The problem of illegal product circulation is particularly acute for Russia: the share of illegal circulation in the manufacturing industry is about 35%, in the perfume market – 20%, and in the medicine market – up to 10%.
According to research by Kantar TNS analytical agency, the share of the illegal cigarette market in Russia increased to 7.7% in Q1 2018, as compared to 4.6% the previous year.
In December 2017, Russian President Vladimir Putin approved the resolution of the Government for the creation of a Unified national track & trace digital system by 2024 based at the Center for Research in Perspective Technologies (CRPT).
CRPT is a joint project of USM (Peter-service, 50%), Rostec State Corporation (Avtomatika Concern, 25%) and Elvis-Plus Group (25%).
The track & trace system being created by the Centre, known as Chestny ZNAK, makes it possible to effectively combat counterfeit and contraband goods and protects legal businesses and brands of bona fide manufacturers and consumers.
Thanks to the introduction of a track & trace digital system, legal businesses will receive protection from counterfeit goods, while their good names on the market will eliminate risks to reputation due to low-quality products being sold under their brands.
Track & trace digital system will allow businesses to increase their production capacity, improve logistic schemes, increase market share and ultimately increase revenue:
- 1. By reducing the share of contraband and counterfeit goods, legal manufacturers will increase the share and volume of production by 5-50%, depending on the product group
- 2. Businesses can switch their production to Industry 4.0, working based on the Just-in-Time principle. By receiving data on products online, they will be able to plan production to the optimal level, reduce stock surplus, and increase turnover of goods
- 3. Connection to the e-document flow operator (if EDF was not previously used)
- 4. Businesses will be able to save significantly on logistics: during the implementation of full traceability, the manufacturer or logistics company can receive the latest statistics on sales geography, performance and seasonality, which will make it possible to modify logistics systems and optimize shipments and inventory
- 5. Businesses will adjust their accounting processes. These days, many entrepreneurs do not have their own data on balances and goods codes in warehouse and stores. Without the correct accounting, it is impossible to calculate profits and plan purchases; therefore, automation would help entrepreneurs to get their business in order
- 6. Businesses will switch to the e-document flow. EDF will radically reduce the volume of paper documents that are still actively exchanged by Russian companies and cut business costs, as well as improve labor productivity