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GS1 DotCode Impact Assessment Final – May 16, 2017


GS1 DotCode Impact Assessment Final – May 16, 2017

Table of Contents Executive Summary ...................................................................................................................................... 1 Applicability .............................................................................................................................................. 1 Other Standards and Services .................................................................................................................. 1 Negative Impacts ...................................................................................................................................... 2 Summary .................................................................................................................................................. 2 GS1 Barcode Symbologies ............................................................................................................................ 3 EAN/UPC Family ....................................................................................................................................... 3 DataBar Family ......................................................................................................................................... 4 Other 1D Barcodes (General Distribution and Logistics) .......................................................................... 5 Two-Dimensional (2D) Barcodes .............................................................................................................. 5 GS1 DotCode ................................................................................................................................................ 7 Positioning ................................................................................................................................................ 7 Applications .............................................................................................................................................. 8 Anti-Counterfeiting .............................................................................................................................. 8 Anti-Arbitrage ....................................................................................................................................... 9 Regulatory Compliance ........................................................................................................................ 9 Cost to Society ...................................................................................................................................... 9 Industry Applicability .................................................................................................................................. 11 Tobacco .................................................................................................................................................. 11 Alcoholic and Non-Alcoholic Beverage ................................................................................................... 12 Pharmaceutical ....................................................................................................................................... 12 Grocery ................................................................................................................................................... 13 Wood ...................................................................................................................................................... 14 Case Study – Tobacco ................................................................................................................................. 15 Market Size ............................................................................................................................................. 15

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Illicit Trade .............................................................................................................................................. 15 Regulatory Frameworks ......................................................................................................................... 16 WHO Framework Convention on Tobacco Control ............................................................................ 16 European Union Tobacco Products Directive ..................................................................................... 17 Adoption of GS1 Standards – Present .................................................................................................... 18 Retail .................................................................................................................................................. 18 Manufacturing .................................................................................................................................... 18 Distribution ........................................................................................................................................ 21 Returns ............................................................................................................................................... 25 Other Issues ........................................................................................................................................ 25 Adoption of GS1 Standards – Future ...................................................................................................... 26 Data Management ............................................................................................................................. 26 Global Trade Item Number (GTIN) ..................................................................................................... 28 Serial Shipping Container Code (SSCC) ............................................................................................... 29 Global Location Number (GLN) .......................................................................................................... 30 EPC Information Services (EPCIS) ....................................................................................................... 30 The Need for Standards ............................................................................................................................. 33 The GS1 Framework ............................................................................................................................... 34 Identify ............................................................................................................................................... 34 Capture ............................................................................................................................................... 35 Share .................................................................................................................................................. 35 ISO Standards ......................................................................................................................................... 36 Academic Support .................................................................................................................................. 36 Standardizing the DotCode ........................................................................................................................ 37 Other Applications ................................................................................................................................. 38 Point-of-Sale Tracking ........................................................................................................................ 38 Traceability and Product Recall .......................................................................................................... 38 Inventory Management ...................................................................................................................... 39 Negative Impacts .................................................................................................................................... 39 This document has been formatted for double-sided printing. Some pages may be blank.

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About this Document This document was prepared under contract to Inexto SA of Lausanne, Switzerland. The author had the cooperation of members of the Digital Coding & Tracking Association in surveying manufacturing and logistics operations and in reviewing early drafts of the document. The opinions expressed in this document, as well as any errors or omissions, are entirely those of the author. Copyright Š 2017 Dolphin Data Development Ltd.

About the Author Kevin Dean is a technology strategist specializing in supply chain standards and manufacturing and logistics operations. He is based in Toronto, Canada.

Document History Author Kevin Dean

Version 1.0

Date May 16, 2017

Notes Initial publication.

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Executive Summary The DotCode, a small- to medium-capacity flexibly-shaped graphical data carrier designed to be demandprintable by high-speed “dot” technologies, was released by Advanced Identification Matters (AIM) in October 2009 and has been proposed as a standard for GS1. The purpose of this paper is to assess the impact its adoption will have. The primary driver for the DotCode is the need to serialize products at production-line speeds. The maximum speed for any current GS1 barcode printing technology is up to 500 impressions per minute and even that would for many users require a significant investment in printing technology. The DotCode, on the other hand, is capable of speeds in excess of 1,000 impressions per minute and can be accommodated by existing production line printing technology (e.g. continuous ink-jet printers that are ubiquitous in grocery and other perishable goods manufacturing). The original proposal for the adoption of the DotCode came from the tobacco industry. The World Health Organization’s Framework Convention on Tobacco Control (FCTC) Protocol includes, among many other provisions, a mandate for identification and traceability of all tobacco products. The European Union Tobacco Products Directive (TPD), aligned with the FCTC Protocol, introduces EU-wide tracking and tracing to combat illicit trade of tobacco products with full implementation by 20th May 2019 for cigarettes and hand rolling tobacco and 20th May 2024 for all other tobacco products. The FCTC Protocol currently has 26 ratifications and while the European Union is the first to implement it, other countries are expected to follow. Neither the FCTC Protocol nor the TPD mandates any system of standards but the reality is that GS1 has the only comprehensive suite of physical and digital object identification and traceability standards necessary to implement them. A global framework to support the FCTC Protocol requires global, interoperable, and open standards.

Applicability The DotCode has applicability in anti-counterfeiting, anti-arbitrage, regulatory compliance, and consumer safety in many industries beyond tobacco including alcoholic and non-alcoholic beverages, grocery, certain luxury goods, and high-value wood products. Due to significant differences in traceability requirements, the cost of deployment, existing industry standardization, and regulatory requirements the DotCode is not suitable for pharmaceutical traceability applications.

Other Standards and Services By encoding serial identifiers at the unit level, the DotCode is a necessary enabling technology for the deployment of EPCIS within the tobacco industry. The European Commission has already undertaken a comprehensive analysis of tracking and tracing solutions for the tobacco industry and calls EPCIS the “lingua franca for supply chain visibility”; the report specifically states that “its neutrality and general acceptance makes it well positioned to appropriately respond to traceability system design and implementation requirements”. GS1 identification is widely deployed in the tobacco industry. Most tobacco products are sold at retail and have a GTIN. The SSCC is in use in distribution, primarily by the manufacturers, but it is not ubiquitous; it is reasonable to expect that to change as EPCIS is adopted throughout the industry.

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Processes and standard printing technologies are already in place in large manufacturers to aggregate DotCode-printed packs into cartons, cartons into cases, and cases onto pallets. The identification of supply chain partners is a significant gap in the traceability implementation. The GLN is not widely deployed and the requirement for traceability to the retailer presents an opportunity for the GLN Service. With tobacco regulation as a driver, broad-based adoption of the GLN throughout the supply chain could enable a significant number of non-tobacco industries as well.

Negative Impacts The addition of the DotCode to existing packaging has no known negative impacts on any supply chain processes. The DotCode is positioned as a supplement to existing symbologies, not a replacement for them, and all processes (e.g. retail point-of-sale) that use the existing symbologies will continue to use them with no adverse impact from the presence of the DotCode on the packaging.

Summary The DotCode meets a need that cannot be met by existing barcode printing technology. It has significant applicability in anti-counterfeiting, anti-arbitrage, regulatory compliance, and consumer safety in many industries. It is a necessary enabling technology for the deployment of EPCIS and has the potential to be part of a comprehensive traceability solution alongside other GS1 standards and services. It has no known negative impacts on any supply chain processes. This paper recommends ratification of the DotCode as a GS1 standard.

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GS1 Barcode Symbologies Broadly speaking, barcodes fall into one of two categories: one-dimensional (1D) barcodes and twodimensional (2D) barcodes. 1D barcodes, by far the most common, are simply dark lines against a light background encoded in a pattern that a scanner can decode.

Figure 1 – 1D barcode

2D barcodes use pixels instead of lines, which allows them to be much more compact but requires more processing power to decode.

Figure 2 – 2D barcode

In a 1D barcode, the data is encoded horizontally; the scanner can read the barcode at any point along the vertical axis. The 1D barcode is highly tolerant of damage, as long as the damage doesn’t obscure an entire vertical segment. In a 2D barcode, the data is encoded both horizontally and vertically; the scanner has to read the entire barcode. The 2D barcode is not as tolerant of damage, although some symbologies can support significant redundancy for environments where damage is a concern. GS1 supports a number of barcode symbologies, both 1D and 2D, with each type different, though not mutually exclusive, use cases.1 Note that the remaining text in this section has been taken verbatim from the GS1 website with only minor edits for clarity.

