10 Things You Should Know

1. Where do the products come from?

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Where do your products come from?

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Chapter 1: Where do the products come from?

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Factors to Consider

Traceability is the ability to track sources of wood in finished products through the supply chain to – as close as is practical – their origins. A clear sense of all the links in the products’ supply chain will be useful for the procurement manager to assess:

  • Whether the sources of wood can be accurately identified.
  • Whether the products have the properties they are claimed to have.
  • For instance, whether:
    • The wood was harvested and processed in compliance with relevant laws
    • The wood comes from sustainably managed forests
    • The unique ecological and cultural features of the forest where the wood was sourced have been maintained
    • The products were manufactured with environmental controls in place
    • Harvesting and manufacturing processes complied with social standards.

Tracing the origin of wood and paper-based products is not always straightforward. Supply chains can sometimes link many wood producers and dealers across several countries, and procurement portfolios can be complex, with multiple supply chains (Figures 2 and 3).

Forest products are difficult to trace because, a finished product might include different types of trees, and many products can come from the same tree (Figure 4).

It is easier to establish traceability for solid wood products than for paper-based products. Paper products are manufactured in pulp mills that typically draw wood from many sources. In the most complex cases, a network of dealers buying wood from many different loggers, landowners and sawmills may supply a pulp mill (Box 1: The wood supply chain). In a sawmill, logs usually lose their link to individual landowners in a sorting yard in the same way an agricultural business would combine grain from individual farmers in a common silo. The wood collected from sawmills – often chips that are by-products of solid-wood products manufacturing – further lose their individual identity during the paper making process.

Several technological approaches are emerging to help trace and verify the origin of the raw materials in products (Table 1: Technologies to trace and verify the origin of wood in the supply chain). There are also new technological applications that seek to increase the overall transparency of the supply chains regarding the origin of the raw materials (Table 2: Tools for increasing transparency in supply chains).

Understanding the position of a company in the supply chain can help identify priorities and key areas of influence. Also, depending on the location and/or complexity of the supply chain, the need for due diligence is greater in some places than in others.

Requesting documentation from suppliers is a common method of tracing the origin of raw materials. A supply chain can be regarded as a chain of legally binding contractual relationships; purchasers can trace the supply chain through contracts, and require that their suppliers commit to providing raw materials that were harvested in compliance with the law, or meet other customer specifications.1 In places where the law – both background law and contract law – is strong and properly enforced, sales contracts can be a good compliance mechanism.

In addition to sales contracts, other documents for tracing the origin of raw materials include:

  • Licensing permit(s) from the relevant authorities giving permission to harvest
  • Certificate of a sustainable forest management standard
  • Certificate of origin
  • Chain-of-custody (CoC) certificate2
  • Certificate of legality
  • Harvesting/management plans
  • Phytosanitary certificates - issued by state/local authorities regarding the plant health requirements for the import of non-processed products
  • Bill of lading - a receipt for cargo and contract of transportation between a shipper and a carrier that describes the goods being transported and is issued when the shipment is received in good order
  • Export documents
  • Transportation certificates

All of these documents should carry appropriate stamps and seals from the relevant governmental or certification agencies. However, false documentation can be common in certain countries and additional systems to trace the raw materials back to their origins, within the limits of feasibility, may be needed in some cases.

Working with those directly involved in the supply chain will help develop a better understanding of the challenges, costs and other impacts associated with implementing additional tracking systems. Forest managers, forest owners, government agencies and certification bodies active in the area can provide useful information.

A high degree of vertical integration makes traceability simpler. However, in some countries such as in the United States, companies are becoming less integrated, selling off their forest lands and thereby externalizing traceability.

Factors to consider regarding traceability

  • Purchase contracts can be useful to trace the origin of the wood. They can also be used as safeguards to require that raw materials be harvested and products be manufactured in compliance with the law, where laws are properly enforced.
  • Tracing wood through the supply chain back to the regions of origin is becoming common in many parts of the world, and new technologies are emerging to aid this practice.
  • Forest certification schemes are often able to track certified and recycled content as well as uncertified content in the product line. For the uncertified content certification schemes are increasingly placing requirements and safeguards to avoid supply from unwanted/controversial sources.
  • Different levels of detail may be needed depending on the risk of encountering unacceptable practices. For instance, in areas where illegal activity may be occurring, detailed information on the specific location of harvesting may be needed while for other areas knowing the general origin of the wood may suffice.
  • Risk should be assessed for every purchase as conditions in the country of origin might change at any time.
  • Chain-of-custody systems have been established by different stakeholders to document the wood flow between various steps of the supply chain. Most forest certification schemes include a chain-of-custody standard that reaches from the forests up to certain processes in manufacturing. Not all chain-of-custody systems cover 100% of the certified product, and all systems allow mixing of certified and non-certified materials. In some cases it may be pragmatic for the end user to ensure that its suppliers maintain proper records and make them available upon request, subject to appropriate confidentiality agreements.

1 In some cases competition laws may limit the amount of information that customer and supplier may exchange. In the US, for instance, a pulp mill owned by a company may buy chips from sawmills owned by one or more companies. All these companies may compete against each other to buy logs from landowners, and the information about their respective suppliers may be highly proprietary business information; sharing this information directly or through a common customer may be improper and perceived as anti-competitive.
2 A Chain-of-custody certificate documents and systematically verifies the flow of the materials from their origin in the forest to their end-use.

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