Guidelines For Implementation of Chain of Custody for Certification

The Malaysian Timber Certification Manual prepared for Malaysian Timber council (MTC)
Part II
Guidelines For Implementation Of Chain Of Custody For Certification
31.03.97

Table Of Contents

1.0 Introduction
1.1 Background
1.2 Forest Management Certification
1.3 Product Certification - The Chain Of Custody
1.4 Objectives

2.0 Requirements Chain of Custody Certification
2.1 Organization and Training
2.2 Purchasing
2.3 Product Identification And Traceability
2.4 Process Control
2.5 Handling, Storage, Packaging And Delivery
2.6 Records

3.0 Best Practice Guidelines
3.1 Organization and Training
3.2 Purchasing
3.3 Product Identification And Traceability
3.4 Process Control
3.5 Handling, Storage, Packaging And Delivery
3.6 Records

4.0 Assessment Procedures
4.1 Pre-assessment
4.2 Main Assessment
4.3 Corrective Action Requests (CARs)
4.4 Reporting, Peer Review, Certification and Registration

5.0 Monitoring for Compliance

6.0 Cost Guidelines

1.0 INTRODUCTION

1.1 Background

A Pilot Study on Timber Certification in Malaysia agreed by a Joint Working Group between the governments of Malaysia and Netherlands was implemented by SGS (Malaysia) Sdn Bhd under a contract with, the Malaysian Timber Council (MTC). The main aspects of the Pilot Study were assessments of forest management of Terengganu, Selangor and Pahang and several chain of custody audits. The Pilot Study forest management assessments were undertaken against the requirements of the Malaysian Criteria, Indicators and Management Specifications for Forest Management Certification (MC&I), dated 17 August 1996. In addition, the Terms of Reference for SGS Malaysia included the preparation of a Manual clearly describing both Forest Management Certification and Product Certification, in order to provide a model for others to follow.

Certification is a means to demonstrate a quality forest management system which is consistent with Malaysia’s commitment to achieve the ITTO’s year 2000 objective of Sustainable Forest Management. Forest management and chain of custody certification enable greater market access to Malaysian exporters of timber products derived from certified forests, in markets where certification is demanded.
 

1.2 Forest Management Certification

With the current global concern over deforestation and the associated environmental affects, consumers of timber have voiced their desire that producers provide timber in a manner which does not contribute to further exploitation of the remaining forests. Consumers want to be assured that the timber which they purchase has been produced through sound forest management and ecological principals. There are a growing number of environmental conscience consumers who do not want to contribute to : deforestation, excessive soil erosion, permanent loss of habitat, destruction of endanger species and so on, through their purchases of wood products.

How does a consumer know that the wooden furniture set he/she is buying is from a well managed forest ? Certification and environmental labeling provides that mechanism. The first component of certification is the assessment of forest management practices and the second is product certification or "chain of custody" assessment.

Basically, certification of forest management is a system whereby a respected independent party can verify in a written statement (or certificate) that the timber product to be purchased, originates from a producer which adheres to accepted practices of forest management as defined by the certifying body. International standards are already in place for general quality management systems such as ISO 9000 while ISO 14001 has recently been adopted for environmental systems. There are ongoing discussions on incorporating ISO 14000 standards for use in forestry although this has not yet been universally accepted. The lead to develop a global standard for forestry has been taken by the Forest Stewardship Council (FSC) which has issued international Principle and Criteria for forest management (FSC 1995). FSC functions as an international accreditation body to evaluate and monitor forest certification bodies and provides an FSC label for use by accredited organizations. The SGS QUALIFOR program holds FSC accreditation.

The International Tropical Timber Organization (ITTO) has established general criteria for the measurement of forest sustainability (ITTO 1992a). ITTO further developed guidelines for the sustainable management of natural and planted tropical forests as well as the conservation of bio-diversity (ITTO 1992b, 1993, 1993a). Although ITTO’s criteria and guidelines were developed for tropical forests they are quite similar to that of FSC. ITTO has been actively reporting on the development of forest certification, but the organization does not evaluate, accredit or monitor individual certifying bodies nor does it provide a system for certifying forest management or labeling products .
 

