a vendor code of conduct, require immediate risk assessments, embed due diligence into procurement, link remediation to contracts, and ensure retention of records is ongoing; provide training to employees; offer targeted support to small suppliers to reduce the heats of compliance and avoid debt traps; monitor that suppliers do not become highly exposed; safeguard workers’ rights and ensure a path to remedy. Include masks and water safety in facilities with heat risk to protect health and support long-term performance.

Examples and lessons: Germany demonstrates how a robust duty-of-care regime aligns with public-to-private collaboration, delivering measurable improvements in supplier accountability. Past crises exposed gaps, but early action reduces disruption and debt risk across tiers. Continue this wave with sustained, long-term collaboration between public and private actors to strengthen resilience.

Opportunity: A duty-of-care framework builds resilience for customers and fairness across supply chains; define clear roles across procurement, operations, and compliance, and turn compliance into a practical, value-adding process that yields safer workplaces, stronger partnerships, and reliable delivery.

Financial and operational gains for firms adopting due-care practices: cost containment, risk reduction, and resilience

Today should start with a concrete action: implement a formal duty of care program that links what we commit to suppliers with what we measure, using continuous data feeds and a shared standard for compliance. This approach clarifies dependencies, reduces transaction complexity, and enhances value across the chain. By codifying cares for workers and operations, companies cut exposure to violations and protect laborers, while strengthening equity throughout the network. The result is improved resources allocation and long-term return.

• Cost containment levers
  • Standardize purchase orders and supplier onboarding to reduce transaction overhead and friction in the procurement cycle, thereby decreasing operating costs today and over the long term.
  • Use syndicated, high-quality data to align demand forecasts with supply realities, cutting excess inventory and carrying costs while boosting service levels.
  • Consolidate shipments and negotiate volume-based pricing with key partners, which increases flexibility without sacrificing speed, and lowers landed costs.
  • Adopt a unified sourcing playbook across industries, including Chinese and other regional suppliers, to improve consistency and reduce past cost spikes.
  • Measure value not only in price but in total cost of ownership (TCO), including compliance, quality, and labor-related risks, therefore driving smarter capital allocation.
• Risk reduction measures
  • Map dependencies across the supply network to identify single points of failure and implement alternate sources, reducing exposure to disruptions.
  • Institute continuous compliance checks and rapid incident response to curb violations and protect laborers, which lowers reputational risk and ensures equity in treatment.
  • Publish a transparent scorecard that tracks supplier performance, safety records, and data quality, helping managers respond to exposed risks quickly.
  • Leverage data to distinguish highly compliant partners from those with recurring issues, enabling proactive remediation rather than reactive firefighting.
  • Integrate labor standards into contracts, so violations are addressed early and remediation costs stay predictable rather than escalating.
• Resilience and long-term value
  • Build resilience by diversifying the supplier mix while maintaining critical dependencies, ensuring continuity during shocks and market volatility.
  • Establish long-term relationships with trusted suppliers that share risk and reward, enhancing stability and reducing the cost of disruptions.
  • Adopt flexible sourcing strategies that can scale up or down with demand while preserving quality and compliance, increasing overall robustness.
  • Track performance in real time and adapt quickly; as June data shows, programs underway in key sectors significantly shorten recovery times after disruptions.
  • Align incentives so laborers are treated fairly and growth is shared, supporting sustained equity and productivity in the supply chain.
• Implementation blueprint
  1. Map the full chain: document dependencies, critical transaction points, and high-risk nodes across Chinese and regional industries.
  2. Define minimum due-care standards and a common data schema to enable continuous data exchange with suppliers and logistics partners.
  3. Launch pilots in a few critical categories today and scale fast as results prove the approach; under McKinsey-like benchmarks, momentum gains can be large when actions are data-driven.
  4. Create a governance rhythm that reviews violations, remedies, and resource allocation on a monthly cadence; use that cadence to inform long-term planning.
  5. Set measurable targets for cost containment, risk reduction, and resilience, then track return on investment and incremental value realization over time.

Collecting continuous data, validating it across syndicates, and translating insights into concrete actions moves the organization from reactive fixes to proactive strengthening of the duty of care. Therefore, firms that act today will see a meaningful increase in efficiency, reduce exposure to risk, and build a more resilient, equitable operation that benefits all stakeholders–customers, laborers, and shareholders alike.

Enhancing customer trust through transparent sourcing, traceability, and accountable supplier performance

Implement end-to-end traceability on a single platform and publish a quarterly supplier performance report to customers; this creates immediate visibility into where materials originate and who owns each step, with the issuance of certificates and verifiable transaction histories for each order delivered.

Start with sustainable materials mapping and expand to all suppliers, with many suppliers included, establishing a public-to-private data sharing model that protects sensitive data while giving customers clear visibility. They can access a concise, customer-facing summary of material provenance and supplier roles that shows who touched what, when, and where.

Set concrete KPIs and align finance and operations: on-time delivery, defect rate, and supplier compliance with ethics codes; track changes across months, and require semiannual audits to validate data. For example, within the first six to twelve months after the established baseline, 95% of masks in the product line should be delivered on time, with materials impacted by shocks clearly flagged.

