Digital marking system in Russia: is your supply chain ready?

The introduction of the Digital Marking system in Russia started in 2019, by now this has become a crucial point for any foreign company who wants to continue and develop its activity on the Russian market.

The idea of this global economic project is to ensure the traceability of turnover from production to sale of the goods and to provide consumers with the quality and authenticity of the goods. To implement such an approach, the products under this regulation have a unique Data Matrix code: a consequence of 119 symbols generated by the digital marking state system and encrypted to the QR-code.

The players of the tobacco, shoe, and pharma industries have faced the first requirements of the new regulation: starting July 1st, 2020 import of these products without digital marking on the territory of the Russian Federation is now prohibited. The requirements apply to all manufacturers, importers, distributors, and retailers, as well as pharmacies and other medical organizations selling medicine.

 

How to check if your supply chain is ready for the digital marking challenge?

First, it is important to note that this new regulation affects the whole supply chain, and this even before entering the Russian Federation. Yet, it is your partner in Russia who must take responsibility for the results of digital marking implementation towards the Russian legal system. To succeed, you need to secure the following with your Russian partner (who should also be the importer):

  • Whether they know the new regulation well enough and are ready to implement the digital marking process fully compliantly?
  • Who will perform the labeling of goods with digital marking? Is it your bonded warehouse partner in Russia or you need to process it on your warehouse outside the Russian borders?
  • To understand and agree on the additional costs for digital marking codes (1 digital marking code/sticker – 0,50 RUR)

When the framework terms are agreed you should check your technical capacity:

  • Your warehouse team must be duly instructed about the rules of digital marking labeling, like e.g. stickers with digital marking should be put on each piece of product
  • As labels should not be lost or damaged during transportation your warehouse should have high-quality adhesives to ensure the quality of labeling
  • Your warehouse equipment should be applicable to work with digital marking

Finally, you should revise your logistics processes, based on the fact, that delivery times for goods to Russia will increase, due to the necessity of additional operations: labeling, check-up, and accounting of digital marking codes. To optimize delivery time, you could think about automatization or outsourcing of these processes or implement a new planning system.

This new regulation can prove to be difficult to integrate into your current processes, and of course, it’s adaptation will definitely require your time and money resources,  but finally, it is a necessity which must be fulfilled in relation to import to Russia and it will ensure the quality and authenticity of your products for local customers.

Implementation of this new approach could be difficult, even for your Russian partners-importers: for small businesses the investments for the integration of digital marking could be substantial, and for larger businesses in the case of non-core products, it could be more profitable to refuse to import such products.
The effort and time take a lot of energy, however with digital marking, this is an investment that must be made to run your business successful and manage the complexity of doing business in Russia.

Being in a pole position to manage digital marking without delays, will give you the competitive advantage you need, to improve your brand image as an agile player on the complex market of Russia.

Author: Natalia Komok, Import & Export Operations Group Team Lead at TF&ASS, Ahlers Russia.