1.3 Product Certification - The Chain Of Custody

The function of certification for the chain of custody is to provide for environmental labeling to identify to the consumers that the of wood products to be purchased are actually derived from forests which have been certified. The chain of custody system allows for tracking of forest products from :

• the forest transport,
• to primary processing,
• from primary processing to secondary processing
• and finally to trade and retail outlets where it reaches the consumer.

1.4 Objectives

The objective of the Malaysian Timber Certification Manual is to clearly describe the requirements and assessment process for both forest management and chain-of-custody, in order to provide a model or reference guide for others to follow during the on-going implementation of certification in Malaysia.

This Manual which is divided into two parts will provide a reference guide for the on-going implementation of certification in Malaysia. Part I details the key elements necessary to implement sustainable forest management and also describes the general process of certification while providing an estimate of the direct costs (in man-days) of forest management certification. Part II details the key elements necessary to implement an acceptable chain of custody system for wood processing companies. Part II also describes the general process of chain of custody certification and provides an estimate of the direct costs (in man-days) for chain of custody assessments.

This Manual "The Malaysian Timber Certification Manual - Part II" outlines actions required to achieve a quality chain of custody system to meet international certification standards.

The requirements for chain of custody certification outlined below and summarized in Figure 1, are consistent with the SGS QUALIFOR program.

The objective of the chain of custody is to ensure that the product bearing a label is produced from certified sources or materials. Chain-of-custody procedures must be implemented at all key points where the product undergoes transfer of title or is affected significantly by manufacture. The organisations involved in a certified chain-of-custody shall address each of the following issues :

1. Organization and training.
2. Purchasing.
3. Product identification and traceability.
4. Process control.
5. Handling, storage, packaging and delivery.
6. Records.

2.1 Organization and Training

• Defined responsibilities must be clearly understood by those members of staff to whom that activity has been allocated.
• The assessed organization shall appoint a management representative who, irrespective of other responsibilities, shall have defined responsibility and authority for ensuring that the chain-of-custody is both implemented and maintained.
• The assessed organization shall ensure that all personnel carrying out tasks related to this certification scheme are qualified to carry out their assigned tasks on the basis of: -

• Appropriate education
• Training
• Experience

• Training and experience records shall be maintained, appropriate to the scale of the operation.

2.2 Purchasing

• The organisation being assessed must have documented procedures for the purchasing of material which allows for easy identification of certified and non-certified sources.
• Procedures exist for the selection of suppliers of certified material based on their ability to meet the requirements of the organisation to provide certified material.

2.3 Product Identification And Traceability

• The organisation being assessed shall establish and maintain procedures, appropriate to the scale of the operation, for identifying product from particular sources, shipment, bills of lading or other such batches.
• Individual batches and/or product shall have a unique identification.
• This identification shall be recorded.
• In the case of continuous processes such as pulp and plywood, certification may be applied on the basis of the percentage of certified material in the product.

2.4 Process Control

• The organisation being assessed shall identify all those production processes which are involved in the use of, and manufacture from, timber and wood based materials derived from certified sources.
• The organisation shall ensure that incoming goods are not used or processed until such time as they have been inspected or otherwise verified as conforming to the requirements of chain-of-custody.
• The organisation being assessed shall establish and maintain records which give evidence that the material has been inspected prior to use.
• The organisation shall only use raw materials derived from certified sources for the manufacture of products that are to be labelled as certified.
• Documented procedures shall be developed to control these activities.

2.5 Handling, Storage, Packaging And Delivery

• The organisation being assessed shall establish, document and maintain procedures, appropriate to the scale of the operation, for the controlled handling, storage, packaging and delivery of product.
• Secure storage areas shall be provided that prevent materials derived from certified sources and those from non-certified sources from becoming mixed or confused.

2.6 Records

• The organisation being assessed shall establish, implement and maintain procedures for the identification, collection, indexing, filing, storage, maintenance and disposition of records of its activities appropriate to the scale of operation. Supplier records shall be a key element of this process.
• All records shall be legible and identifiable for the product involved.
• Retention times for records shall be defined and recorded. These must be adequate for the purpose and shall take notice of any legal requirements.
• Records must be sufficiently comprehensive to make it possible to trace timber or wood based product back to the source of origin.

