Key motivations for a global traceability system
- Commercial, political and human implications of non-quality compliance of Chinese products are already perceived worldwide and are immense. Not only because of loss of revenue but also because of expected litigation notably by consumer associations.
- With globalization of trade, production and market environment are becoming increasingly complex.
The occurrence of quality and safety issues related to imports is growing accordingly with a strong negative impact on the industrial added value (between 5 and 20% of the revenue generated by Chinese exports). It is commonly acknowledged that 80% of downstream problems are generated by 20% of upstream factors, in 30% of claim situations the manufacturers could not be found.
- Solutions currently proposed by business lobbies worldwide are piecemeal and local while the issue is global. At best, this might lead to a limited compliance system, mainly if not exclusively led by international buyers.
- The appropriate approach is to combine innovative political solutions with innovative technical solutions. Therefore, a “global traceability system” is a must. Global means (a) worldwide and (b) inclusive with all the key actors involved along the supply chain. The solution is in a post-manufacturing traceability system where benefits are clearly identified for each and every actor of the supply chain.
- Support from Europe is critical to develop a truly global, transparent and accountable system of traceability. The present context also offers the opportunity for the European Union to take the initiative and play a prominent role in the design and implementation of such a global post-manufacturing traceability system, in close collaboration with the USA.
Challenge Optimum S.A. has been volved in study of the feasability of a traceability system which synopsis November 2008 is the following :
This study, carried out during 2008, focuses on the commercial, technical, legal and political feasibility of a post-manufacturing traceability system along the supply chain between the People’s Republic of China and the European Union. The traceability system would cover product quality, safety, authenticity, compliance as well as the manufacturing process, environmental impact and CSR-related issues. The study highlights the fundamentals needed for such a system to be launched, operated and sustained over the mid- to long-term.
This feasibility study was funded by the EU-China Trade Project, Beijing, to investigate possible means to strengthen Europe’s commercial partnership with the People’s Republic of China while enhancing the safety level of the products manufactured in China and distributed in Europe.
The study is based on a collection of technical specifications compiled by a group of internationally recognized experts in quality control, quality assurance, quality management and high tech marking systems (RFID, QR code, Data Matrix, bar code). These specifications were used to build a demonstration model to illustrate the collective knowledge now available on traceability systems across diverse populations of users and/or stakeholders (www.optimum.ch/tracingdemo). The demonstration model served as a benchmark for interested parties to understand how they could position themselves if such a system were to be available. The model has played a useful role in demonstrating what such a system might look like in concrete terms. It was of particular assistance in making issues clear to the different target groups which all have distinct and different requirements from a system. Four main key supply chain players were interviewed: Chinese manufacturers, international buyers, authorities (including Chinese, EU and Japanese), and consumer associations. Following feedback from a diverse range of potential users, the model was adapted so as to accord as closely as possible to the requirements of all the different parties.
The study results in the following conclusions :
- Technically, the system should be a 3rd party, international database located in an independent country with hierarchically differentiated internet access to the data dependent on the user’s profile, with a batch based numbering system based on the EPC standard and where each and every product should be tagged individually.
- Commercially, the marking cost of the products should not exceed 3% of its FOB value, making both optical and RFID marking technologies eligible for most products.
- Legally and politically, a voluntary approach may eventually result in such a proliferation of schemes that its purpose would probably be defeated. The preferred approach would be a harmonised framework agreed between the EU and the USA requiring individual product tagging.
Following the drafting of the report the methodology, finding and recommendations were extensively discussed with a Chinese specialist, nominated by AQSIQ, so as to ensure a knowledgeable channel reporting directly back to the Chinese government.
For any further information, please contact :
- Mrs Philippa Kelly, EU China Trade Project,
+86 10 8441 7096 ext. 22, firstname.lastname@example.org
- Mr David Balme, Challenge Optimum SA,
+41 22 738 13 11, email@example.com