1. Why did the EU create this regulation on T&T?

The T&T system under the TPD is aimed at combatting illicit trade within the European Union. Illicit trade amplifies the negative effects by making it cheaper for people to buy tobacco products. Illicit tobacco products are less likely to comply with EU rules, such as the obligation to carry combined health warnings. As clarified in the IAs, the T&T system is also being used to comply with Article 8 of the Protocol to Eliminate Illicit Trade in Tobacco Products to the World Health Organization’s Framework Convention on Tobacco Control, which was ratified by the European Union. To tackle illicit trade, the TPD provides for the establishment of an EU-wide T&T system for the legal supply chain of tobacco products under Article 15. The T&T system is complemented by a system of security features to help detect counterfeit products under Article 16. Tracking and tracing tobacco at the pack level from the manufacturer down to the last economic operator before the first retail outlet, will allow the authorities to follow the route and source of genuine product.

2. Who are considered economic operators “before the first retail outlet”?

The “first retail outlet” is defined under the IAs as the facility where tobacco products are placed on the market (i.e. made available to consumers in the EU) for the first time, including vending machines. Thus, economic operators before the first retail outlet include all direct and indirect customers along the tobacco supply chain as distributors, wholesalers, cash & carries, key accounts with central warehouses, vending vans, warehouses, transporting companies, and importers involved in the trade of tobacco products.

3. What are the main steps in setting up a T&T system?

There are two key steps:

(1) Appointment of ID Issuer

Each Member State must appoint an independent ID issuer, which is charged with two critical tasks.

First, the appointed ID issuer must generate UIs, composed of numbers and/or letters, for unit packets, and where requested by economic operators, for aggregated packaging. These UIs need to be applied to the product within a period of six months.

Second, ID issuers are also responsible for issuing 'identifier codes' for all relevant economic operators, facilities and machines, so they may be easily identified under the system. These identifier codes are needed in order to request for a UI. These identifier codes are also needed when sending logistical and transactional information to the repositories system.

(2) Setting up of Repositories System

In the meantime, each manufacturer and importer of tobacco products will be required to conclude a contract with a data storage provider to host the T&T data exclusively related to their products (“primary repository”). The Commission will examine each draft contract and the suitability of all proposed providers, particularly in terms of independence and technical capability, and thereafter, approve or reject them. In the absence of a reply by the Commission within three months, the contract and the provider will be deemed to be approved.

Once the primary repository providers have been selected and approved, the Commission will be responsible for selecting the provider of a 'secondary' repository. The secondary repository will store all T&T data (including those stored in the various primary repositories) and be responsible for ensuring that Member State authorities have access to a single data set. The repositories system will provide authorities with an overview of all product movements.

Once these key steps have been completed, the T&T system will begin to take shape. The relevant tobacco products will begin to be marked with UIs, and their movements scanned and recorded throughout the supply chain as of May 20th 2019.

4. What changes will be seen on the pack?

All packs will carry a UI (track and trace code). Depending on the manufacturer, the UI is likely to be located in a black box at the bottom of the pack. There may also be minor adjustments to other features on the pack in order to accommodate that black box.

5. What is the use of the UI?

The UI, which is applied to the pack at the time of production, contains, among others, the following information:

  • Date and place of manufacture
  • Manufacturing details (machine used, shift or time of manufacture)
  • Product description
  • Intended market of retail sale
  • Intended shipment route

This UI enables the authorities to track every step in the supply chain, from the factory to the first retail outlet.

6. How to integrate product tracking into working environment?

Each participant in the tobacco supply chain will need to prepare and assess how the TPD and the IAs will impact their business processes. Please find below some of the matters that should be considered:

  1. Process for recording all tobacco product movements (e.g., receiving products, creating new hierarchies for dispatch, dispatching products to next economic operator) should be assessed and readied for compliance.
  2. Application of a UI code for every aggregation and movement of tobacco goods. The aggregated level UI code may be requested from a competent ID issuer or generated by the economic operator itself.
  3. Relevant data relating to the aggregation and movement will need to be transmitted to the repositories system via a router.
  4. Each facility (stock holding location), including retail outlets, will require a identifier code (Facility ID), which will be used when generating aggregation codes or dispatching/receiving tobacco goods during scanning.
  5. All economic operators before the first retail outlet need to be ready with the necessary equipment to be able to scan tobacco products (cigarettes and roll-your-own) and transmit the data to the repositories system according to TPD principles.

