Track & trace for Dietary Supplements

The unified Digital Track & Trace System will allow businesses to improve productivity, streamline their logistical processes, gain a greater market share and ultimately maximize earnings:

• According to a study conducted by the National Research University Higher School of Economics in August 2020, as the share of illegal circulation shrinks, legal manufacturers stand to increase their market shares and output by 5 to 50% depending on the product group.
• Businesses will be enabled to reinvent their production according to Industry 4.0 principles and Just-in-Time principles. By tracking warehouse stocks, product movements and shipments online, businesses will be able to optimise their production planning, reduce stock surpluses and improve turnaround times.
• Businesses can implement in-depth accounting at all stages of the production and logistics cycle. Many entrepreneurs do not currently receive independent data on their stock balances or goods codes at warehouses and stores. SKU tracking will pave the way for optimising costs and raising efficiency.
• Businesses will switch to e-document management (EDM). EDM radically reduces the volume of paper documents, which are still widely being exchanged by Russian companies. It also cuts business costs and improves productivity.

In December 2017, the President of Russia, Vladimir Putin, endorsed the government’s vision of a national digital track & trace system for goods to be in place by 2024. The project is being implemented as a public/private partnership without reliance on the federal budget. The government has appointed the Center of Research in Perspective Technologies (CRPT) to operate the system.

The Digital Track & Trace System employs a digital code technology based on the DataMatrix standard, which stores information about each product unit, and on cryptographic protection technology that makes it impossible to falsify a code. A unique code is applied on each product unit at production or importation (for some product groups).

Electronic Document Management ensures that each marked product unit remains traceable at all times.

In order to monitor the disposal of marked goods from circulation, a system is in place to share information that conveys any instance of the disposal of a product and its code via the fiscal data operators.

This approach ensures a complete traceability of goods, from the production line to checkout, thus eliminating the possibility of introduction of unmarked goods into a circulation cycle.
The use of digital technology also provides an opportunity to expand public monitoring mechanisms through the use of the Chestny Znak mobile app. With this app, a consumer gets to check product’s legitimacy and specifications and may direct any complaint to the regulatory or supervisory authority.

The feasible methods of applying and reading the marking codes at production will be determined based on the results of production site surveys carried out by systems integrators in conjunction with representatives of the Operators and manufacturers. In the more challenging cases, individual package form factors may have to be submitted for extra laboratory testing to determine how to apply marking codes of the required quality to a specific form factor, as well as to validate the quality of application during reading.

The feasible methods of applying and reading the marking codes at production will be determined based on the results of production site surveys carried out by systems integrators in conjunction with representatives of the Operators and manufacturers. In the more challenging cases, individual package form factors may have to be submitted for extra laboratory testing to determine how to apply marking codes of the required quality to a specific form factor, as well as to validate the quality of application during reading.

A small surface sized approximately 13 mm by 13 mm is sufficient for the application of the code to the label or the cap. The exact size and place of application can only be determined through experimental work at the enterprise.

A label printer, applicators (where labelling is required) and machine vision where the digital marks are applied at the manufacturing site. Only machine vision is required when marking codes are printed on a label by a printer. More details about the equipment, its deployment locations and process integration will arise from the findings of the production site survey.

Small businesses and microbusinesses may be able to do this via their user accounts. But if this option is inconvenient, an update or upgrade of their existing stock accounting system will be necessary to integrate it with the track & trace system account. Large and medium-sized businesses are strongly recommended to implement integration with their stock accounting and warehouse automation systems as this would greatly simplify interoperation with the GIS/TT.

After the introduction of mandatory marking, unmarked goods will be barred from crossing the customs border into the Russian Federation. Do marking codes have to be applied to imported goods at the manufacturing site or at the customs warehouse?

• An Enhanced Qualified Electronic Signature, which can be obtained from a certification centre accredited with the Russian Ministry of Communications and Mass Media;
• A 2D barcode scanner to read Data Matrix codes;
• An online cash register for retail sales (you may need to update the firmware);
• Document exchange will have to be configured with the aid of the electronic document management operator to be able to accept goods into the warehouse;
• When operating the stock accounting programme, the economic agent may integrate it with their user account in the track & trace system.

The cost of the track & trace service for marked goods (generation and provision of a code/storage of information on marking code transfers between legal entities per product unit) was approved by Executive Order of the Russian Government No. 577 of 8 May 2019 and amounts to a flat RUB 0.50 per product unit, excluding VAT, over a period of 15 years.

The marking codes are issued free of charge for the duration of the experiment. After the experiment, as of the official start date for digital marking, the amount will be charged every time the details of a product’s entry into civil circulation are submitted.

Market participants bear the cost of the risk of loss resulting from goods write-offs/defects regardless of whether the goods are marked or not. The risk is unrelated to the operator’s service of providing marking codes. Marking codes retain their traceability even when up to 50% of their surface is damaged. Greater damage may indicate damage to the product packaging, rendering it non-compliant with health and safety regulations. As the physical printing and application of the marking codes are not included in the services provided by the operator, incorrect application or mutilation of a code cannot be attributed to the risks of the operator.

The track & trace project consists of these stages:

1. The preparatory stage, where the best technology is selected for applying the marking codes, the TT GIS system gets set up and we reach out to the broadest possible audience of industry players to raise their awareness of the goals and objectives of the system;
2. The experiment, which involves testing the marking technologies in industrial settings, testing and fine-tuning the TT GIS system, informing the industry about the results of the Experiment and preparing for the mass roll-out;
3. Roll-out on a massive scale, where all manufacturers, distributors and retail chains implement the track & trace technology.

The purpose of the experiment is to successfully test the entire flow of marked goods from manufacturing sites or import to their disposal at checkouts.

The experiment consists of the following key steps:

1. Order the code from TT GIS and apply it on the finished product;
2. Report the successful application of the code to TT GIS;
3. Aggregate the products into shipping packages and aggregate product unit codes into an aggregation code;
4. Put the marked products into circulation and generate a report;
5. The products progress down the distribution chain as per the Electronic Universal Transfer Document (eUTD) involving the transfer of codes between legal entities;
6. The products exit from circulation through cash register equipment or via eUTDs without resale rights.

• They get to test the product marking technology in their specific manufacturing environment. The work is done by third-party system integrators at no cost to the manufacturer. Outputs: a report on the possibility of applying marking to the products of a particular manufacturer; recommended equipment specifications with an eye on the particular characteristics of the manufacturing site; an understanding of the impact of the introduction of digital marking on the manufacturer’s or importer’s production cycle (changes in the packaging process, aggregation of products into shipping packages and subsequent product distribution); an understanding of the required changes in the business processes and technologies of the wholesale component and retail; the opportunity to reach an early consensus on the cost of the subsequent full-scale roll-out of the track & trace system;
• Analysis of business processes altered by the introduction of marking. Outputs: early assessment of the volume of required changes in the business processes of manufacturing, logistics, sales and affiliate network (if applicable) and the opportunity to prepare for the changes in good time;
• An open discussion with the experiment’s participants on the ground rules of marking and circulation and the possibility to influence the shaping of the rules, even at the federal executive level. Outputs: ground rules for marking that take the needs of the manufacturing sites into account.

There are no limits on company size or the number of SKUs required to join the experiment; however, it is advisable to use several different package form factors and one or more production lines.