EAN/UPC Family Instantly-recognisable, EAN/UPC barcodes are printed on virtually every consumer product in the world. They are the longest-established and most widely-used of all GS1 barcodes.2 EAN-13

• • • •

Capacity: 13 numeric Omnidirectional Supports GTIN-13 Does not support attributes

1 2

GS1, “GS1 barcodes”, http://www.gs1.org/barcodes GS1, “EAN/UPC barcodes”, http://www.gs1.org/barcodes/ean-upc

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UPC-A

• • • •

EAN-8

UPC-E

DataBar Family

• • • •

Capacity: 8 numeric Omnidirectional Supports GTIN-8 Does not support attributes

• • • •

Capacity: 12 numeric Omnidirectional Supports GTIN-12 Does not support attributes

Capacity: 12 Numeric, zeroes suppressed Omnidirectional Supports GTIN-12 Does not support attributes

DataBar barcodes are often used to label fresh foods. These barcodes can hold information like an item's batch number or expiry date, in addition to other attributes used at the point-of-sale such as the item weight. DataBar barcodes are often used in retail, and can be read by laser scanners. The GS1 DataBar family consists of seven symbols in total: four for use a point-of-sale and three not for use at point of sale. The symbols for use at point-of-sale are shown below.3 DataBar Omnidirectional

• • • •

Capacity: 14 numeric Omnidirectional Supports GTIN, GCN Does not support attributes

DataBar Stacked Omnidirectional

• • • •

DataBar Expanded Stacked

Capacity: 14 numeric Omnidirectional Supports GTIN, GCN Does not support attributes

• • • •

Capacity: Maximum 74 Numeric/ 41 Alphanumeric Omnidirectional Supports GTIN, GCN Does support attributes

3

GS1, “GS1 DataBar barcodes”, http://www.gs1.org/barcodes/databar

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DataBar Expanded

Capacity: Maximum 74 Numeric/ 41 Alphanumeric Omnidirectional Supports GTIN, GCN Does support attributes

• • •

Other 1D Barcodes (General Distribution and Logistics) GS1-128 and ITF-14 are highly versatile 1D barcodes that enable items to be tracked through global supply chains. The GS1-128 barcode can carry any of the GS1 ID keys, plus information like serial numbers, expiration dates and more. The ITF-14 barcode can only hold the Global Trade Item Number (GTIN) and is suitable for printing on corrugated materials.4 ITF-14

• • •

Capacity: 14 numeric Supports GTIN Does not support attributes

GS1128

Capacity: 48 Alphanumeric capacity (per symbol, multiple symbols may be used) Supports all GS1 keys Does support attributes

Two-Dimensional (2D) Barcodes Two-dimensional (2D) barcodes look like squares or rectangles that contain many small, individual dots. A single 2D barcode can hold a significant amount of information and may remain legible even when printed at a small size or etched onto a product. 2D barcodes are used in a wide range of industries, from manufacturing and warehousing to logistics and healthcare.5 GS1 DataMatrix

• • •

Capacity: 3116 Numeric capacity, 2335 Alphanumeric capacity Omnidirectional Supports all keys Supports attributes

4

GS1, “One-dimensional (1D) barcodes used exclusively in general distribution and logistics”, http://www.gs1.org/barcodes/1d-general-distribution 5 GS1, “Two-dimensional (2D) barcodes”, http://www.gs1.org/barcodes/2d

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GS1 QR Code

• • •

Capacity: 7089 Numeric capacity 4296 Alphanumeric capacity Omnidirectional Supports all keys Supports attributes

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GS1 DotCode The DotCode is a small- to medium-capacity flexibly-shaped graphical data carrier (that is, “barcode”) designed to be demand-printable by high-speed “dot” technologies ─ typically ink-jets or lasers ─ and readable by 2D imaging technologies. It was conceived by Dr. Andrew Longacre, Jr. in 2007 and placed in the public domain and was reviewed and improved by the Association for Automatic Identification and Mobility (AIM) Inc.’s Technical Symbology Committee. While most 2D symbologies are square, the DotCode can be printed in variable ratio rectangular form. This gives it more flexibility in packaging design and allows it to be used in existing manufacturing environments with continuous ink-jet (CIJ) line printers with limited resolution.

Figure 3 – DotCode with GS1 Encoding

Positioning In developing the Business Requirements Analysis Document (BRAD) for High-Speed Barcode Printing, the user group positioned the DotCode as follows6: The GS1 System does not provide a consumer trade item barcode that can be printed at production speeds up to 1000 ppm. This project is designed to evaluate, for inclusion into the GS1 System, a barcode symbol known as DotCode, which was designed to be generated at very high production speeds. Permitting this barcode symbol to carry GTIN and GTIN attributes will enable industry to accurately identify and track products across supply chains where scanning capability exists or for where the scanning capability is explicitly planned to exist. This work was in response to the near-term business challenge surrounding implementation of track-and-trace solutions to combat illicit trade in the tobacco industry. The World Health Organization published the Framework Convention on Tobacco Control (WHO FCTC) and Protocol to Eliminate Illicit Trade in Tobacco Products. These are guiding documents that provide the basis for our leadership, development, and participation decisions in this Working Group. In response to the WHO Convention, the European Union issued Directive 2014/40/EU, establishing tobacco-related product labelling requirements intended to enable product traceability throughout the supply chain. GS1 standards can address this challenge, but current GS1 barcodes can only support production speeds of up to 500 parts per minute (ppm) and some speeds reach 1000 ppm. Thus, there is a 6

GS1 High-Speed Barcode Printing Mission-Specific Work Group, “Business Requirements Analysis Document (BRAD) High Speed Barcode Printing”

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need to evaluate DotCode for inclusion into the GS1 System. Industry participation and consultation between GS1 Member Organizations and national parties is needed to help to ensure GS1 standards can meet regulatory traceability requirements while providing for cross-border interoperability. While the initial impetus for the adoption of the DotCode as a GS1 standard is the requirement for serialization and traceability of tobacco products, the DotCode has applicability beyond that and there are other GS1 standards that need to be part of the serialization and traceability solution.

Applications Anti-Counterfeiting Counterfeiting is a worldwide problem and is often viewed as a victimless crime. In reality, counterfeiting is extremely harmful socially, economically, and politically. Governments are faced with increased cost of crime and enforcement actions. The social burdens caused by counterfeiting includes lost jobs, human slavery, and unsafe working conditions to mention a few. Governments are seeing “a greater shift towards dealing with fake cigarettes and automotive brakes, and more alarming and destructive of all, pharmaceuticals”7. Consider the case of a pharmaceutical product, and in particular the case where you know that the product is a counterfeit. • • • • • •

You don’t know where it came from. Even if you know where it came from, you don’t know that it contains the appropriate active ingredient. Even if it contains the appropriate active ingredient, you don’t know that the excipient is appropriate to the active ingredient. Even if it contains the appropriate active ingredient and excipient, you don’t know that it was manufactured to the proper specification. Even if it was manufactured to the proper specification, you don’t know that it was stored and transported under appropriate conditions. Even if it was stored and transported under appropriate conditions, you don’t know that it hasn’t expired.

Counterfeiting is not just a problem with organized crime; corruption through mainstream routes is also a prevalent problem.8 Unique identification of a product instance through serialization is a common solution to reduce the risks of counterfeiting and illicit trade. By definition, a uniquely identified product cannot or should not be duplicated if effective controls are put in place. The discovery of a product with the same identifier in two locations strongly suggests that counterfeiting is taking place, whether by an illegitimate actor duplicating an existing identifier or a legitimate actor such as a contract manufacturer extending a production run 7

Lolwa N. Alfadhel, “TRIPS and the Rise of Counterfeiting: A Comparative Examination of Trademark Protection and Border Measures in the European Union and the Gulf Cooperation Council”, https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2743209_code2247018.pdf?abstractid=2743209&mirid=1 8 ibid

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without the knowledge of the brand owner. This is especially true if the identifier is encrypted or otherwise randomized as it makes it difficult for an illegitimate actor to create identifiers that would pass for legitimate products. The DotCode can assist as part of an anti-counterfeit risk management strategy by encoding the necessary unique identifier without impeding production line speed.

