Business challenge
The European Union Deforestation Regulation (EUDR) is a landmark EU law aimed at stopping EU organisations from driving global deforestation and forest degradation. It requires companies to prove their products are not linked to deforestation and commodities, like timber, coffee, cocoa, soybean, palm, oil and rubber, are legally produced. For those who don’t comply, there are severe penalties, with fines of up to 4% of annual EU turnover, the confiscation of goods and market access restrictions.
For our client, a large global retailer with very complex global supply chains, adhering to this legislation presented a number of challenges. The retailer had a very fragmented data landscape, with limited insight into where critical compliance data was housed. Data was spread across a dozen teams spanning different countries, business functions and areas like supplier management, compliance and retail sites.
The regulation itself was also subject to ongoing simplifications and clarifications from the EU, which made it difficult to establish stable requirements. And the sensitive nature of supply chain data, combined with the risks of non-compliance, meant the solution had to be failsafe. A robust data pipeline was needed to gather, validate and submit thousands of compliance records daily to the EU, while maintaining data integrity.
Beyond the technical complexities, there were also organisational challenges. With data scattered across multiple teams and geographies, establishing clear ownership and accountability was difficult. An example arose when the engineering team was asked to stop automatically correcting geo-location data, as this was seen as manipulating user input. But leaving the data uncorrected would have resulted in 300 non-compliant records being submitted to EU authorities. Resolving this required careful stakeholder navigation: the team had to identify the correct upstream data owners, then build a relationship with them, train them on what constituted a ‘bad record’ and work collaboratively to implement upstream fixes
Solution
Valcon was brought in for its expertise in agile delivery, data engineering and stakeholder management to design and operate the solution. The approach centred on creating an agile product development environment embedded in the client’s corporate structure. This allowed the team to move quickly while staying aligned to governance requirements.
The solution architecture followed traditional software engineering design principles adapted for data pipelines, which ensured the solution could be easily scaled and maintained. A key element of the strategy was about establishing direct lines of communication between stakeholders across business units and the engineering team lead, to enable swift decision-making and issue resolution.
Valcon fostered a culture of ownership, with engineers taking responsibility for different areas of the data product, which ensured quality was maintained in each component of the pipeline. The delivery approach was iterative, delivering features incrementally – first proof of concepts, before moving to wider production after securing buy-in from stakeholders, once they have full confidence in the approach.
Valcon also designed a self-testing system to address accuracy requirements, which detects and flags potential errors in the data pipeline. Combined with stringent manual testing procedures, this ensured data quality was optimum before submitting reports to EU authorities.
Benefits
The EUDR compliance pipeline is now live in production, successfully processing thousands of records daily and automatically transforming and submitting data to EU authorities. The client is 100% compliant with EU legislation, which has mitigated any risk around prosecution which non-compliance might result in. Some key benefits include:
- Pinpoint accuracy: zero errors have stemmed from the Valcon-built pipeline during go-live and ongoing operations. The only problems that have arisen have been due to upstream data sources. This demonstrates the robustness of the engineering approach.
- Stability and resilience: the data pipeline has required minimal maintenance, while it continues to meet stringent compliance requirements. This allows the client’s internal teams to focus on strategic activities rather than day-to-day pipeline management.
- Adaptability: when the EU recently passed simplification votes that will modify EUDR requirements, the client was able to quickly begin planning updates to the pipeline, confident in the solution’s flexibility and the team’s ongoing support.
Beyond the technical delivery, the client has achieved their business goal – to demonstrate responsible supply chain practices and not fall foul of the regulators. The retailer can now confidently sell products across EU member states, backed by a compliance solution that provides audit trails and evidence of due diligence, safe in the knowledge it is operating in a sustainable manner, sourcing materials in a way that protects the environment.