3.0 BEST PRACTICE GUIDELINES

This section provides additional guidance for each of the chain of custody requirements, to assist organizations in meeting certification requirements. These guidelines are based directly on the corresponding elements of a quality management system compatible with the requirements of the ISO 9000 standard.

3.1 Organization And Training

• All staff know and understand their specific responsibilities as defined within the organization’s policy.
• Responsibilities are defined clearly in published job descriptions.
• A published organization chart exists.
• Training and experience records are maintained and up to date.
• Individual members of staff are aware of their responsibilities under the certification scheme.

3.2 Purchasing

• The organisation being assessed has clearly defined purchasing procedures, appropriate to the scale of the operation.
• Suppliers of certified material to the organisation being assessed are selected on the basis of their ability to meet the requirements of certified product derived from well-managed sources. A list of acceptable suppliers has been established and is maintained. Adequate records are maintained of the material purchased and supplier performance.
• Purchasing documents contain adequate information clearly describing the material ordered, including: -

• Type, class, grade of material.
• Required status with regard to certificate of origin and chain-of-custody.
• Title or other positive identification.
• Forest management certificate number.

All purchasing documents are reviewed and approved prior to release to suppliers.

3.3 Product Identification And Traceability

• Written procedures and work instructions, appropriate to the scale of the operation, have been prepared and implemented covering the organization’s system for product identification and traceability through the production process.
• All appropriate product carries a unique identification number or other such mark. Where appropriate the assessed organisation allocates a new individual number at the time of importation onto its premises. Through this number/mark it is possible to trace the product to: -

• Source of origin.
• Original shipment and/or batch.
• Certified well managed source or sources.

Where a batch process system is utilized, a new number may be allocated at the end of the production run. Through production records, it is possible to trace back from this number to the raw materials used in the production run.

3.4 Process Control

• Written procedures and work instructions, appropriate to the scale of the operation, have been prepared and implemented which cover all the key production processes.
• Accurate production records are kept for each batch of product processed, by which it is possible to identify materials input and goods manufactured.

• Certified raw material is stored separately from non-certified material. Production runs of certified and/or non-certified product are clearly segregated both physically and in time. Certified product is stored separately from non-certified material.

3.5 Handling, Storage, Packaging And Delivery

• Materials derived from certified and non-certified sources are stored separately.
• Product is packaged and identified in such a way that its status with regard to its origins can be readily identified.Certified product is marked in accordance with the rules governing this certification scheme.
• Written procedures and work instructions, appropriate to the scale of the operation, have been prepared and implemented covering the organization’s system for product identification and segregation during storage, packaging and delivery.

3.6 Records

The following records should be maintained:

Purchase Records.

• Customs documentation or other inspection documentation as appropriate.
• Bills of lading, and any other relevant transportation documents.
• Purchase orders, contracts, invoices and list of approved suppliers.
• Origin, nature, quantities and certification of timber and wood based products received from certified sources.
• Origin, nature, quantities and certification of timber and wood based products received from other sources.
• Goods inwards notes and records of receipt inspections.

Stock Records.

• Stock records of raw materials and finished product, including where appropriate annual stock taking results.

Production Records.

• Job cards, production orders and other milling or processing records.
• Volumes and nature of raw materials consumed.
• Details of products manufactured and quantities produced.
• Batch numbers and records.
• Wherever possible sample conversion ratios should be assessed in order to confirm that no uncertified material is entering the production process.

Sales Records.

• Sales orders received by the organization being assessed.
• Details of products and quantities sold, paying particular attention to descriptions provided both by and to the customer.
• Publicity material used and claims made by the assessed organization concerning the sources of origin of the materials sold, and the certifications held

The assessment process for chain of custody is extremely similar to that for forest management assessment. The only differences are the following:
 

4.1 Pre-assessment

This is not generally undertaken for chain of custody assessment, unless specifically requested by the client
 

4.2 Main Assessment

Forest management and environmental knowledge is not necessarily required by the Assessor(s). There is not necessarily a requirement for stakeholder consultation. The site visit specifically includes:

• a review of all pertinent records and reconciliation of the findings, including spot checks of the product on the ground
• inspection of the mechanisms for identification of certified product and separation from non-certified product
• reconciliation of the documented procedures with actual practices

Opening Meeting.