Anti-Arbitrage Arbitrage is the practice of taking advantage of a price difference between two or more markets. The price difference may be the result of differential pricing by the supplier (e.g. pharmaceuticals sold in developing countries at prices lower than in developed countries) or the result of tax regimes that focus on particular categories of products (e.g. alcohol and tobacco). The primary difference with arbitrage is that the product is the same as the one being displaced. However, in environments where pricing is a motivator, it can be difficult if not impossible to tell the difference between a legitimate product, a counterfeit product, and an arbitraged product. Unique identification of a product instance through serialization is a common solution to arbitrage. A product with a unique identifier can be allocated to a given market (e.g. alcohol or tobacco for which the market’s tax has been paid) and if the product appears for sale in a different, unrelated market, it is highly likely that it has been diverted to take advantage of the lower-cost regime from which it was sourced or intended for sale. The DotCode can assist as part of an anti-arbitrage risk management strategy by encoding the necessary unique identifier without impeding production line speed.

Regulatory Compliance Virtually every product manufactured today is regulated in some way. Light regulations may require only that the product not be harmful to the user; more stringent regulations may require a protocol for product recall in the event a problem is detected; the most stringent regulations may require unique identification and traceability to ensure consumer safety or to limit counterfeiting, arbitrage, and other forms of illicit trade. The most stringent regulations ultimately require some form of unique identification. They may not require whole-chain traceability but rather traceability at critical points to detect counterfeit, diversion, or other illicit trade activity. Serialization lends itself very well to disjoint traceability. Instead of having to record a product’s identifier at every point in the supply chain, it can be recorded at key points (e.g. manufacturer, distributor, retailer) or at the manufacturer only unless otherwise required. The DotCode can assist in regulatory compliance by encoding the necessary unique identifier without impeding production line speed.

Cost to Society Counterfeiting and arbitrage are not victimless crimes. Both have been identified as sources of funding for criminals and terrorists. Tobacco is among the most commonly traded commodities on the black

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market due to the relative ease of production and movement along with low detection rates and penalties.9 The costs vary by product, but can include any or all the following: • • • • • • •

loss of revenue to the brand owner; loss of employment; loss of brand equity; loss of revenue to other parts of the legitimate supply chain and therefore loss of employment; loss of tax revenue to the government and therefore loss of services; increased cost of crime and enforcement actions; and physical harm to the end user, including injury or death.

9

OECD, “Illicit Trade: Converging Criminal Networks”, http://www.keepeek.com/Digital-AssetManagement/oecd/governance/charting-illicit-trade_9789264251847-en

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Industry Applicability Tobacco The European Union Tobacco Products Directive (TPD)10 requires traceability (Article 15) and visible and invisible security features (Article 16) for all tobacco products. Full and accurate traceability can only be achieved through serialization. Specifically, Article 15 of the Directive requires that the unique identifier shall allow the following to be determined: a) b) c) d) e) f) g) h) i)

the date and place of manufacturing; the manufacturing facility; the machine used to manufacture the tobacco products; the production shift or time of manufacture; the product description; the intended market of retail sale; the intended shipment route; where applicable, the importer into the Union; the actual shipment route from manufacturing to the first retail outlet, including all warehouses used as well as the shipment date, shipment destination, point of departure and consignee; j) the identity of all purchasers from manufacturing to the first retail outlet; and k) the invoice, order number and payment records of all purchasers from manufacturing to the first retail outlet. This is possible only through serialization. Serialization satisfies the requirements for a visible security feature. The presence of a serial identifier is an indicator that the product has unique identification and is therefore easily subjected to an authenticity check at the very least and full traceability at the most. Article 16 also makes allowance for “tax stamps or national identification marks used for fiscal purposes” to serve as the security feature “provided that the tax stamps or national identification marks fulfill all of the technical standards and functions required”. The only way for this to occur is if the tax stamp or national identification mark includes serialization embedded within the stamp, which is typically the case. Serialization can substitute for a tax stamp or national identification mark. Certain labels are easily counterfeited and the distinction between a legitimate and counterfeit label is difficult to discern except to a trained eye or with special equipment that can detect covert markings on the label. Serialization, especially that which provides the kind of information required by Article 15, can itself provide the proof otherwise provided by a tax stamp or national identification mark without requiring country-specific packaging (e.g. white space to accommodate an additional label) or customized manufacturing (e.g. integration of the label with a cellophane wrapper).

10

European Union, “Directive 2014/40/Eu of the European Parliament and of the Council”, http://ec.europa.eu/health/sites/health/files/tobacco/docs/dir_201440_en.pdf

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Serialization provides a visible (overt) security feature and can be combined with the invisible (covert) security features embedded into packaging. The tobacco industry has already adopted the DotCode to satisfy the unique identification requirement. The requirement does not follow any global standard; the DotCode is not encoded with any GS1-compliant content.

Figure 4 – DotCode in cigarette production

Alcoholic and Non-Alcoholic Beverage The alcoholic beverage industry is not as highly regulated as the tobacco industry but it is as highly taxed, leading to significant opportunities for counterfeiting and arbitrage. Because of the nature of the product, one of the more common forms of counterfeiting is the refilling of empty bottles11, a problem that, in developing countries, can easily extend to non-alcoholic beverages. The same requirement for alcoholic beverages applies as for tobacco products: high-speed printing of unique identification. This can be further complemented by aligning the printing of the identifier on the bottle with the printing of the same identifier on the cap; if the cap and the bottle don’t have the same code, the bottle has been refilled and is therefore counterfeit.

Pharmaceutical The pharmaceutical industry also has significant identification and traceability requirements. In the United States, the Drug Supply Chain Security Act12 uses the term “standardized numerical identifier” to mean “a set of numbers or characters used to uniquely identify each package or homogenous case that is composed of the National Drug Code that corresponds to the specific product 11

Financial Times, “Drinks companies battle counterfeiters”, https://www.ft.com/content/43f7e794-1b03-11e2a5e1-00144feabdc0 12 United States Food and Drug Administration, “The Drug Supply Chain Security Act (DSCSA)”, http://www.gpo.gov/fdsys/pkg/PLAW-113publ54/pdf/PLAW-113publ54.pdf

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(including the particular package configuration) combined with a unique alphanumeric serial number of up to 20 characters”. It does not give any guidance on the generation of the serial identifier. The National Drug Code is issued and managed by the FDA but can be mapped to a GTIN by purchasing the appropriate GS1 Company Prefix from GS1 US. In the European Union, the Falsified Medicines Directive13 requires a unique identifier for a product instance and states that it “should be placed in a 2D barcode and contain the product code, a serial number, the National Health Reimbursement Number (if requested by Member States), the batch number and the expiry date”. It does not give any guidance on the generation of the serial identifier. Although the identification requirements are similar to those for tobacco, the traceability requirements are significantly more involved. Even if not prescribed by regulation, traceability to the patient is a significant requirement for consumer safety and recall management. This will often involve the recording of the unique identifier at the point of dispensing, which itself will often be in a retail environment. There is no retail point-of-sale scanning solution on the market today that can read the DotCode and absent broad-based industry support for it, there will not be for some time to come. The DotCode, as far as the retail environment is concerned, is invisible and therefore cannot be used for traceability to the patient. Furthermore, even if the ability to read the DotCode were widely deployed, the industry itself has already standardized on GS1 DataMatrix14 and some regulators require DataMatrix as the symbology for pharmaceutical products (one such being the European Union15). For reasons of cost, industry support, and regulatory requirements, the DotCode is not suitable for pharmaceutical applications.

Grocery The grocery industry already has significant investment in CIJ printing. Batch/lot identifiers, best before dates, and other production control information are often printed on the packaging to aid in shelf management and recall identification.

Figure 5 – Production control information on a bottle cap

13

European Commission Directorate-General Health and Food Safety, “Falsified medicines”, https://ec.europa.eu/health/human-use/falsified_medicines_en 14 GS1, “GS1 Healthcare Discussion paper on the use of GS1 DataMatrix in Healthcare and a comparison to GS1 QR Code”, http://www.gs1.org/docs/healthcare/GS1 QR DM discussion paper_20140113_FINAL.pdf 15 European Commission, “Commission Delegated Regulation (EU) 2016/161”, https://ec.europa.eu/health/sites/health/files/files/eudralex/vol-1/reg_2016_161/reg_2016_161_en.pdf

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The challenge with this is that the information is not available in machine-readable format and is not standardized except by regulation. While GS1 has significant support for production control information in its AIDC standards, without a symbology that can be printed at production-line speeds such standards cannot be applied. The DotCode is not just for serialization. With appropriate encoding, it can hold any relevant production control information. Unlike for pharmaceuticals, which may require scanning at point-of-sale, there is no requirement for recording of production control information at point-of-sale so the absence of support in retail point-of-sale scanning environment is irrelevant. Where the DotCode can be used is in product recall as a way of verifying that the product on the shelf is in fact part of the batches or lots affected by the recall.

