MSC - Marine Stewardship Council Consultation Document:
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1 MSC - Marine Stewardship Council Consultation Document: Consultation Dates: 11 September 26 October 2013 MSC Contact: Chelsea Reinhardt Executive Summary FOR CONSULTATION This paper provides an update on the MSC Online Transaction Solution (MOTs) pilot project and a chance for stakeholders to give feedback on the initiative. Through developing a central database to collate and cross check volumes of MSC seafood purchased and sold in supply chains, this project aims to: Improve the integrity of the Chain of Custody (CoC) particularly in regions where companies process large volumes and maintain paper-based records. Eventually allow CoC audits to be streamlined and reduced, particularly for low risk companies or those not transforming products. The MOTs database will complement, not replace, the existing CoC requirements, but will improve the overall robustness of the CoC system and will allow audits to be more effective at detecting issues of mislabelling or substitution. The system will ensure that sales and purchases of MSC products are validated between suppliers/ customers, and will give certifiers the full picture of a company s trade in MSC products before an audit. The MOTs system is currently in development and will be piloted with 3-4 supply chains in Additional consultation and a thorough review of the pilot performance will be conducted in 2014 before determining whether to eventually implement the system across the full CoC programme. Purpose This paper seeks preliminary stakeholder feedback on the MSC Online Transaction Solution (MOTs) pilot project. Feedback is requested to help identify key success factors and risks for the project, and to get input on the proposed pilot approach and governance structure. This project is in the design stages currently; and extensive stakeholder consultation will be conducted as the pilot develops. Background The MSC currently has over 2400 CoC certificates in more than 60 countries across the world, representing over 30,000 certified sites. As the CoC program continues to expand, the MSC is looking to strengthen the rigour of the system to ensure it remains a scalable, best-practice traceability standard. The existing CoC standard relies on a one-step-up and one-step-down traceability model, where each CoC-certified company must be able to trace and identify MSC-certified products from raw material input through to point of sale. During a CoC audit, the certifier will test the system through conducting a traceability test and mass-balance on a sample of products. However, in some cases CoC audits have a limited ability to detect cases of mislabelling or substitution, due to the following factors: An audit may only look at a sample of records for MSC products, so the auditor cannot verify if they are being shown the full picture of the company s sales and purchases of MSC products Traceability and mass-balance records in some regions can be prepared before the audit (due to large volumes of product handled and paper-based record systems) There is no mechanism to validate transactions between a supplier and buyer, particularly in cases where companies have different certifiers To address these limitations and to enable the CoC program to operate more efficiently, the MSC has consulted on various options to integrate technology solutions into the CoC program. The MSC conducted a stakeholder survey in April 2012 and consulted with the Stakeholder Council in November 2012 and the Technical Advisory Board in December
2 2012. These groups were asked to advise if the MSC should move ahead with a pilot IT project that would either: Option 1: Provide full online batch traceability for MSC-certified products this would enable products at the end of the chain to be traced back to an incoming batch, and would require each company to enter data at each point of processing or handling Option 2: Capture sales/ purchase transactions of MSC-products only (i.e. transaction volume, product form, date, etc.) on a periodic basis. This system would not track specific batches through the supply chain or provide batch traceability within each company s processing operations Stakeholder feedback expressed the strong view that the MSC, as a voluntary certification program, should not implement an online batch traceability system (Option 1) but should allow operators to track batch traceability in any way they choose, as per the current CoC standard. This is due to the fact that many CoC-certified companies already have various batch traceability systems in place, and online systems may not be feasible or cost effective for many operators (particularly in developing regions). Furthermore, many companies handle only a small number of MSC products, so implementing an online traceability system specifically for MSC products is not feasible However, stakeholders did support the MSC moving ahead to develop a pilot project for an online transaction solution (Option 2); recognising that this type of solution is critical to help ensure the continued integrity of the CoC program. Based on this consultation process, the MSC has therefore made the decision to move ahead with designing a small-scale pilot project for the MSC Online Transaction System (MOTs). MOTs Solution Overview The MSC Online Transaction Solution (MOTs) will collect volume-only sales and purchase transactions of MSC certified products from CoC-certified companies into a centralised database (no financial or pricing information will be included). CoC-certified companies will enter data on a periodic basis (timelines to be defined), and can use a number of alternatives for upload into the system: online webform, Excel uploads, and an API for integration with internal IT systems. Transaction data will be stored in a secured database with clearly set user-profiles to ensure that each company s data is visible only to that company, their certifier, the MSC, and ASI (the MSC s accreditation body). Data confidentiality and security will be a top priority throughout the development and implementation of the MOTs system, and extensive consultation will be conducted on this topic. Essential data will cover the volume of the transaction, the species, and details of its origin as MSC product. Additional data such as sub-catch area, catch method, fishery, vessel number, etc. can also be collected in the system by batch on a voluntary basis, as required by specific supply chains or customers. Before an audit, certifiers will be able to download data that shows the client s full volumes of MSC product bought and sold by species, and identify any particular areas of concern (e.g. un-validated purchases). The system will not track yield rates for internal processing, but some yield thresholds may be incorporated into the reporting of data for specific products. Accessing data from MOTs will allow certifiers to be much more targeted and effective with audits, and may enable certain companies to be audited remotely. Considerations MOTs has the potential to transform the CoC system to make it more robust, and at the same time more efficient. Under the current CoC system, there is no reconciliation of transactions across the supply chain and no requirement for companies to record all purchases or sales in MSC products. This issue is particularly critical in regions such as China, with high processing volumes and paper-based record systems, where auditors may not be presented with the full-picture of a client s trade in MSC products before an audit. Furthermore, without validation of purchases between suppliers and customers, it is possible for a company to use the same legitimate purchase records to justify several Consultation Document: MSC Online Transaction Solution (MOTs) Pilot 2