At the commencement of the Main Assessment, an Opening Meeting is held with the client which is chaired by the Lead Assessor. To assist in this meeting the following checklist is used by the Lead Assessor:-

1. Introduction to the Assessment Team
2. Circulate Attendance Sheet to record attendance
3. Explain the Document Review
4. Explain the Site Assessment Process
5. Confirm business confidentiality
6. Explain Major and Minor CAR's
7. Agree itinerary
8. Invite the attendees to the closing meeting

Site Assessment.

The Site Assessment commences following the agreed itinerary and the Assessors are accompanied by the client's representatives. Assessors shall consult the personnel working in the client's organisation who are responsible for following the procedures being audited. This is in order to ascertain the level of understanding of the procedures and management plans, and the level of adherence to the procedures.

Objective evidence shall be collected to substantiate the adequacy of compliance both with the client's procedures and the system specification. Compliance or non-compliance with the client's procedures shall be recorded on the Main Assessment Checklist along with any notes regarding observations or non-compliance with the System Specification. Where non-compliance are discovered, these shall be pointed out to the client's representative at the time to ensure that there are no surprises later should they result in CAR's being raised.
 

Final Closing Meeting.

Following completion of the Main Assessment, the Lead Assessor shall convene a Closing Meeting with the client's representatives. To assist in this meeting the following checklist shall be used by the Lead Assessor:-

1. Inform the client of the certification decision.
2. Explain Major and Minor CAR's and observations.
3. Report on CAR's.
4. Circulate Attendance Sheet to record attendance.
5. Obtain the client's representative’s signature on any CAR's.
6. Report on observations unless the client is satisfied to have them reported in the Main Assessment Report.
7. Thank the client for assistance and hospitality and congratulations if appropriate

4.3 Corrective Action Requests (CARs)

Correction Action Requests or CARs, are written requests by the certifying body to the client to address all non-compliance in the system with respect to the standard used in the assessment. CAR's raised during an assessment are categorized as either MAJOR or MINOR by the lead assessor.
 

Raising CARs.

A MAJOR CAR is raised where there is an absence, or a total breakdown, of a procedure required as part of the assessed organization’s management system. Where a non-compliance is likely to result in an immediate hazard to the quality or standard of the product or service being offered, then the CAR shall be categorized as MAJOR. MAJOR CARs raised during an assessment prevent the client from being certified.

MINOR CARs are raised when a single observed lapse has been identified in a procedure required as part of the assessed organization’s management system.MINOR CAR's raised during an assessment do not preclude the organisation from being registered.

The CAR's shall first be signed by the Assessor, who shall then obtain the organisation representative's signature on the CAR to indicate both acknowledgement and understanding of the non-compliance details by the organisation and proposed close-out date. On both Main Assessment and Surveillance, copies of the CAR's shall be left with the organisation representative. The originals shall be retained by the Assessor.
 

CAR Follow-Up.

Whether the MINOR CAR was raised during an assessment or on a surveillance, the organisation shall respond in writing within 3 months detailing the actions taken to prevent recurrence of the problem, the effectiveness of the resulting action taken by the organisation must be verified at the next surveillance visit. At that visit, the assessor shall decide whether, or not, appropriate corrective action has been taken. The action taken must have been implemented for a sufficient period of time for adequate evidence to be available to the Assessor when making this decision.

MAJOR CAR's, raised during an assessment: preclude the organisation from being registered. The assessor must be notified of the action taken within 1 month of the report issue date. Failure to respond will eventually lead to a complete reassessment being necessary prior to registration. The action, as notified by the organisation, shall be verified by the Assessor within 2 months of the CAR being issued. Any extension to this time limit must be authorised.

MAJOR CAR's, raised on surveillance or reassessment: are regarded very seriously considering that the organisation is already a Registered Organisation. The certifying body must be notified of the action taken by the organisation within 2 weeks of issuing the CAR. This action shall be verified by the Assessor within 1 month of issue, regardless of whether notification of action has been received or not. A follow-up date shall be agreed with the client during the original visit.