7. How should economic operators deal with non-TPD-compliant products (no UIs) come May 20, 2019?

The IAs provide that cigarettes and make your own / roll-your-own products manufactured prior to May 20th, 2019 without UIs may still be distributed within the supply chain (from factory to retail store) until May 20th, 2020 (i.e. without a requirement to scan).

However, from May 20th, 2019 economic operators are required to scan and report movements and transactions of any new TPD-compliant tobacco SKUs (i.e. those packs that contain UIs) which they have in stock.

8. What software & hardware will be needed to be compliant?

Economic operators can purchase “off the shelf” solutions that provide both the hardware and software required to scan and transmit TPD data.

Alternatively, they can choose to build their own solutions, or update their existing systems to become TPD enabled.

If they already have hardware, then they may be able to use TPD software available from the supplier(s) listed by the SPOC, but due to the technical requirements of TPD only a limited set of hardware will be compatible.

If hardware is not already in place, basic equipment such as a smartphone and/or scanner for higher volumes in order to ensure the capability to scan will likely be needed, but this will be dependent on each economic operator’s business needs and software selection.

Ultimately, it is each economic operator’s responsibility to adapt its operational and logistics systems to comply with the T&T requirements of the TPD and the IAs.

9. Who will provide the hardware?

Economic operators will purchase the hardware from their supplier of choice, bearing in mind the amount that is subject for reimbursement, as communicated by the SPOC. The hardware (scanner) that is necessary to support TPD requirements is already available in the market.

10. Who will provide the software?

Economic operators have various options when assessing their software needs for TPD compliance. The economic operator may choose to purchase an off the shelf solution from the list of supplier(s) provided by the SPOC, choose to develop/enhance their existing internal systems, or alternatively engage directly with another development partner capable of delivering a TPD compliance solution.

11. If an economic operator already has scanners and software to run his business, can he continue using those?

Depending on their business needs and the suitability/complexity of their existing solutions, economic operators may be able to enhance their existing solutions to support TPD. Again, they will do this by using their own internal resource, or by engaging directly with a development partner.

12. Will economic operators have to use a different solution for each manufacturer?

The implementing act specifies four types of data carriers for encoding the TPD information. Decoding the information from the data carrier depends on the encoding of the information performed by the manufacturers, and therefore, its suggested for the economic operator to evaluate each supplying manufacturer’s encoding specifications to ensure his solution of choice has the ability to decode the correct information.

Attached is the encoding specifications prepared by BAT, JTI, ITG and PMI, which is an open standard that anyone is free to use. Standardisation of the encoding between manufacturers greatly simplifies the decoding of information, and improves the possibility of using a single solution for scanning tobacco products.

DCTA EU-TPD Coding Details

13. How will this affect the economic operator’s current Route to Market?

All economic operators will have to adapt their processes to make sure scanning and transmitting data according to TPD principles will be carried out. The current level of automation and the set-up of the operations will affect any adjustments to the Route to Market. For instance, a highly automated economic operator will have different points to consider compared to an economic operator with little to no automation. It is critical that the process is carefully reviewed by the economic operator to understand where scanning has to take place and when data transmission has to happen – either before or after the event. These duties will have an impact on all economic operators.

14. What happens if the economic operator does not scan / what are the   implications / penalties?

Penalties for non-compliance with the requirements of the TPD differ per Member State.  Also, under the IAs, a Member State may deactivate the EOID of a non-compliant EO in the system.

15. Where can an EO get more information about the TPD?

Click here for all the Article 15, TPD related documents that the European Commission has made available for the public.

16. How does an economic operator request an Economic Operator (EOID) and facility identifier codes (FID)?

The actual procedure needs to be defined by the ID issuer appointed in each Member State. The Implementing Acts provide for the following:

  • Article 14 describes how the request for an economic operator identifier code is processed.
  • Article 15 describes how Issuing and registration of economic operator identifier codes is processed.
  • Article 16 describes how the request for a facility identifier code is processed, and
  • Article 17 describes how Issuing and registration of facility identifier codes is processed.

