It’s been almost three years since Russia formally began transforming its supply chain. When President Vladimir Putin signed Federal Law No.425-FZonDecember29,2017, he set in motions weeping legislation that affects virtually every industry, from dairy and drinking water to pharmaceuticals and footwear.Phased implementation began in 2019 and is due to conclude in 2024.
The goal of Russia’s National Track and Trace Digital System, known as ChestnyZNAK, is to protect on summers by keeping fake and substandard products off the market. Deadlines and labeling requirements have changed, but the fundamentals have remained constant. Hallmarks include 2D Data Matrix codes, randomized serial numbers, crypto codes, unit-and batch-level traceability, and secure reporting and records management.Manufacturers, importers, wholesalers, and retailers must comply with the regulations.
The requirements are strict—some say too strict—but the consequences of noncompliance are considerable.No matter your role in the dairy supply chain, it’s in your interest to understand how ChestnyZNAK works and make sure you’re ready to meet 2021deadlines and comply.
The basics of ChestnyZNAK
ChestnyZNAK, which is sometimes translated as Honest SIGN or Honest BADGE, is managed by the Center for Research in Perspective Technologies (CRPT), the country’s first public-private partnership in the IT sector and the first of its kind at the federal level . Private investments totaling more than $2.5billion are expected over the next 15 years.
The Russian government says the main objective of the regulations is“ to guarantee the authenticity and declared quality of goods being purchased by customers. ”Products must be marked with 2D Data Matrix codes with an alphanumeric sequence that contains at least four groups of information: a Global Trade Item Number (GTIN), a serial number, a verification key, and a verification code(i.e.,cryptocode). A typical alphanumeric sequence has 85 characters, including two non-printable, machine-readable group separators.
The crypto codes are an important part of ChestnyZNAK. The law initially stipulated that the codes must have 88 characters, but a federal decree in August 2019 that amended the procedure for applying drug labeling codes cut the requirement to 44 characters.
There are additional requirements that make the regulations more complex. For example, only an authorized representative can request crypto codes from the CRPT and the owner of goods must create a universal transfer document at the moment of ownership, then transfer it to the CRPT.
The system man dates complete trace ability all the way to consumers. Every product will go through five steps, starting with manufacturers and ending with consumers. Products are to be scanned at each step and every transfer of ownership must be recorded, which ChestnyZNAK says will help “guarantee the authenticity and declared quality of goods being purchased by customers.”
In most cases, stores are required to use point-of-sale cash registers that are connected to the internet. When the cashiers cans the 2D Data Matrix code on a product, the data is synchronized with the information in ChestnyZNAK’s catalogue of marked goods and the item is officially removed from circulation. If the data doesn’t match, the product is counterfeit or otherwise illegitimate and the retailer may not sell it.
After making a purchase, consumers can use an app to scan 2D Data Matrix codes on packaging. This gives them access to product information directly from ChestnyZNAK, including the date, time, and place of production, the expiration date, and details about the product’s journey from the farm or factory to the store. If as can reveals a “violation” meaning the product is counterfeit or not in compliance with marking regulations—consumers can report it directly to the CRPT. They can also send questions about how the app works and suggestions to improve it.
Requirements for the Dairy Industry
Today, the ChestnyZNAK regulations apply to 12 industries: footwear, fur, light industry, medications, perfumes, photo cameras and flashbulbs, tires, tobacco, bicycles, bottled drinking water, dairy, and wheel chairs. The latter five, including dairy, are currently in a pilot phase.
The pilot for dairy began on July15, 2019, and is scheduled to end on December 31,2020. Mandatory labeling is scheduled to begin on January 20, 2021, but only for some products that are required to have a Combined Nomenclature of Foreign Economic Activity (TNVED) code. Used by the Eurasian Economic Union, TNVED codes are essentially customs codes that classify products and substances according to three criteria:
- The material a product is made of
- The product’s function(s) or purpose(s)
- The degree of manufacturing or processing required to make the product
Mandatory labeling for other dairy product groups is to begin no later than October1,2021.
The setup for dairy is unique because ChestnyZNAK will share track and trace duties with another government system, the “ Mercury” electronic veterinary certification system, which tracks animal products in Russia and is part of the Federal State Information System. Mercury will track dairy products from farms to processing plants, and ChestnyZNAK will track them from the plants to the customer. The Ministry of Agriculture and the Federal Service for Veterinary and Phytosanitary Surveillance approved this scenario.
In the shared Mercury–Chestny ZNAK system, the codes are associated with “veterinary accompanying documents” that provide a provenance for the product. This information is passed along the supply chain and reported electronically to both ChestnyZNAK and the national Goods Marking State Information System via the mandated universal transfer document.
Like products in other industries, dairy products must be marked with 2D Data Matrix codes. Each code must contain three data points : a 14-digit GTIN,a13-digit serial number, and a 4-digit verification key from the CRPT. Aggregation is required, and the parent-child relationship must be maintained between the aggregation and the individual units within it.
Product packaging must have a blank field up to 15×15 mm to accommodate the code. Caps for PET bottles must be prepared properly to accommodate either printing or marking with a laser. If a manufacturer is concerned about marking any of its packaging, such as an unusually shaped carton or bottle, it can submit a sample for testing to determine if the 2D Data Matrix codes will adhere to it and if the form factor affects the accuracy/reliability of scanning.
There’s an optional fourth data point for expiration dates. Dairy products with a shelf life longer than three days should express the expiration date in the 6-digit YYMMDD format. For products with a shelf life of fewer than three days, the date should be expressed in the10-digit YYMMDDHHMM format , which pin points the expiration down to the hour and minute.
As of late September 2020, ChestnyZNAK reports that it has issued nearly 8.5 million codes to more than 6,000 pilot participants. It has said that data requirements for the codes could change after the pilot has ended and been assessed.
Dairy companies have a lot to think about if they want to do business in Russia. The Chestny ZNAK regulations are strict and complex, so you must be informed, nimble, and ready to adapt to changes to ensure your operations aren’t disrupted.
Beyond preparing your internal systems, the key to Chestny ZNAK compliance is to partner with a solution provider that understands the complexities of the Russian regulations. Make sure your provider is an authorized CRPT representative. Ideally, they should have a presence in Russia and speak the language. The requirements are rigorous, but with planning and the right partner, you can comply and bring all of your dairy products to the lucrative Russian market.
About the author
Victoria Kozlova is general director of Russian operations for track and trace software company rfxcel. She is based in Moscow.