MAJOR CAR's, raised on an extension to scope: preclude the organisation from being registered for that extension to scope. The assessor must be notified of the action taken within 1 month of issue and failure to respond will eventually lead to that extension to scope being completely reassessed prior to registration. The action, as notified by the organisation, shall be verified by the Assessor within 2 months of the CAR being issued. Any extension to this time limit must be authorised.

The client organisation is required to notify the certifying body in writing of proposed corrective action or corrective action taken in the agreed time-frame. In the case of MAJOR CAR's, a follow-up visit to the organisation shall be arranged, in order to verify the effectiveness of the corrective action taken. In the case of MINOR CAR's the Assessor shall appraise the action taken at the next surveillance visit, as written, and if unsatisfactory the organisation shall be informed.
 

CAR's Closed-out.

CARs raised during an assessment must be addressed to the satisfaction of the certifying body within the specified time frame. When corrective actions have been satisfactorily implemented the assessor shall "close-out" the CAR . To close a CAR , the Assessor shall sign and date the CAR as acceptance of the corrective action taken and shall add any appropriate comments on the CAR for reference. A copy of the "closed out" CAR's shall be left with the client.
 

CARs Not Closed-Out

When no corrective actions have been implemented within the specified time period to address a CAR raised during an assessment or surveillance, the CAR is considered "not closed out". Under exceptional circumstances, an extension of the time period to address a CAR may be agreed. Failure to comply with the time-scale for closing out a MAJOR CAR will result in a reassessment being necessary. Where a MINOR CAR has not been closed out by the next surveillance visit, a MAJOR CAR shall be raised cross-referencing the original MINOR CAR. This will be followed up as described previously.

Where a MAJOR CAR raised on surveillance or reassessment has not been closed out, this is recorded in the "Acceptance of Corrective Action" panel of the CAR. The organisation is notified that the certificate is to be suspended by the issue of a Suspension/Withdrawal/Cancellation Notification.
 
 

4.4 Reporting, Peer Review, Certification and Registration.

On completion of the Main Assessment, the Lead Assessor or delegated team member, prepares an Assessment Report.

Peer review of the Assessment report is not generally undertaken for chain of custody assessment.

If no major CARs were raised and the Main Assessment Report is favorable, checked and approved. a certificate for chain of custody can be issued. The following package is then sent to the assessed organization:-

• The Certification Letter
• Main Assessment Report

1. A covering letter.
2. Main Assessment Report.
3. Copies of the CAR's, if appropriate.

1. The Certification Letter - Chain of Custody.
2. Finalized Main Assessment Report.

Certification and Registration.

When the stage has been reached where a Certification Letter has been raised, the next certificate number from the Certificate Issue Log. The Certificate Issue Log is completed, and the Certificate is prepared, ensuring that the appropriate document is used i.e. Forest Management or Chain-of-Custody.

An Assessment Schedule, defining the scope of certification, is prepared to accompany the Certificate. The information detailed must conform to the information given in the Main Assessment Report, namely in terms of, the scope of the operations assessed and also the sites and/or offices examined. The Certification Trademark Pack is sent to the client, and details of new certifications shall be registered in a directory.

A certificate is generally valid for a period of five years. Following certification, the continued compliance of the organization with certification requirements is verified by regular visits, known as surveillance visits.
 

Planning.

A Surveillance Register is maintained in order to determine when a surveillance visit is due. Surveillance can be conducted by the Lead Assessor who originally assessed the organisation or can be allocated to a Surveillance Officer, taking into account the general skills and expertise required. The surveillance visit after two and a half years, i.e. midway through the certification period, must be undertaken by a Lead Assessor.

Following allocation of the surveillance and prior to the visit, the Surveillance Officer shall obtain the following documentation:-

1. A copy of the previous Surveillance Report, or the Main Assessment Report if it is the first surveillance.
2. Any complaints or appeals which have gone on file since the last surveillance.

Frequency of Visits.

The Surveillance Officer shall contact the client to arrange a mutually convenient date for the surveillance visit. Surveillance visits are conducted once every 6 months. In order to achieve a mutually convenient date, the visits are permitted to be up to 2 months before or after the nominal date.
 

