The EUDR, the EU Regulation on deforestation-free products, raises the management of supplier data, proof of origin, geolocation information and due diligence processes to a new level for companies producing, importing or exporting wood and wood-based products. Companies in the wood industry must not only prove that their products are made from legally produced raw materials, but also that they are not linked to deforestation or forest degradation occurring after 31 December 2020.
Why did EUDR compliance represent a business risk?
A Hungarian wood product(s) manufacturing company had to comply with its EUDR operator obligations within a short timeframe. The urgency of the project stemmed from the fact that, under Regulation (EU) 2023/1115 on deforestation-free products — following the 2024 postponement — 30 December 2025 was the applicable* deadline for large and medium-sized operators. The company’s complex wood raw material supply, relying on multiple sources, the numerous mixing points during production, and its export-oriented business model together created a risk profile that required a structured response.
The key question was: how can regulatory compliance become a tool for reducing business risk?
Challenge
A Hungarian wood product(s) manufacturing company had to comply with its EUDR operator obligations within a short timeframe.
The complex, multi-source supply of wood raw materials,
the numerous mixing points during production, and
the export-oriented business model
together created a risk profile that required a structured response.
Solution
RSM started the project with a structured gap analysis. Based on its findings, we:
- developed the EUDR compliance processes and their internal documentation,
- built the supplier due diligence system and data collection structure,
- prepared the necessary proposals for amendments to internal policies and responsibility matrices,
- and provided guidance on fulfilling IT system-based data reporting obligations.
Result
The company established an EUDR-compatible data and process structure.
- It reduced the documentation risks related to export processes,
- strengthened supplier communication,
- and created a long-term, workable compliance system
without unnecessary additional administration.
The client: an export-oriented Hungarian wood product(s) manufacturing
The client is a Hungarian wood product(s) manufacturing whose production is — naturally — primarily based on wood raw materials. The company sources raw materials partly in the form of pre-processed boards from sawmills and partly processes them in-house. The latter results in the mixing of raw materials of different origins at several points in the production process. By-products remaining from production are sold on in the form of briquettes, which creates a separate material flow and, with it, a separate traceability obligation.
The wood industry is one of the sectors affected by the EUDR: the regulation imposes mandatory traceability and risk assessment requirements on wood-based products placed on the EU market. Due to the company’s export-oriented business model, EUDR compliance is not merely a legal obligation, but also a direct business requirement.
For wood manufacturers, managing the transition from the EUTR to the EUDR is particularly important. While the EUTR primarily focused on preventing illegally harvested timber from being placed on the market, the EUDR also requires compliance with deforestation-free criteria and the submission of an electronic due diligence statement.
Background to the challenge: complex wood raw material supply and EUDR obligations
The project was both a regulatory compliance and business risk management task. A specific feature of the production process is that the route of raw materials from source to finished product can become difficult to trace at several points: wood raw materials of different origins are mixed on the production line, by-products continue through a separate sales channel, and the company’s direct influence over both foreign and domestic suppliers is limited, while the market is concentrated.
As an operator, the company is responsible for the transparency of its own supply chain — while the availability and quality of the required data largely depend on the willingness of its partners to cooperate. The stakes are high: if customs procedures are obstructed due to deficiencies in EUDR documentation, this may directly threaten the continuity of sales and delivery processes.
The timing of the compliance project was also driven by the EUDR application deadlines. According to the current EU timeline, the application obligation applies to large and medium-sized operators from 30 December 2026, and to micro and small enterprises from 30 June 2027.
In Hungary, NÉBIH publishes practical information on a dedicated EUDR webpage, and the use of the EUDR IT system also plays a key role in domestic implementation.
Project objective: developing a workable EUDR compliance system
The objective of the project was to develop an EUDR compliance system that is workable in day-to-day operations and:
- ensures full traceability of wood-based products from raw material sources to finished products,
- reduces compliance and documentation risks related to the supply chain,
- and enables the company’s export activities to continue smoothly after the EUDR enters into application;
- supports the structured collection, verification and organisation of data required for EUDR due diligence statements,
- and prepares the company for the electronic data reporting obligations to be fulfilled in the EUDR IS / TRACES NT system.
The focus was not merely on ticking regulatory boxes, but on developing an operating model that is also efficient from a business perspective, scalable in the long term and maintainable with internal resources.
