EU AI Act August 2025: New Rules for High-Risk AI Systems
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On 2 August 2025, the European Union’s Artificial Intelligence Act entered its second phase of implementation, introducing essential EU AI Act compliance requirements that directly affect supply chain management operations. This milestone builds on the initial EU AI Act regulations that started in February, bringing comprehensive oversight to high-risk AI systems, general-purpose AI models, and establishing clear penalties for non-compliance across supply chain networks.
The August 2025 EU AI Act implementation introduces vital provisions that directly influence how businesses deploy AI across their supply chain management operations:
High-Risk AI Systems in Supply Chains: Organisations must now demonstrate EU AI Act compliance with strict requirements for AI systems that pose significant risks to health, safety, or fundamental rights. This includes AI systems used in supplier risk assessment, supply chain monitoring, vendor evaluation, and procurement decision-making processes.
General-Purpose AI Models for Supply Chain Management: Companies utilising broad AI applications in their supply chain operations must ensure their systems meet harmonised market standards and obtain proper CE marking where applicable under EU AI Act requirements.
Enhanced Supply Chain AI Governance: New monitoring and surveillance mechanisms establish accountability throughout the AI value chain, from AI providers to supply chain deployers and their vendor networks.
EU AI Act Penalty Framework: Clear consequences for non-compliance are now enforceable, making adherence not just ethical but financially imperative for supply chain operations.
Perhaps the most important influence on supply chain management is the EU AI Act's Article 25, which outlines responsibility along the value chain. The Act introduces a cascading compliance requirement, making supply chain organisations responsible not only for their own AI use but also for the AI practices of their suppliers and partners.
Consider these supply chain scenarios now clearly covered by the EU AI Act:
For supply chain professionals, compliance with the EU AI Act entails conducting detailed due diligence on every vendor and partner employing AI systems. The ease with which AI has become embedded in supply chain operations now requires careful review to prevent violations of the EU AI Act and avoid potential disruptions in service.
As the EU AI Act regulatory landscape becomes more complex, supply chain organisations need not sacrifice innovation for compliance. The key is to implement supply chain AI solutions designed with EU AI Act requirements from the outset.
Modern supply chain due diligence requires AI tools that prioritise transparency, fairness, and human oversight in line with EU AI Act principles. Instead of replacing human judgment in supply chain decisions, compliant AI should improve decision-making abilities while maintaining clear audit trails and explainable outcomes for supplier assessments.
This approach aligns with the EU AI Act's core principle: AI should serve humanity's best interests while respecting fundamental rights and freedoms. For supply chain businesses, this means AI implementations that not only boost efficiency but also demonstrate tangible value without compromising ethical standards or EU AI Act compliance.
At Factlines, we've developed our comprehensive supply chain risk management platform centred around these EU AI Act regulatory principles. Our AI capabilities span various areas while strictly adhering to compliance boundaries:
AI-Enhanced Document Analysis processes regulatory documents and supplier certifications, automatically extracting key compliance information and providing transparent explanations of findings.
AI Summary for Supplier Assessments synthesises complex survey responses covering sustainability scores, compliance frameworks, and risk indicators, highlighting key positives, risks, and recommended next steps without replacing human judgment.
Multi-Tier Supply Chain Intelligence enables cascading supplier assessments across tiers, ensuring visibility of EU AI Act compliance throughout the value chain while maintaining data privacy and avoiding prohibited social scoring practices.
Customisable Screening with AI Support allows teams to define specific supplier selection criteria, with AI automatically enriching profiles with data from official registries, avoiding bias and ensuring thoroughness.
As supply chain professionals navigate increasingly complex due diligence requirements, including verifying suppliers' compliance with EU AI Act regulations, comprehensive platforms like ours become essential for maintaining both efficiency and compliance across all supply chain management operations.
Understanding how to implement AI responsibly within supply chain operations, maximising its benefits for supplier risk management, requires careful consideration of technology and EU AI Act regulation.
As supply chain organisations adjust to these new EU AI Act requirements, the emphasis should shift from seeing compliance as a burden to recognising it as a competitive edge in supply chain management. Companies that actively adopt responsible AI practices in their supply chain operations will be better equipped to build trust with stakeholders, minimise regulatory risks, and foster sustainable operational improvements while fully complying with the EU AI Act.
The EU AI Act's second phase signifies a maturing of AI governance in supply chain management, moving away from a "move fast and break things" approach towards one of careful, responsible innovation in supply chain operations. For supply chain professionals, this presents an opportunity to lead by example in demonstrating how AI can be both powerful and principled in supplier risk management and vendor assessment processes.
Discover your hidden supply chain risks. Book a demo today to see how our SRM platform meet your business needs.