Wood The harvesting of high-value wood products can have a significant environmental impact. Consumer demand for sustainable harvesting practices naturally leads to identification and traceability but the nature of the product is such that this is challenging at best. While the QR Code has been proposed as an appropriate data carrier for the identification information16, it would be printed on a label that could be removed or duplicated. A DotCode printed directly on the product using a laser may be a more viable solution.

16

Shanna Appelhanz, Victoria-Sophie Osburg, Waldemar Toporowski, Matthias Schumann, “Traceability system for capturing, processing and providing consumer relevant information about wood products: system solution and its economic feasibility�, https://www.sciencedirect.com/science/article/pii/S095965261500147X

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Case Study – Tobacco This section refers to multiple product sizes. They may include: Size Pack

Pouch

Carton

Case Pallet

Description This is the retail unit for cigarettes. Each pack contains a fixed number of individual cigarettes wrapped in foil, packed in cardboard, and wrapped in cellophane. Tax stamps and serialization are required at this level. Regulations may specify a minimum number of cigarettes that may be sold in a pack. This is the retail unit for loose tobacco. Each pouch contains a fixed quantity of tobacco wrapped in plastic-coated thick paper stock and wrapped in cellophane. Tax stamps and serialization are required at this level. Regulations may specify a minimum quantity of tobacco that may be sold in a pouch. Also referred to as an “outer”. This may be a retail unit for cigarettes and loose tobacco. Each carton contains a fixed number of packs or pouches. Serialization is required at this level. Cartons may be sold complete or may be broken down for individual sale. This is typically the minimum order level by the retailer except for direct-store-delivery (DSD) scenarios where sales agents may sell individual packs or pouches. This is the primary distribution unit. Each case contains a fixed number of cartons. This is the secondary distribution unit. Each pallet contains a fixed number of cases.

Market Size According to the OECD, the percentage of the population 15+ who are daily smokers ranges from a low of 13.1% to a high of 40.0%, depending on the country and the year in which it was measured.17 Worldwide, this translates to roughly 5.5 trillion cigarettes per year18 worth US $698,541.7 billion19. The low cost of production and the high retail cost of tobacco products, due primarily to taxes, makes industry ripe for counterfeiting and arbitrage.

Illicit Trade Except where indicated, the text and figures here are derived from the KPMG Project SUN report20, which focuses on the illicit cigarette market in the European Union, Norway, and Switzerland. In Europe, the illicit trade in tobacco has accounted for 1 in 10 cigarettes consumed since 2010 with illicit whites (cigarettes manufactured for the sole purpose of being smuggled into and sold illegally in another market) accounting for over one third of that. 17

OECD (2014), “Tobacco consumption, Percentage of population 15+ who are daily smokers”, http://dx.doi.org/10.1787/tobacco-table-2014-1-en 18 World Health Organization, “WHO Report on the Global Tobacco Epidemic, 2015, Raising taxes on tobacco”, http://www.who.int/tobacco/global_report/2015/en/ 19 Euromonitor International. “Market Research on the Tobacco Industry” http://www.euromonitor.com/tobacco (paid access) 20 KPMG, “Project SUN: A study of the illicit cigarette market”, https://home.kpmg.com/uk/en/home/insights/2015/05/project-sun-a-study-of-the-illicit-cigarette-market.html

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Unsurprisingly, the greater the price differential between neighbouring countries, the greater the flow of contraband. Eastern EU countries with high levels of counterfeit and contraband mainly bordered non-EU countries where average prices were four times lower. Counterfeit and contraband as a percentage of consumption was also high in Greece, Norway, UK, and Ireland, which also have the highest prices within Europe. Due to increased supply chain monitoring because of agreements signed by the four largest tobacco product manufacturers (outside of China) with the European Anti-Fraud Office (OLAF), the percentage of arbitraged product intercepted dropped steadily from 2009 (23.9 billion cigarettes) to 2015 (6.5 billion cigarettes), accounting in 2015 for 12.2% of the total contraband market. Counterfeiting has been increasing since 2013 with the likely cause being the increased monitoring of the supply chain by the manufacturers leading to lower availability of specific brands in the contraband market. Counterfeit identified in the study was most common in brands with high levels of legal domestic sales in the country identified. Total tax losses for the EU 28 countries based on weighted average price were estimated to be €11.3 billion in 2015, down marginally from €11.5 billion in 2014. With arbitraged product representing 12.2% of the total contraband market, the net loss due to arbitrage in 2015 was approximately €1.38 billion.

Regulatory Frameworks WHO Framework Convention on Tobacco Control The WHO Framework Convention on Tobacco Control (FCTC)21 is a supranational agreement that seeks “to protect present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke” by enacting a set of universal standards stating the dangers of tobacco and limiting its use in all forms worldwide. To this end, the treaty’s provisions include rules that govern the production, sale, distribution, advertisement, and taxation of tobacco.22 Article 15 in particular focuses on eliminating illicit trade by mandating identification and traceability: 2) Each Party shall adopt and implement effective legislative, executive, administrative or other measures to ensure that all unit packets and packages of tobacco products and any outside packaging of such products are marked to assist Parties in determining the origin of tobacco products, and in accordance with national law and relevant bilateral or multilateral agreements, assist Parties in determining the point of diversion and monitor, document and control the movement of tobacco products and their legal status. In addition, each Party shall: a) require that unit packets and packages of tobacco products for retail and wholesale use that are sold on its domestic market carry the statement: “Sales only allowed in (insert name of the country, subnational, regional or federal unit)” or carry any other effective marking 21

World Health Organization, “WHO Framework Convention http://apps.who.int/iris/bitstream/10665/42811/1/9241591013.pdf?ua=1 22 Wikipedia, “WHO Framework Convention on https://en.wikipedia.org/wiki/WHO_Framework_Convention_on_Tobacco_Control

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Control”, Control”,

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indicating the final destination or which would assist authorities in determining whether the product is legally for sale on the domestic market; and b) require that unit packets and packages of tobacco products for retail and wholesale use that are sold on its domestic market carry the statement: “Sales only allowed in (insert name of the country, subnational, regional or federal unit)” or carry any other effective marking indicating the final destination or which would assist authorities in determining whether the product is legally for sale on the domestic market; and consider, as appropriate, developing a practical tracking and tracing regime that would further secure the distribution system and assist in the investigation of illicit trade. It is this mandate from the WHO that is driving the requirement for identification and traceability within the EU and will ultimately drive it in other countries.

European Union Tobacco Products Directive The European Union Tobacco Products Directive (TPD)23 is the EU’s implementation of the FCTC. As such, its regulations are closely aligned with the FCTC’s requirements. It introduces EU-wide tracking and tracing to combat illicit trade of tobacco products with full implementation by 20th May 2019 for cigarettes and hand rolling tobacco and 20th May 2024 for all other tobacco products. Article 15 of the TPD concerns traceability, of which the critical requirement is paragraph 5: Member States shall ensure that all economic operators involved in the trade of tobacco products, from the manufacturer to the last economic operator before the first retail outlet, record the entry of all unit packets into their possession, as well as all intermediate movements and the final exit of the unit packets from their possession. This obligation may be complied with by the marking and recording of aggregated packaging such as cartons, mastercases or pallets, provided that the tracking and tracing of all unit packets remains possible. An economic operator is a business or other organization which supplies goods, works or services within the context of market operations. The term is used in public procurement to cover suppliers, contractors and service providers.24 In short, all economic operators in the supply chain except the retailer must maintain complete traceability records of all movements related to tobacco products. While retailers are themselves excluded, the last economic operator before the retailer is still required to record the movement to the retailer itself.

23

The European Parliament and the Council of the European Union, “Tobacco Products Directive (2014/40/EU)”, https://ec.europa.eu/health/sites/health/files/tobacco/docs/dir_201440_en.pdf 24 Wikipedia, “Economic operator”, https://en.wikipedia.org/wiki/Economic_operator

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Adoption of GS1 Standards – Present Retail Tobacco is ultimately a retail product and as such most tobacco products are barcoded and identified with a GTIN. The figure below shows retail packaging for a pack of cigarettes; note the absence of any preprinted production control information.

Figure 6 – Cigarette pack before manufacturing

The figure below shows the marked end of a carton. Note the GS1 DataMatrix barcode with GTIN, serial identifier, and alternate product identification.