3 different sales of MSC products. This is a key integrity risk with the existing CoC system and one that would be addressed by MOTs. Potential benefits of MOTs: MOTs will strengthen the CoC system and enable better detection of mislabelling through the following main ways: Requiring transactions to be validated between suppliers and buyers at each link in the chain Providing certifiers with key information on the total volume of MSC products bought/ sold by their client before an audit, and any potential areas of concern this will make audits more effective at detecting/ deterring integrity risks Providing visibility into volumes of MSC product flowing through supply chains and enabling high-level monitoring and analysis of high-risk areas Aside from these integrity benefits, MOTs will also help to modernize the CoC program in a broader sense. This project will allow the MSC to utilise information technology and datasharing to improve audit efficiency and supply chain transparency. Potential benefits for supply chain companies include: Improved confidence in the MSC CoC system to ensure only genuine certified products are sold as MSC (protection for brands and their investment in the MSC) Reduced costs and effort for CoC certification: o Shortened & more focused audits, reduced audit frequency o Potentially eliminates the need to manage supplier lists or detailed scope information via certifiers o Low-risk companies using MOTs could have remote audits or no audits (i.e. traders, box-in/ box-out distributors, small operators selling to consumers) Supply chain visibility: Additional data can be carried through the supply chain e.g catch area, sub-catch area, catch method, vessel number The auditing process and CoC standard will both be revised to account for the impact of MOTs, including any analyses that can be provided to certifiers before an audit. The ultimate aim is for MOTs to enable CoC audits to be more targeted, less frequent, and less costly for supply chains. Risks and Concerns: Although the MOTs solution will help to modernise the CoC programme and ensure it remains credible and scalable in the future, there are a number of important considerations. Data security: Companies and CABs have legitimate concerns about data confidentiality and security. The MOT system will have to ensure the highest level of data protection before companies will be comfortable using it. Data uploads: Although there will be three methods to enter data into the system (via web-form, Excel upload, or web-services interface), the entering of data needs to be as easy and quick as possible. It is proposed that companies will enter data on a periodic basis (such as monthly, or quarterly), and these timeframes could be flexible depending on the type of company. Web-forms should be accessible for even very small companies, but potentially a mobile phone application (or similar) will be needed for any company without internet access. Interaction with other traceability systems: Companies want to minimise duplication with other traceability systems currently in use. MOTs will capture data only on sales and purchase transactions, but it still must align with other systems where possible. The MSC is working with several leading traceability systems around the world to identify opportunities to align systems and data fields. Batch traceability: In accordance with the guidance given to MSC by stakeholders, MOTs is not being developed as a full batch traceability system across the supply chain. It is therefore not possible to follow all certified outputs from a certificate holder through Consultation Document: MSC Online Transaction Solution (MOTs) Pilot 3
4 to their related inputs. This means that some of the more comprehensive functionality possible in a batch traceability system, such as automatic calculation of yields and alerts of problems relating to this, is not included in MOTs. Following the pilot, stakeholders will again be consulted and if their advice is to investigate batch traceability such functionality could be considered on the same platform in the future. Additional risks and impacts will be collected during the pilot development and through stakeholder consultation, and will be addressed as the project develops. Pilot project and timeframe: The MSC is currently developing a small scale pilot of the MOTs system, which will be trialled for 4-6 months beginning in Consultation and evaluation will be carried out during the entire pilot phase, both with participating companies and a broader set of stakeholders. In addition to the core group of pilot companies, who are giving regular input into the system design, the MSC has also convened a MOTs Advisory Committee to provide strategic oversight on the project. This group is composed of representatives from the MSC s Board, Technical Advisory Board, Stakeholder Council, certification bodies, ASI, ASC, and other key seafood companies across a variety of sectors. Proposed MOTs pilot approach and timelines: Consultation Questions 1. Will the MOTs system strike the right balance between improving integrity of the CoC system without requiring supply chains to provide full traceability data by batch (i.e. at every step of processing, transport, etc.)? 2. What other risks or considerations should we be aware of during the pilot phase? 3. What other benefits could the system deliver to supply chain companies, CABs, MSC and other stakeholders? 4. Are there additional stakeholders that should be actively consulted during the pilot development? 5. Do you have any other comments on the project? 6. For certifiers: How do you see information from MOTs being used during the audits, and how could it make audits more effective or efficient? Who can comment? This consultation is open to any interested stakeholders Consultation Document: MSC Online Transaction Solution (MOTs) Pilot 4
5 Next steps Further consultation will be conducted on the pilot project in 2014 once the pilot implementation phase has begun Further Information Please contact: Chelsea Reinhardt Senior Supply Chain Manager Supporting Documentation Consultation Document Background Consultation Document: MSC Online Transaction Solution (MOTs) Pilot 5
* 3. Please confirm you agree to your responses being made available (unattributed) to the public on the MSC Program Improvements website?
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