Site/Field Visit.

The surveillance shall cover that part of the organisation's Management System outlined in the Surveillance Plan. The number of working days allowed for the visit is indicated on the Surveillance Plan. To achieve this the Surveillance Officer shall arrange assistance as necessary.

Any amendments made to the System since the previous surveillance (assessment if first surveillance) shall be discussed and evaluated against the requirements of the System Standard. Should the certification requirements be amended at any time, the client will be granted a period of twelve months, from the date of notification of these amendments, to implement any required changes to their systems.

On the first surveillance, all the observations made during the original assessment shall be checked for action where action was considered to be appropriate. All Minor CAR's from the assessment or previous surveillance shall be dealt with as described in the Procedure for Corrective Action Requests.

The choice of other areas selected for auditing is influenced by:-

1. Any observations made on the previous visit.
2. CAR's raised on the previous visit.
3. Which areas were audited during the previous visit.
4. Any changes to the System since the previous visit.
5. Any complaints from stakeholders.

During the visit, the Surveillance Officer shall be accompanied by client representatives. Personnel shall be consulted who are responsible for following the procedures being audited. This is in order to determine the level of understanding of the procedures and level of adherence to the procedures.

Objective evidence shall be examined to determine the adequacy of compliance both with the client's procedures and the System Specification Standard. Documentation examined shall include current publicity and advertising material, and the use of Certification Trademarks. This is to check to ensure that there is no misrepresentation of the Certificate. In the event of any misuse of a certificate mark or misrepresentation made by a certificate holder, a CAR must be raised.
 

Surveillance Report.

Non-compliance with the client's procedures and any observations made shall be noted in the Surveillance Report. Where non-compliance are discovered, these shall be pointed out to the client's representative at the time to ensure that there are no surprises later should they result in CAR's being raised. On completion of the Surveillance visit, the client's representative's signature shall be obtained on the Surveillance Report which verifies that the surveillance has taken place. A copy of the Surveillance Report shall be left with the client.

The direct costs of chain of custody assessments comprise the professional fees for the assessors, charged on the basis of a daily fee rate, and expenses incurred for travel, meals and accommodation, which are generally charged at cost. The professional input to assess a given wood processing facility depends on both the size and complexity of the facility.

The following is a general guide to the range of the professional input in mandays required to conduct a main assessment and surveillance of smaller and larger wood processing facilities on a single site.
 

Main Assessment	Small Facility	Larger Facility
No. of assessors : No. of days desk study : No. of days for site/field visit : No. of days for report preparation : Total professional input (mandays) :	1 0 -1 1 1 2 - 3	1 - 2 1 1 - 2 1 - 2 3 - 7

 

Surveillance	Small facility	Larger Facility
No. of assessors : No. of days for site/field visit : No. of days for report preparation : Total professional input (mandays) :	1 1 0 -1 1 - 2	1 1 - 2 1 2 - 3

The initial certification of a chain of custody comprises the Main Assessment which would typically involve a total professional input of 2-3 mandays for smaller facilities and 4-5 mandays for larger facilities on a single site.

Following certification, surveillance visits to monitor compliance are undertaken at a six-monthly frequency. A certificate is generally valid for a period of five years, which would require that a total of 11 surveillance visits be undertaken during the certification period. Therefore, the total professional input over a five year certification period for a small facility would typically range from 13- 25 mandays and a large facility from 25 - 40 mandays.

The costs of certification are directly related to the size of the organization and/or the complexity of the chain of custody. There can be, however considerable economies of scale, such that the per cubic meter costs of certification are correspondingly lower in larger facilities.

It is assumed that the daily professional fee rate of the certifying body is changed over time in line with inflation, and therefore the current fee rate would need to be confirmed by the applicant.

Figure 1. Flow chart describing the essential elements required to implement a chain of custody system for product certification and labeling.
 
 

• Responsibilities of personnel defined
• Personnel adequately trained for their position
• Procedures and work instructions of key activities documented and understood by personnel
• Adequate records of key activities and production processes are documented and maintained

• Documented procedures for purchasing material and selection of suppliers
• Records of purchased material sufficient to identify : origin of material, type of material, species, quantity, certification numbers, etc.

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