Figure 7 – Cigarette carton

Manufacturing From a standards perspective, tobacco product manufacturing follows a familiar model: packs into cartons, cartons into cases, cases onto pallets. Because of the regulatory requirement for serialization and traceability, recording of all aggregation information is required. The steps are therefore roughly as shown below.

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1) Application of serial identifier. Note blanks space on packs at the bottom, printed on packs at the top.

2) Recording of serial identifiers and preparation for carton. Note laser scanner at the left.

3) Packing into carton and serialization of carton. Note the GS1 DataMatrix barcode in the centre.

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4) Aggregation into case and labelling of the case.

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5) Aggregation onto pallet.

Distribution Distribution is highly variable and depends significantly on the size of the distributor and the size of the economic operator to which the product is being distributed. Most distributors receive cases and pallets, though smaller distributors serving remote areas may receive only cartons. The biggest challenge in distribution is to the retailer, which in many instances is a small tobacconist selling a case of mixed product per week.

Figure 8 – Mixed case

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Figure 9 – Mixed case

It is at this point that standardization often breaks down. While homogenous cases may be identified with a GTIN at the manufacturer, heterogeneous cases such as the ones above are typically assembled by distributors well removed from the manufacturers. These distributors often have no relationship to GS1 at all and are unable to mark cases in a standard way. Even manufacturers who do such distribution themselves typically don’t have processes in place for standardized heterogeneous case marking.

Figure 10 – A typical, proprietary case label

Distributors are also, to some extent, manufacturers, in that they often have to prepare promotional packs or accommodate price changes for vending machines by including extra change in the package when cycling out old stock with pre-printed prices. When preparing a promotional pack, scanning the DotCode is required.

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Figure 11 – Promotional pack with cigarette lighter

The challenge of standardization is further exacerbated by the fact that there is not a single, coherent distribution model and no firm definition of “retailer” for all circumstances. •

Many small retailers purchase their products wholesale from “cash-and-carry” warehouse outlets. While many are exclusive to retailers and other businesses (business-to-business or B2B), others will sell to the general public as well (business-to-consumer or B2C). This creates issues for traceability as in the B2B scenario the outlet is the last economic operator before the retailer and in the B2C scenario it is itself the retailer. Vending machines are typically installed in bars and other environments where cigarettes in demand and other retail options are not readily available. The vending machines are typically not owned by the business in which they are installed and so although the business receives a commission or other consideration for the sales the question of who is the retailer is still an open one. If the vending machine operator is the retailer, it may be sufficient for the distributor supplying the operator to record the cases, cartons, and packs shipped. If the business hosting the vending machine is the retailer, the vending machine operator will be required to record each and every pack loaded into the vending machine. Large retailers with centralized distribution of their own will typically order in bulk and distribute to their individual outlets. If the retailer in this scenario is the company as a whole, there is no requirement for the centralized distribution centre to record the unique identifiers of the products shipped to the individual outlets. If the retailer is the individual outlet, then the centralized distribution centre becomes part of the traceability chain with all the attendant recording requirements. Even with service from a centralized distribution centre, individual outlets of a large retailer situated in remote areas may source product not just from the centralized distribution centre but also from local, independent distributor or cash-and-carry outlets.

By the Numbers – JTI UK Japan Tobacco International (JTI) operates a distribution facility in Crewe, United Kingdom. It is the sole distribution centre for the UK.

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The UK is a direct account market. The distribution facility serves 240-250 customers, comprising large retail organizations, large distributors (wholesalers, cash-and-carry), and independent retailers. The facility also handles duty-free (airport shopping, cruise lines, military, etc.) but that volume is very small. Within their customer base, the top 60 give 98% of volume and the top 25 give 93% of volume. Small distributors may serve large, sparsely populated areas. Most sales are at the pallet level. There are generally 50 cases per pallet but it depends on the cigarette size (regular vs. king size). Other sales at the case level (5,000 sticks, 25 x 10 cartons x 20-per-pack). Smaller customers are almost exclusively dealt with at the carton level; larger customers may be handled at the carton level as well to simplify their distribution to individual outlets. Major retailers don't buy from tobacco companies directly. Instead, they deal with a distributor (Palmer & Harvey) that delivers directly to individual retail outlets, bypassing the retailer's normal supply chain. JTI supplies three regional cash-and-carry distribution centres (Booker) which in turn ship to 172 depots. Ireland has more accounts than UK (approximately 1,000) and consists primarily of small, direct-to-retail orders as there are very few distributors in Ireland. The majority of the product (79%) comes from Poland, 20% from Romania, and 1% from Germany. Many of the warehouse procedures driven by duty regulations. Product in warehouse is duty-suspended until the order is picked when it moves to duty-paid status and the order can be fulfilled only from dutypaid. Because of the immediacy of the duty liability, customers are invoiced at time order is picked, not delivered. Liabilities from any calendar month are paid on the 15th of each month. Not all products are subject to traceability; it depends on the brand's agreement with the UK customs authority. Brands sold exclusively in the UK are not tracked as if it's present outside of the UK, it's obviously smuggled or counterfeit. This will change under TPD. By the Numbers – Logista Logista is a large distributor based in Madrid, Spain. It manages over 98% of the tobacco market in some countries and overall 40% of the tobacco market in Europe. Their market, tobacco and non-tobacco, includes 300,000 delivery points in Spain, France, Italy, Portugal, and Poland, of which one third are small tobacconists. Logista deals with approximately 100 different tobacco manufacturers with different barcode placement, identification standards, and quality. They receive approximately 50 trucks per day in Spain, mostly pallets, though sometimes loose cases, which causes problems for receiving. Some pallets come in with non-standard heights and labels. There is no homogeneity in positioning and quality for outer (carton) level barcode; the big four manufacturers have standardized but small manufacturers have not. This is a significant issue as they scan 500,000 cartons per day in Spain alone. In Portugal, Logista services 7,000 vending machines that are replenished at the loose pack level. In Spain, the vending machines are replenished by individual tobacconists. For the top 100 products picking is automated or semi-automated; for the remaining 3,000 products the picking is manual. By Logista’s estimate, scanning individual cartons in pick-to-light drops manual picking productivity by 25%, so the labour cost impact of TPD is high.

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Returns Returns are a significant issue for tobacco manufacturers and distributors. While there is no requirement in the TPD for recording of returns, it is a gap that may need to be addressed at some point as destruction facilities are common points of leakage for many products. Product that is in resalable condition (full carton, no damage, tax stamp still present) may be returned to inventory. Often, however, returned product is damaged and must be destroyed. The complication for the returns management process is that returns are often in units and bundled up in standard carton quantities of 10 for ease of accounting and transport. The example below shows 10 packs of mixed product, taped up in random orientation. The retailer has been credited for a full carton return.

Figure 12 – Returned packs, bundled in 10s to match carton configuration

Other Issues There are several other issues that complicate the implementation of TPD. •

Processes and systems in place today allow traceability of product and quantity to its destination. Significant reengineering of warehouse management processes and systems will be required to support the pack-level traceability requirement. Many distributors and cash-and-carry operations are simply not ready. Paragraph 7 of the TPD states that “Member States shall ensure that the manufacturers of tobacco products provide all economic operators involved in the trade of tobacco products, from the manufacturer to the last

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economic operator before the first retail outlet, including importers, warehouses and transporting companies, with the equipment that is necessary for the recording of the tobacco products purchased, sold, stored, transported or otherwise handled.” This is not well-defined; downstream economic operators are expecting tobacco manufacturers to fund the compliance but the regulation says nothing about covering the people required to implement traceability. There is no common identification scheme for any of the economic operators; every party has its own identification system for the other parties it deals with. This complicates the requirement that data be stored with an independent third party. Without a common identification scheme or repository format, any independent third party dealing with multiple economic operators will have to segment the data for each one. This severely limits the ability of EU regulators and tobacco industry investigators to trace contraband product. Sales representatives doing DSD for tobacco will need to have updated systems to record individual packs sold to small retailers. The sales representatives themselves may also have to be identified as individual economic operators to manage traceability. Distributors will reuse cases for filling orders. In these situations, the case label is replaced, but the new label often doesn’t obscure the old one, which can lead to problems in scanning.

Adoption of GS1 Standards – Future A standards-based framework is the only viable way to implement the TPD. The requirements for identification, traceability, and data sharing simply cannot be met with proprietary solutions in the timeframe allowed.

