Russia is in the midst of creating the world’s most ambitious — and strict — supply chain track and trace system. Its National Track and Trace Digital System, known as Chestny ZNAK (and sometimes translated as Honest SIGN or Honest BADGE), is on track to be fully operational in 2024. Chestny ZNAK track and trace requirements are tough, and they’ll cover virtually every type of product you can imagine.
No matter what role you play in the supply chain, you have to understand how the system works and what the regulations mandate. Let’s examine Chestny ZNAK track and trace, from its origins to what it requires.
The origins of Chestny ZNAK track and trace
On December 29, 2017, Russian President Vladimir Putin signed Law No. 425-FZ, officially inaugurating the Chestny ZNAK track and trace system. Its goal is to streamline quality control, protect against counterfeits, and monitor supply and demand and expenditure. The regulations cover 12 product categories: medicines, furs, footwear, bottled drinking water, tires, tobacco, dairy, wheelchairs, bicycles, light industry, perfumes, and photo cameras and flashbulbs.
Chestny ZNAK is run by the Center for Research in Perspective Technologies (CRPT), a public-private partnership akin to the European Medicines Verification Organization. Its principal partner, with a 51 percent stake, is business giant USM, which was founded in 2012 and has interests in many of Russia’s key sectors, including metals/mining, telecom, technology, and internet.
According to USM, Chestny ZNAK is 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 200 billion rubles ($2.5 billion) are expected over the next 15 years.
What are the requirements?
Chestny ZNAK track and trace regulations are arguably the strictest in the world. Companies that do not comply face fines and other penalties, including “deprivation of liberty” (prison), and can in essence be banned from doing business in Russia.
The requirements vary by industry, and deadlines and labeling requirements have changed, but the fundamentals have remained constant: serialization, aggregation, unit- and batch-level traceability, crypto codes, and electronic reporting and records management.
Products must be marked with 2D Data Matrix codes with an 85-character 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., crypto code). Furthermore, the owner of goods must create a Universal Transfer Document (UTD) at the moment of ownership, then transfer it to the CRPT.
The crypto codes are an important part of Chestny ZNAK track and trace. At first, every code had to have 88 characters, but a federal decree in August 2019 that amended the procedure for applying drug labelling codes cut the requirement to 44 characters. The CRPT issues the codes, which only authorized representatives can request/receive. rfxcel is an approved partner of the CRPT; more on that below.
For the pharma sector, it’s prudent to note that Chestny ZNAK track and trace requires over-the-counter (OTC) drugs to be labeled, scanned, and recorded in the system. This is a significant departure from the EU Falsified Medicines Directive (FMD) and the U.S. Drug Supply Chain Security Act (DSCSA).
These are the broad strokes of the Chestny ZNAK track and trace regulations. There are other requirements — such tracking products with Universal Transfer Documents (UTDs), which must be sent to the CRPT when ownership of goods changes — but we won’t get into those here. For a full accounting of the regulations in all the industries, download our white papers.
How does it work?
Chestny ZNAK track and trace is a five-step process that calls for complete traceability all the way to consumers. Let’s walk through these steps.
First, the CRPT sends the manufacturer, wholesaler, retailer, or importer — referred to as “economic agents” in the regulations — a unique digital code for every product that must be affixed to the packaging. Only a CRPT-authorized representative can request codes. Every product is logged in Chestny ZNAK’s catalogue of marked goods.
In the second “logistics” step, the digital code becomes an immutable “passport” that legitimizes the product at every step of the supply chain. Every transfer of ownership must be recorded.
Next, the product arrives at the location where it will be sold or dispensed. The receiver scans the item, Chestny ZNAK receives a transfer confirmation, and it’s ready for sale.
Fourth, the product is sold or dispensed. The seller is required to have a point-of-sale cash register, a system connected to the internet that typically includes a touchscreen, a scanner to read 2D Data Matrix codes and other codes, a credit card scanner, and a printer. The product is scanned at checkout and the cash register reports to Chestny ZNAK that “the code has left circulation.” If the scanned data doesn’t match what’s in the catalogue of marked goods, the product is counterfeit or otherwise illegitimate and cannot be sold.
In the last step, the consumer takes over and becomes the final supply chain quality control checkpoint. Using the Chestny ZNAK app for smart devices, described as “your main assistant for product quality tracking and counterfeit detection,” a person scans the 2D Data Matrix code on the product and gets instant access to rich information directly from Chestny ZNAK. If a scan 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
Here, we want to point out that the Chestny ZNAK track and trace app reminds us of our own MobileTraceability app, only for consumer use. Both can show 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. Our MobileTraceability app is a powerful tool for track and trace in any industry. Check out our short video about how it works in the food and beverage supply chain.
If you follow our blog, read our white papers, or follow our news, you know rfxcel is the leader in Chestny ZNAK track and trace compliance. That’s a bold statement, but we think we have the facts to back it up:
- We’re an official integration, software, and tested solution partner with the CRPT. We’ve demonstrated that our solutions, particularly our signature rfxcel Traceability System (rTS) and Compliance Management (rCM), can meet the stringent Chestny ZNAK track and trace requirements and ensure companies stay compliant.
- rTS works seamlessly with Chestny ZNAK track and trace, including a Russian-language user interface that makes integration and startup much quicker.
- We’ve prepared for Chestny ZNAK since 2018.
- We’re one of the few providers with active implementations in Russia.
- We’ve tripled our workforce in Russia over the last year. Our team in Moscow provides our clients, which include major global consumer goods and pharmaceutical companies, the quickest time to market while fully automating their compliance reporting.
Contact us today learn more about how we can help you with Chestny ZNAK track and trace. No matter how far along you are in your preparations to meet the requirements, you should talk to us — even if you’re already working with another provider. Our powerful software ensures companies in any industry remain compliant with the complex regulations.