RSM’s solution: gap analysis, due diligence and IT preparation
RSM did not arrive with a template-only solution: the project began with an in-depth mapping of the company’s specific material flows and risk profile. This provided the foundation for the entire consulting process.
In the first phase, a detailed gap analysis was carried out to identify existing processes, data and documentation gaps, and the critical risk points from an EUDR compliance perspective. The diagnosis made it clear where intervention was required and what depth of change was justified.
Based on the results, RSM worked in parallel across four areas:
- Development of compliance processes: we translated EUDR requirements into documented processes tailored to the company’s existing operations.
- Supplier due diligence system: we built the data collection structure and the risk assessment framework, including control mechanisms that can be applied even where direct influence over suppliers is limited.
- Internal policies and responsibility matrices: compliance responsibility is based on documented processes rather than individual knowledge.
- IT integration and traceability: we provided practical guidance on feeding the required data into the IT system, including TRACES, thereby reducing the risk of data reporting errors.
Throughout the project, the guiding principle was that the system developed should not only meet current legal requirements, but also remain flexible and adaptable without creating unnecessary administrative burden.
Interested in EUDR readiness support?
Key challenges during EUDR preparation in the wood industry
Complex material flows and the limits of traceability
During production, wood raw materials from different sources are mixed at several points in the processing workflow, while the by-products generated enter a separate sales chain. This material flow structure conflicts with the EUDR’s traceability requirements: traceability is not only a technical issue, but also a complex process and data management challenge for which the regulation does not provide a ready-made solution
Operator responsibility with limited direct influence
The EUDR places a significant part of the compliance responsibility on the operator — in this case, the manufacturer — while EUDR-compatible data provision largely depends on suppliers’ willingness and capacity to provide the required data. The control system therefore had to be designed in a way that remains reliable, verifiable and sustainable even in the absence of direct influence.
Direct business exposure to compliance risk
Due to the export-oriented business model, deficiencies in EUDR documentation may have immediate commercial consequences. Given the risks arising in customs procedures, deadlines and accuracy were treated as top priorities throughout the project. The system developed had to be operational before disruptions to export processes became a real threat.
EUDR data quality and the management of geolocation information
One of the critical points of EUDR compliance is that the company needs not only supplier declarations, but also structured, verifiable and item-level retrievable data. In the case of wood raw materials, this is particularly complex, as data related to origin, legal harvesting, deforestation-free status and the product-related due diligence statement may be generated at several supplier levels. For this reason, particular attention was paid during the project to data quality, the availability of geolocation information and the development of a data structure that can be used in the EUDR IS.
Results: a more transparent supply chain and reduced export risk
As a result of the project, the company’s EUDR-compatible data collection and risk management system covers the full scope of critical wood raw material procurement. The due diligence framework developed, together with the structured supplier and customer communication process applied throughout the project, is capable of substantially reducing the proportion of incomplete or incorrect data submissions. Compliance processes are now based not on individual expertise, but on a documented and reproducible system.
The documentation risks related to export processes have become manageable: the company fulfils its EUDR obligations that are critical from a customs perspective within a transparent and verifiable structure. Through internal policies and responsibility matrices, responsibilities have been institutionalised, reducing operational risk while strengthening trust with partners and customers.
EUDR consulting and readiness support with RSM experts
EUDR compliance is not a one-off project: it requires a system that is tailored to the company’s specific material flows and remains reliable even as regulatory expectations evolve.
RSM’s EUDR consulting is not based on a template solution, but on a detailed diagnosis and the client’s specific risk profile.
RSM’s EUDR consulting and readiness service provides practical support to wood industry, agricultural, trading and manufacturing companies for which EUDR compliance is not only a regulatory obligation, but also an export, supplier and reputational risk. The service supports companies from rapid impact assessment through the development of supplier due diligence systems and internal policies to the preparation of EUDR IS / TRACES data processes
Request an EUDR readiness assessment
*At the time the project was prepared, the timing of EUDR compliance was determined by Regulation (EU) 2023/1115 and its amendment adopted in 2024, under which 30 December 2025 was the applicable application deadline for large and medium-sized operators. Although the EU legislator subsequently amended the deadline, the urgency of the project resulted from the regulatory environment in force at the time, the time required to establish the necessary due diligence system, and the business risks associated with non-compliance.