Data Management Data management is a critical part of the GS1 system. In general, it is broken up into three broad types: master data, transaction data, and event data. Master Data Master data is the class-level data associated with the items being tracked or traced or the parties participating in the request. This is the minimum information necessary to issue any form of tracking or tracing request as it identifies what is being requested, who is requesting it, and of whom it is being requested. GS1 supports master data exchange for products through the Global Data Synchronization Network (GDSN)25 and for locations and parties (participants in the request) through the GLN (Global Location Number) Service26. Depending on where the request originates, it may also be necessary to identify the party responsible for assigning the Global Trade Item Number (GTIN) to the product or the GLN to the location. This may be done through the Global Electronic Party Information Registry (GEPIR) network27.

25

GS1, “Global Data Synchronization Network”, http://www.gs1.org/gdsn GS1, “GLN Service”, http://www.gs1.org/gln-services 27 GS1 “GS1 GEPIR”, http://gepir.gs1.org/ 26

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With only master data available, any tracking or tracing request is going to be limited in its effectiveness. This is useful for broad-based use cases such as product recalls where notification is sent to a large number of parties with little to no confirmation that the parties have ever handled the product. Transaction Data Transaction data binds parties in the supply chain together. Even the simplest operation has many transaction elements associated with it. For example, the order process at its simplest involves the following: Order Advanced shipment notice

Receipt Invoice Manufacturer

Payment

Retailer

Figure 13 – Simple order process

In reality, an order process may involve multiple other parties including carriers, distribution centres, brokers, customs agents, and more. With appropriate transaction documents for all parties involved, it’s possible to track products forward trace them backward in the supply chain using connections to previous and next party in the supply chain (referred to as “one up, one down” in traceability). GS1 supports transaction data through GS1 Electronic Data Interchange (EDI), which is composed of three complementary standards28: • • •

GS1 EANCOM GS1 XML GS1 UN/CEFACT XML

With appropriate transaction data records, it’s track or trace a product through the entire supply chain. The level at which this occurs depends, of course, on the level at which the product is recorded: class (GTIN), group (GTIN plus batch or lot identifier), or instance (GTIN plus serial identifier). Event Data Event data is the recording of events at a group or instance level of a product. The definition of “event” is purposefully very broad; it can encompass literally anything of interest to one or more parties in the supply chain. EPC Information Services (EPCIS) is the GS1 standard for event data, the goal of which is “to enable disparate applications to create and share visibility event data, both within and across enterprises”29. In general, EPCIS deals with both event data and master data. The standard defines event data as data that “arises in the course of carrying out business processes, and is captured through the EPCIS Capture

28

GS1, “GS1 EDI”, http://www.gs1.org/edi GS1 “EPC Information Services (EPCIS) Standard 1.2”, http://www.gs1.org/sites/default/files/docs/epc/EPCISStandard-1.2-r-2016-09-29.pdf 29

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Interface and made available for query through the EPCIS Query Interfaces”30. It defines master data as “additional data that provides the necessary context for interpreting the event data”31. EPCIS is, as much as possible, a generic specification with many of its elements defined by the business processes in which the events occur. To support this abstraction and to provide concrete definitions for many common supply chain processes, GS1 has also defined the Core Business Vocabulary (CBV) standard, the goal of which is “to specify various vocabulary elements and their values for use in conjunction with the EPCIS standard”32. If fully implemented across all parties in the supply chain, EPCIS and CBV can provide a complete picture of all movements of an object through the supply chain including conditions under which the object was handled (e.g. temperature in a warehouse), activity in which the object participated (e.g. manufacturing), association with transactions, and more. The extensibility of EPCIS means that, should parties in the supply chain require the recording of additional information above and beyond that supported by EPCIS and CBV, they can do so by defining their own structures and identifiers within EPCIS and remain compliant.

Global Trade Item Number (GTIN) The Global Trade Item Number (GTIN) can be used by a company to uniquely identify all of its trade items. GS1 defines trade items as products or services that are priced, ordered or invoiced at any point in the supply chain.33 The GTIN is the lingua franca of trade. At any point where a product may be sold ordered, there should be a GTIN: on the pack, on the carton, on the case, and on the pallet. While many pallets in the tobacco industry are identified using an SSCC (see below), that satisfies only the logistics use case. Even if a GTIN is never printed on a preconfigured pallet, it should at least be available for ordering. Serialization The scope of serialization defines the range in which the serial identifiers are unique. The scope depends on the regulatory environment, the industry requirements, and the manufacturer capability. The lowest scope is the product or GTIN and by definition the serial identifier is always unique at this level: no two products with the same GTIN should ever have the same serial identifier. The immediate challenge with maintaining serialization at the product level is that a single production run may result in multiple products similar in content but differing in some factor such as size or target market. As each product is packaged, the system applying the serial identifiers would have to refer to a productspecific record to apply the right one to the right product. The next scope is the product line. This eliminates the need to track individual products and applies the serial identifier to each product regardless of differences in production factors. Similar scopes include the

30

ibid ibid 32 GS1, “Core Business Vocabulary Standard 1.2”, http://www.gs1.org/sites/default/files/docs/epc/CBV-Standard-12-r-2016-09-29.pdf 33 GS1, “Global Trade Item Number (GTIN)”, http://www.gs1.org/gtin 31

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brand (serial identifiers unique across all products within the same family), and the company (serial identifiers unique across all products manufactured by the company). In each case, the serial identifier is entirely under the control of the company that owns the product. The company can answer queries about the serial identifier as long as the product is known to come from that company and the query includes the GTIN of the product. The company can also parcel out serial identifiers to each of its manufacturing facilities to ensure uniqueness regardless of where the product is manufactured. There are two possible scopes outside the company that owns the product. The first is within an industry, where an industry organization works with its members to ensure that serial identifiers are unique across all products within the industry. Unless driven by regulation, such an approach is likely not feasible as it requires voluntary participation on the part of the industry members. Regulation leads to the widest scope of all: that of a country or region. Tax stamps for tobacco are a good example of this: the unique identifier on the tax stamp is managed by a government authority or designated third party, issued to companies on an as-needed basis, and allocated to products by those companies. The mandate would likely be accompanied by a registration process so that serial identifier queries can be handled by the government authority directly, which will have access to all the manufacturing information necessary to map the serial identifier to the product instance it represents. This last scope requires a high degree of coordination between the government and the affected companies. It requires high security to ensure that legitimate, pre-printed stamps are not stolen. It also limits the geographic area in which the product may be sold to the country or region in which the regulation applies. GS1 itself does not define any standards for serialization. Support for serial identifiers is available throughout the system but the generation of the identifiers themselves is at the discretion of the manufacturer. The only requirement is that the serial identifier be unique within the scope of the GTIN itself, a requirement that is satisfied by all the above approaches.

Serial Shipping Container Code (SSCC) The Serial Shipping Container Code can be used by companies to identify a logistic unit, which can be any combination of trade items packaged together for storage and/ or transport purposes; for example a case, pallet, or parcel.34 The SSCC is an aggregation of products for shipping and is associated with the transactional data for the shipment. There is no contradiction in the application of an SSCC to case that is already identified with a GTIN and serial identifier; in that instance, the SSCC is the aggregation of a single item (the homogenous case). Due to the traceability requirements of TPD, the SSCC is strongly recommended for all shipments to provide the necessary standardized shipping and receiving notifications.

34

GS1, “Serial Shipping Container Code (SSCC)�, http://www.gs1.org/serial-shipping-container-code-sscc

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Global Location Number (GLN) Global Location Number (GLN) can be used by companies to identify their locations, giving them complete flexibility to identify any type or level of location required.35 The GLN was originally designed for parties (companies, divisions, departments) and large, coarselygrained locations (buildings, floors, rooms). Fine-grained locations such as warehouses which may include thousands of individual locations (bins on shelves in rows in areas) can easily exceed the GLN capacity available to any one organization. To support fine-grained locations, the GLN supports an extension component of up to 20 alpha-numeric characters. The extension component is typically the internal warehouse location using the existing warehouse map.

EPC Information Services (EPCIS) EPCIS is a GS1 standard that enables trading partners to share information about the physical movement and status of products as they travel throughout the supply chain – from business to business and ultimately to consumers. It helps answer the “what, where, when and why” questions to meet consumer and regulatory demands for accurate and detailed product information.36 The goal of EPCIS is to enable disparate applications to create and share visibility event data, both within and across enterprises. This sharing is aimed at enabling users to gain a shared view of physical or digital objects within a relevant business context.37 EPCIS is intended to be used in conjunction with the GS1 Core Business Vocabulary (CBV) standard. The CBV provides definitions of data values that may be used to populate the data structures defined in the EPCIS standard. The use of the standardized vocabulary provided by the CBV standard is critical to interoperability and critical to provide for querying of data by reducing the variation in how different businesses express common intent.38 EPCIS supports all the events necessary to implement the Tobacco Products Directive: • • • • • • • •

commissioning (manufacturing the pack); aggregation (packs into cartons, cartons into cases, cases onto pallets); put-away; picking; shipping; receiving; disaggregation; and decommissioning (destruction).

