RADIX Tree – Getting to the Root of EUTR Due Diligence

Global Traceability have been featured in various timber industry publications this month with an in-depth look at our RADIX Tree software.

This article features an interview with our CEO Dr.Ulrich Heindl, discussing how Global Traceability devised the online platform RADIX Tree to cut through this complexity and ease the workload of EUTR due diligence management for suppliers and buyers alike“.

You can find us in the Timber Trade Journal and in this months edition of Timber Design & Technology Middle East and in Wood News India.

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Getting to the root of due diligence

The RADIX Tree platform has branched into a one-stop online solution for timber due diligence, sustainable sourcing and traceability management.  

When the EU Timber Regulation (EUTR) was implemented in 2013 it did not come with one-size-fits-all due diligence and risk mitigation systems for operator-importers to ensure timber supply legality. The range of businesses EU-wide made that impractical and instead looser guidelines were set.

But the consequence of that today is considerable diversity of due diligence approaches. That, in turn, creates the challenge for suppliers of dealing with a wide variety of due diligence questionnaires and other documentation from different EU customers, complicating the process for everyone.

Simply put, says Global Traceability Solutions, it has devised an online data platform and traceability system that cut through this complexity and ease the workload of EUTR due diligence management for buyer and supplier alike.

The cloud-based RADIX Tree, as the German company named its platform, still allows flexibility in how buyers undertake due diligence.  But at the same time it provides standardised online supplier questionnaires that satisfy most approaches and readily customise to others.
“That means buyers can join the RADIX Tree, find suppliers are already on it servicing other users, and quickly and easily ensure they satisfy their due diligence too,” said Global Traceability founder and CEO Ulrich Heindl.  “Similarly suppliers joining to meet the requirements of one buyer can start working with others without having to complete radically different documentation.  It streamlines the process for all.”

The RADIX Tree’s growth since its 2013 launch has been exponential and driven by users.

“We’ve expanded largely through operator-importers inviting suppliers to join, and they, in turn, inviting their suppliers, like a social network,” said Dr Heindl. “Some have a few connections, others hundreds, adding up to 70,000 buyer and supplier users globally.”

Increasing the system’s momentum is Global Traceability’s partnership with EUTR Monitoring Organisations (MO) such as NEPCon, which operates its LegalSource due diligence system.

“This gives users the option of the complete package; the technology of the RADIX Tree to connect with suppliers and manage, store and share legality assurance data, combined with an MO’s know-how and full management service.”

[Significantly] since 2013 the PEFC has also used the system to  register and manage all its chain of custody and forest certification information.

Certified companies can use the platform to verify suppliers’ certificates live,” said Dr Heindl. “So technically, EU buyers can manage 100% of their legality and sustainability assurance via the platform.”

Dr Heindl launched Global Traceability in 2010 after a decade working in traceability and supply chain transparency, first with BASF focusing in chemicals, food and feedstuffs, then an IT company.

“Our criteria for Global Traceability’s target market was that it should require new supply chain solutions and offer scope to quickly build critical mass,” said Dr Heindl. “Timber satisfied both; available solutions were inadequate, inflexible and expensive and need was driven by the upcoming EUTR.”

Key to the practicality and user-friendliness of the RADIX Tree system was that it was developed with industry.

“We worked with BHB, the German DIY, building and garden products trade association,” said Dr Heindl.  “They had a joint environmental working group   and were focused on ensuring EUTR due diligence compliance across their wood products offer; from sawn timber, to garden furniture. They were rivals, but didn’t see legality assurance as an area to compete. They felt the whole market needed a supply chain data highway and the best way to build one was through cooperation. It was then up to each driver how effectively they used it!”

So the RADIX Tree took root (which is what ‘radix’ means in Latin).

The initial version was operational early 2012 and, by the introduction of the EUTR in March 2013 it had already 1000 users ­– although most early adopters were paper and board suppliers and buyers, with some, like consumer goods giant Unilever, also using it in its other capacity, besides managing legality assurance, to document sustainable sourcing.

Growth in use among EU operator-importers in the mainstream timber industry has been in line with the increasing rigor of EUTR enforcement and companies’ mounting realisation of the administrative burden and cost of due diligence.

Their use of the system has also evolved.
“Some start by using RADIX Tree and our standard set of parameters and processes to collate legality assurance information, but continue to manage due diligence externally,” said Dr Heindl. “Then they request more support and advice and move management of due diligence more onto the platform. Its beauty is having the flexibility, through easy configuration, to reflect their due diligence system in its environment. Likewise we can adapt standard due diligence questionnaires to include user specific aspects, such as internal product codes. Next users may upgrade to the full platform and MO due diligence service.”

Global Traceability also provides different options for verification of supplier information and illegality risk assessment.

“Buyers can do it themselves, or we can advise and help make judgements,” said Dr Heindl. “We have a team monitoring key parameters; from producer country forestry legislation, to developments in CITES and the Corruption Perceptions Index.”

Again, he added, companies may also upgrade to ‘the optimal solution’ for risk assessment, combining the RADIX Tree with services of a MO such as NEPCon’s LegalSource system.

Naturally a key consideration for prospective RADIX Tree users is security of sensitive supply chain data, but Global Traceability is clearly confident about it.

“We use a certified data hosting centre, with the guarantees that provides,” said Dr Heindl. “And users never see beyond tier one suppliers.”

The cost to buyers of using the RADIX Tree depends on supplier relationship number; the more they have, the lower the per supplier fee, starting at €20 per month for one, rising to €150 for 20 and so on.

Suppliers pay a ‘modest’ set annual subscription to be on the system.

 “Most are effectively obliged to use the platform as buyers write it into contracts, but few object, as most see the administrative benefit to them too,” said Dr Heindl. “Clearest evidence of this is that some proactive suppliers have initiated   adding their legality assurance and sustainability data without being invited by customers. It’s potentially a valuable marketing tool for them and we see more doing this in the future.”

Another aspect of the platform Global Traceability anticipates growing in use is its shipment tracking facility.

“This is generally used on an industry standard, batch level, but can potentially provide individual item traceability to the stump,” said Dr Heindl. “So users potentially have a centralised repository for all product shipping and supply chain data, as well as EUTR compliance and proof of sustainability information.”

Going forward, RADIX Tree promises to become an even more versatile and comprehensive tool for the global timber and forest products sectors simultaneously to ensure and demonstrate they are sourcing legally and sustainably and to manage supply chains.

Further ahead, RADIX Tree may evolve for use by buyers and suppliers with other timber market legality requirement systems, notably the US Lacey Act, Australian Illegal Logging Prohibition Regulation and Japan’s Goho-wood system.

Probably more imminent will be addition of a graphical interface with satellite forest monitoring systems as a further legality due diligence and sustainability assurance tool.

Meanwhile, RADIX Tree user numbers continue to grow organically at a constant rate and Dr Heindl sees that continuing.

“Adding to our impetus is growing commercial overlap between buyers and sellers on the platform, with new users now finding 40-60% of trading partners already there,” he said.

Global Traceability also has relatively untapped potential in some key markets, including the UK.

“In fact the UK is on our priority list, as it has a good EUTR enforcement structure, but no common system or standard solution in place which can drive up due diligence efficiency and effectiveness and reduce cost,” said Dr Heindl.

Watch: An introduction to RADIX Tree