Adopt practical governance: create cross-functional supplier risk roles, with procurement and finance collaborating on cost controls while maintaining well-structured processes, having integrity, and ensuring data quality; use a supplier scorecard that tracks economic and ethical performance and links to procurement decisions. The data helps them continue to optimize and compare suppliers and adjust contracts as they evolve, with similar data formats across suppliers to facilitate comparisons, ensuring costs stay manageable.

Communicate benefits to customers: they see a significantly improved relationship with suppliers and a transparent chain; customers trust brands that can show provenance and accountable performance, which can boost orders and retention even in a boom cycle. Looking to September and beyond, a transparent approach supports sustainable growth without sacrificing efficiency.

Finally, implement a phased rollout: start with critical components, then extend to tier-2 suppliers; map transactions and ensure the same data quality across suppliers, with standardized formats and regular cadence. This approach reduces costs and improves supplier collaboration, enabling a sustainable competitive advantage.

ERC relief specifics for transportation manufacturers: eligibility, credit rate, and eligible wages

Claim ERC relief now by running a wage-by-wage analysis for 2020 and 2021 and align the results with your finance plan to reduce debt and long-term costs. Transportation manufacturers with U.S. employees can recover a meaningful portion of wages paid during disrupted chains, especially where government orders or sharp drops in receipts impacted operations.

Eligibility hinges on meeting the criteria for an eligible employer in the transportation sector and showing wages paid during periods affected by a government order or a decline in gross receipts. For 2020, a 50% decline in gross receipts compared with the same quarter in 2019 qualifies, while 2021 uses a 20% decline. Recovery startup rules extended eligibility in 2021 for certain entities. If you faced multiple facilities, you can consider the broader company impact and combine employees across sites to maximize the credit, provided you avoid double counting.

Credit rate details are straightforward: 2020 offered a 50% credit on qualified wages up to $10,000 per employee for the year (maximum $5,000 per employee). 2021 raised the incentive to 70% of qualified wages, with the $10,000 cap applying per employee per quarter (maximum $7,000 per employee for the year). For a large transport operation with several shifts, this can translate into substantial cash back, especially when you actively capture health-plan costs as part of qualified wages.

Eligible wages include wages paid to employees who perform services during the eligible periods, plus allocable qualified health plan costs. Wages counted for ERC cannot be double-counted with wages used for PPP forgiveness, so coordinate with your finance and HR teams before claiming. Include payroll taxes that support Social Security and Medicare, and document the time periods and reasons (government order or gross receipts decline) that make those wages eligible. For transportation manufacturers with international exposure, these funds can offset costs tied to maintaining critical staffing in the face of global supply chain pressures.

To implement, pull wage data by employee and by quarter, identify which periods qualify, and apply the applicable rate caps. Prepare amended payroll filings (Form 941x) for 2020 and 2021 where needed, and evaluate whether you can offset credits against payroll tax liabilities. If you previously received PPP funds, separate the wages used for forgiveness from those eligible for ERC. Maintain detailed records of government orders, revenue declines, and employee compensation to defend the claim in audits and to support your case during negotiations with lenders or with customers who rely on your continued capability.

This approach strengthens your company’s financing posture and supports your customer commitments without increasing long-term costs. By actively pursuing ERC relief, you protect equity and stabilize cash flow, helping you defend efforts to keep skilled employees, including engineers and shop floor teams, on payroll. In a global context, ERC can be a pragmatic tool to reduce the financial exposure discussed in past dealmaking conversations, support European and Asian supply chain partners, and maintain a fair competitive position in years ahead.

Practical steps to claim CARES Act ERC: documentation, timelines, and compliance controls

Assign an ERC owner and run a rapid eligibility check for 2020 and 2021 using payroll totals, revenue comparisons, and activity declines. This approach accelerates claims and clarifies who signs off on the data. Build an outbound workflow with payroll providers and tax authority contacts, and map responsibilities to a clear relationship across finance, HR, and treasury. Deliver a first calculation of eligible wages within two weeks, and set a standing cadence for updates across the year.

Documentation: Collect core items: quarterly payroll registers, Form 941 filings and any 941-X, employee-level wage data, and receipts showing declines in gross receipts. Include records of qualified health plan costs attributable to the period under public-health programs; document PPP interactions with wages to avoid double counting; assemble a ledger showing how each wage line contributes to ERC.

Timelines: For 2020, credits are claimed via Form 941 for applicable quarters; if you amend, file Form 941-X within three years from the original due date. For 2021, credits are claimed via the quarterly 941 filing; amended filings follow the same three-year window. Build a calendar with quarter end dates and plan to have calculations and supporting docs ready within 2-4 weeks of quarter end.

Compliance controls: Implement two-person review for ERC calculations, reconciliations between payroll data and credit amounts, and a single source of truth for all numbers. Maintain an audit trail with versioned spreadsheets and stored PDFs; separate duties across data collection, calculation, and approvals; lock critical files with access controls; ensure no overlap with PPP wages; create a quarterly certification by leadership.

Process and technology: Use your payroll provider or ERP to export data; maintain an ERC ledger; link each employee’s wages to a claimed amount; produce a quarterly reconciliation; store all documentation in a structured folder with search tags; ensure retention for the period required by tax law.

Global context: For multinational operations, coordinate with counterparts in european and asian operations; discuss inbound and outbound processes; align with public-health programs and treatments; use ERC refunds to stabilize operations and support deals with lenders and suppliers, delivering resilience in the face of rising costs and a changing business environment.