35

GS1, “Global Location Number (GLN)”, http://www.gs1.org/gln GS1, “EPCIS and Core Business Vocabulary (CBV)”, http://www.gs1.org/epcis 37 ibid 38 ibid 36

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The European Commission has already commissioned a comprehensive analysis of tracking and tracing solutions. Its key findings are39: • • • •

• • •

Implementation of tobacco implementation of traceability [sic] is feasible both technically and from a competitive market perspective (see Market Assessment); Traceability is a growing trend globally and is being applied across multiple industries (see Case Studies); The needs of varied stakeholders are not mutually exclusive and multiple parties can benefit from secure traceability, e.g., public health, law enforcement, revenue, consumers; There is no “one size fits all” solution; traceability can be achieved via multiple approaches with respect to technology, solution architecture and governance (see Four Options for Traceability and Security Features); Global standards for communication, product and supplier identification are already prevalent in today’s tobacco supply chains, and this usage will enable traceability (see 4.3); Independent data storage is not only feasible, but the estimates of data storage requirements show this to be manageable (and not as large as originally envisaged); and, The accumulative estimated benefits of tobacco traceability outweigh the costs to industry and government (see Cost Benefit Analysis).

The document further refers to EPCIS as the “lingua franca for supply chain visibility”. In its analysis of current track and trace industry trends it concludes as follows: By defining a shared minimum requirement and showing what action is required from trading partners, the GS1 traceability standard enables maximum interoperability between traceability systems across the supply chain whilst accommodating specific commercial, industry sector or legislative requirements. It serves as a foundation for identifying the unique requirements of each actor in the supply chain, and the service provider and/or integrators can add their own extension or leave out some of the components according to their needs or specific intent. The EPCIS standard is only a part of the GS1 ecosystem which itself has to communicate with other systems such as Manufacturing Execution System (MES) and Enterprise Resource Planning (ERP). The EPCIS standard is designed as a platform with a uniform query and update interface to applications, while the actual implementation details and data binding to existing databases and information systems is not specified by EPCIS, which should therefore support simultaneous binding to multiple databases and information systems from multiple vendors. This implementation is a differentiating factor and usually reflects the maturity of the solution for the targeted sector, with every vendor flavouring his own EPCIS implementation to win the edge on the competition and/or solve a particular problem. In sum, the GS1 standard offers a framework to establish a holistic view of the supply chain and create a bridge between the physical and the information flow. Its neutrality and general acceptance makes it well positioned to appropriately respond to traceability system design and implementation requirements. Specifically in the area of exchange and recording of traceability 39

Eurogroup Consulting and Sovereign Border Solutions, “Analysis and Feasibility Assessment Regarding EU systems for Tracking and Tracing of Tobacco Products and for Security Features”, http://ec.europa.eu/health/sites/health/files/tobacco/docs/2015_tpd_tracking_tracing_frep_en.pdf

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event data, implementation of EPC Information Service (EPCIS) may not be as high as levels of the other GS1 standards, though detailed EPCIS specifications have already been developed by GS1, with large-scale and mature applications just beginning to be exploited at large scale. EPCIS has been implemented and supported by several software providers including the likes of IBM, Microsoft, Oracle, SAP, NEC, LG, as well as Fosstrak, an open source software project.

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The Need for Standards Identification and traceability regulations generally only specify the requirements for identification and traceability and leave the implementation to the industry. The requirements within the TPD can best be summed up as follows: • •

Identification: every retail tobacco product produced by a manufacturer shall have a unique identifier. Traceability: every economic operator from the manufacture to the last economic operator before the retailer shall record the movement of each product.

None of this is possible with proprietary solutions. This is best illustrated through a simplified retail supply chain process.

Figure 14 – Simplified retail supply chain process

The manufacturer on the left ships to the distributor, who in turn ships to the retailer, who sells to the consumer. Assuming perfect visibility into the process, the manufacturer knows to whom it sold the product, the distributor knows to whom it sold the product, and the retailer knows to whom it sold the product. It should therefore be possible to track the product to the consumer to whom it was sold. Conversely, it should also be possible to trace the product through all the parties that handled it and back to the location in which it was manufactured. Even in such a simple supply chain, there is seldom perfect visibility. Several factors can confound the ability to track or trace products through the supply chain: •

• • •

A party in the supply chain may not have accurate records of the movement of goods through its facility. o The manufacturer, distributor, or retailer may not record the movement of goods with sufficient accuracy to determine exactly what went where. o The retailer may not have any information about the consumer (e.g. cash purchase) or may be prohibited by regulation from recording detailed purchase information. Parties may use different identifiers for the same product, making cross-referencing difficult. Parties in the supply chain may not keep records in a consistent, standard format. Goods may be diverted (e.g. due to tax arbitrage) without any records.

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These issues become more acute as the supply chain grows.

Figure 15 – Larger retail supply chain process

Even this diagram isn’t realistic; brokers, carriers (road, rail, air, and sea), cooperatives, and more may be involved in the manufacturing and distribution of a single product and any or all of them will have something to contribute to the supply chain process. A proprietary solution for TPD fails in several ways: • •

• •

without central coordination, the unique identifiers assigned by manufacturers to their products will occasionally collide; distributors who, by definition, deal with multiple manufacturers will be provided with multiple sets of incompatible equipment that they will have to use, often on the same order fulfillment, to record distribution to the retailers; manufacturers, distributors, and retailers that serve multiple industries will have to deal with multiple traceability systems to satisfy TPD and other non-tobacco requirements; and regulators will be required to contact each manufacturer individually to trace contraband product.

The GS1 Framework Identify Identification is the core of traceability. Proper identification tells you unambiguously what is being traced and where it has been. Depending on the regulatory or business requirements, traceability may be as coarse-grained as product and quantity and as fine-grained as individual units. The more valuable the product or the stronger its impact on consumer health and safety, the more fine-grained the requirements.

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An identifier must be unique within its domain to prevent conflict or ambiguity. In the supply chain, only GS1 provides the breadth of identification standards necessary to implement traceability: • • • • •

the GTIN to identify products; the GLN to identify locations; the GSIN, and GINC, and SSCC to identify shipments, consignments, and containers respectively; the GDTI to identify documents; and the GRAI and GIAI to identify assets.

Within its identification system, GS1 supports many qualifiers to narrow the scope of identification: • • • • •

the batch/lot identifier to narrow the scope of the GTIN to a particular set of common production characteristics; the serial identifier to narrow the scope of the GTIN to a particular instance of a product; the GLN extension to narrow the scope of the GLN to a fine-grained location within a location (e.g. a bin in a warehouse); the serial identifier to narrow the scope of the GDTI to a particular instance of a document; and the serial identifier to narrow the scope of the GRAI to a particular instance of an asset.

Capture Identifiers have to be encoded in a machine-readable way; with the volume of products and shipments moving through the supply chain, having only human-readable identifiers is both inefficient and prone to error. GS1 supports multiple barcode and RFID tag formats to carry its identifiers and related information. Each format supports one or more use cases and each use case supports one or more formats. It is in this area of the GS1 standards that DotCode fits.

Share The ability to share data is the necessary final pillar supporting traceability. While the idea of a single, central repository may be appealing, such a solution is problematic from several perspectives including: • • •

governance (who owns or controls it and where the data resides); data security (how is the system secured against snooping or other hostile business intelligence activities); and timeliness (how often and how quickly do supply chain parties update the system).

GS1 provides a comprehensive suite of data exchange standards to facilitate data sharing: • • •

master data (products and locations); transaction data (GS1 XML, EANCOM, GS1 UN/CEFACT XML); and event data (EPCIS and CBV).

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ISO Standards GS1 is an active participant in the International Organization for Standardization (ISO) and a number of GS1 standards have been accepted as ISO standards.40 In addition, ISO has a number of standards that may apply to the implementation of the TPD including ISO 1293141 (performance requirements for authentication solutions), ISO 1667842 (deterrence of counterfeiting and illicit trade), and ISO/IEC 15459243 (unique identification).

Academic Support There is significant academic support for the GS1 system of standards in traceability and interoperability applications including papers by Myo Min Aung and Yoon Seok Chang44; R. Badia-Melis, P. Mishra, and L. Ruiz-García45; Teresa Pizzuti and Giovanni Mirabelli46; Maitri Thakur, Carl-Fredrik Sørensen, Finn Olav Bjørnson, Eskil Forås, and Charles R. Hurburgh47; A. Kassahun, R.J.M. Hartog, T. Sadowski, H. Scholten, T. Bartram, S. Wolfert, and A.J.M. Beulens48; A. Kassahun, R.J.M. Hartog, and B. Tekinerdogan49; and more. While a comprehensive review of all references is beyond the scope of this paper, all references support identification at the unit or batch/lot level to enable traceability and all support EPCIS as a framework for implementation.

40

GS1, “GS1 and ISO Partnering for Standards”, http://www.gs1.org/docs/gs1_iso_brochure.pdf ISO, “ISO 12931:2012 – Performance criteria for authentication solutions used to combat counterfeiting of material goods”, https://www.iso.org/standard/52210.html 42 ISO, “ISO 16678:2014 – Guidelines for interoperable object identification and related authentication systems to deter counterfeiting and illicit trade”, https://www.iso.org/standard/57391.html 43 ISO, “ISO/IEC 15459-2:2015 – Information technology -- Automatic identification and data capture techniques -- Unique identification -- Part 2: Registration procedures”, https://www.iso.org/standard/54780.html 44 Myo Min Aung and Yoon Seok Chang, “Traceability in a food supply chain: Safety and quality perspectives”, http://www.sciencedirect.com/science/article/pii/S0956713513005811 45 R. Badia-Melis, P. Mishra, and L. Ruiz-García, “Food traceability: New trends and recent advances. A review”, http://www.sciencedirect.com/science/article/pii/S0956713515002698 46 Teresa Pizzuti and Giovanni Mirabelli, “The Global Track & Trace System for food: General framework and functioning principles”, https://www.researchgate.net/publication/274645949_The_Global_TrackTrace_System_for_food_General_frame work_and_functioning_principles 47 Maitri Thakur, Carl-Fredrik Sørensen, Finn Olav Bjørnson, Eskil Forås, and Charles R. Hurburgh, “Managing food traceability information using EPCIS framework”, http://www.sciencedirect.com/science/article/pii/S0260877410005492 48 A. Kassahun, R.J.M. Hartog, T. Sadowski, H. Scholten, T. Bartram, S. Wolfert, and A.J.M. Beulens, “Enabling chainwide transparency in meat supply chains based on the EPCIS global standard and cloud-based services”, http://www.sciencedirect.com/science/article/pii/S016816991400249X 49 A. Kassahun, R.J.M. Hartog, and B. Tekinerdogan, “Realizing chain-wide transparency in meat supply chains based on global standards and a reference architecture”, http://www.sciencedirect.com/science/article/pii/S0168169916300710 41

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Final

GS1 DotCode


Standardizing the DotCode The DotCode satisfies three critical requirements that cannot be satisfied by any existing barcode symbology: • • •

it can be printed at speeds in excess of 1,000 barcodes per minute compared to 500 barcodes per minute for the closest competing barcode50; it can be printed using continuous ink-jet printing technology (already ubiquitous on product lines) and laser printing technology (less common); and it is skew-tolerant, a common problem when dealing with high-speed production lines and lowquality CIJ printers.

While GS1 strongly recommends the use of a single barcode to carry all the data necessary for the use case to which it is being applied, multiple barcodes are supported. The use of multiple barcodes is naturally slower as it requires multiple scanning operations, which can be further slowed if the barcodes are on different faces of the product, as is the case of the EAN/UPC barcode on the side of a cigarette pack and the DotCode on the bottom. (Note that, if the DotCode also contains the GTIN that is encoded in the EAN/UPC barcode, it is considered to be a single barcode as it’s not necessary to scan the EAN/UPC barcode.) Multiple barcodes are an acceptable solution when the requirement is for sampling (i.e. where not every barcode is required to be read to satisfy the use case) or for scanning multiple homogenous items (e.g. where the GTIN is the same and multiple serial identifiers are being read as is the case when picking for order fulfillment). Each of these applies to contraband traceability. When confronted with potential contraband product, representative sampling is all that is necessary to confirm or reject the contraband hypothesis and, if contraband, to determine the source through the traceability records. If comprehensive scanning is required, the nature of contraband suggests that, while quantities may be significant, variety of product is likely to be low, requiring the scanning of only a few GTINs versus the multiple serial identifiers. It is therefore not necessary to encode the GTIN in the DotCode to satisfy the traceability requirements imposed by regulation frameworks like the TPD. This can also simplify the implementation of TPD. The requirement that everything be encoded in a single barcode would require more complete integration into the production control systems to know exactly what GTIN is being produced, although some integration is already required in that the serial identifier has to link to the product description. It also means that the space required by the DotCode is smaller and time to mark it on the packaging is less, which may be a critical feature in packaging design.

50

GS1 High-Speed Barcode Printing Mission-Specific Work Group, “Business Requirements Analysis Document (BRAD) High Speed Barcode Printing”

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Other Applications Point-of-Sale Tracking Point-of-sale tracking is where the unique identifier is required to be read for every product sold. This is known to occur for high-value products (e.g. electronics in retail) and for products with significant impacts on consumer health and safety (e.g. pharmaceutical dispensing). The adoption of the DotCode in such environments would require a significant investment in equipment upgrades (hardware or software) and is therefore not viable at this time. Furthermore, regulatory requirements as in the pharmaceutical industry may mandate different symbologies. The DotCode is not suitable for point-of-sale tracking applications.

Traceability and Product Recall The adoption of the DotCode in environments in which there is already significant CIJ printer investment, such as in grocery and other perishable goods manufacturing, would lend itself very well to the traceability and product recall use cases. An independent food safety watchdog, the Food Standard Agency identified three basic characteristics for traceability systems51: i. ii. iii.

identification of units/batches of all ingredients and products; information on when and where they are moved and transformed; and a system linking these data.

The first point is the identification of units/batches; this is enabled through the addition of a serial identifier (units) or batch/lot identifier (batches). For such identification to be effective from a traceability point of view, it must be encoded in a machine-readable manner. For it to be cost-effective, it must be possible to encode the information without affecting production line speeds. Product recalls may affect all instances of a product (due to a design defect) or a time-limited set of instances (due to a manufacturing defect). In the former case, the DotCode adds no value as all that matters is the GTIN. In the latter use case, however, the DotCode may add significant value by limiting the recall to only those products affected. Recalls for manufacturing defects typically include a list of the affected batches/lots. These batches/lots are those that are known to have been produced at the time that the manufacturing defect (equipment sterilization, contaminated ingredient, improper temperature control, etc.) is known to have occurred. Retailers affected by the recall may then use a mobile app integrated into the product recall service to scan the GTINs (to confirm the product affected) and the batch/lot identifiers to determine if any of the product on the shelf is affected. Manual validation of the batch/lot identifiers is problematic because of inconsistent placement and formatting across brands and even across products within the same brand. As with TPD, the product recall use case is one where the scanning is requirement is for sampling (i.e. or for scanning multiple homogenous. It is therefore not necessary for the CIJ printing system to know the 51

UK Food Standards Agency, “Traceability in the food chain�, http://tna.europarchive.org/20110116113217/http://www.food.gov.uk/news/newsarchive/2002/apr/traceability

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Final

GS1 DotCode


GTIN to which the batch/lot identifier is being applied; it is often the case that they don’t know and the same batch/lot identifier will be applied to multiple products (e.g. multiple sizes of the same product or multiple brands of the same product manufactured under contract). The DotCode is suitable for product recall applications.

Inventory Management Similar to product recall, the encoding of a sell-by or best-before date in a DotCode can help retailers with shelf management by giving them an automated means to confirm that the product on the shelf is within its sell-by or best-before range or by helping them select inventory placement by putting the oldest product first. The DotCode is suitable for inventory management applications.

Negative Impacts The addition of the DotCode to existing packaging has no known negative impacts on any supply chain processes. The DotCode is positioned as a supplement to existing symbologies, not a replacement for them, and all processes (e.g. retail point-of-sale) that use the existing symbologies will continue to use them with no adverse impact from the presence of the DotCode on the packaging.

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Gs1 dotcode impact assessment  
Gs1 dotcode impact assessment  

Inexto - GS1 dotcode impact assessment

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