Please refer to the specific articles for additional information. Click here to access the official Journal and pick the preferred language:

17. Who will provide information/workshops how to use scanners and software and train our staff?

Once an economic operator makes his choice of the supplier to purchase the hardware, they can arrange the details of setting up and training directly with the supplier.

18.Can I refer to a supplier of my choice to spend the money allocated to me?

An independent Consulting company (consultant) was appointed by the participating manufacturers to conduct a survey of the market and identify which companies can be suitable hardware and software solution providers for economic operators. While the consultant reached out to several companies and received several responses only two companies, Honeywell and Inexto, provided the details of their offerings that they declare as meeting the requirements of the TPD and the Implementing Acts issued by the European Commission. The foregoing does not constitute an exhaustive list of available suppliers or equipment and is based only on the suppliers who responded to the consultant as of 19/10/18.

Economic Operators are free to select any supplier or equipment of their own choosing, making sure that the selected solution enables the Economic Operator to read and transmit the recorded data of the tobacco products to the appointed data storage facility.

19.What is the process of Equipment acquisition? Will I contact the proposed local Equipment supplier representative or supplier’s HQ, or do I need to order via e-commerce?

The contact details of the two suppliers identified through the independent Consulting company’s survey are available on the portal throughout the whole process for the Economic Operators to review and get in touch with. The foregoing does not constitute an exhaustive list of available suppliers or equipment and is based only on the suppliers who responded to the consultant as of 19/10/18. Economic Operators are free to select any supplier or equipment of their own choosing.

Once the Economic Operator receives the level of reimbursement for the equipment from the Single Point of Contact (SpoC), he can contact the supplier of his choice and arrange the details for the acquisition of the needed solution for his business directly with that supplier. After providing proof of acquisition, order or other proof of installment of TPD-related equipment to read and transmit recorded data for tobacco products for your business to the SPoC, the SPoC will assess your submission and proceed with the reimbursement of the cash equivalent.

20.How can I get the part of the reimbursement from a non-participating manufacturer?

If a manufacturer does not participate in the model, the Economic Operator will need to contact it directly to seek its contribution to the necessary equipment costs.

21.What is SGS?

The industry has selected a third-party company, SGS Société Générale de Surveillance SA (“SGS”), to act as the SPoC to assist all Economic Operators (Economic Operators) to equip themselves in an efficient way with the necessary equipment to read and transmit the recorded data to the repositories system. With more than 95,000 employees, SGS is the world’s leading inspection, verification, testing and certification company, and it is recognized as the global benchmark for quality and integrity. SGS recognizes the fundamental importance of confidentiality, data privacy and security and is committed to protecting the privacy of all its customers and partners across all its business operations.

22.What does the first retail outlet mean?

All Economic Operators involved in the trade of tobacco products from the manufacturer to the last Economic Operator before the first retail outlets, need to obtain the equipment that is necessary for the recording of the tobacco products purchased, sold, stored, transported or otherwise handled. The “first retail outlet” is defined as the facility where tobacco products are placed on the market (i.e. made available to consumers) for the first time (e.g. supermarkets, gas stations, tobacconists, newsagents, etc.) Track & Trace finishes with the outbound scanning to the first retail outlet. Under the lAs, the only obligation of operators of first retail outlets is to secure an economic operator ID and a facility ID.

23.How are claims calculated? What are the assumptions used? Can we receive a precise formula for reimbursement calculation?

For the reimbursement (claims) calculation, SGS is using factual economic operator data and objective criteria verified by independent consultant company:

  • Business type of the economic operator: C&C, warehouse or other;
  • Equipment needs for all scanning activities, including inbound, outbound, pick & pack, transloading and Ex Van sales;
  • Facility volume shipped in different packages, facilities working time and number of work stations (volume means - volume of cigarettes, RYO and MYO products shipped to Economic Operators during the year 2017).

24.What is the interpretation of the “software” included in the scanning unit? I have to store, integrate, etc.

The equipment unit equivalent is that equipment assessed as necessary for economic operators to be able to read and transmit recorded data of tobacco products to the repository system in order to comply with their reporting obligations according to the TPD and the Implementing Acts issued by the European Commission.

The solution is composed of scanning devices with software linked to a public cloud and has the following capability:

  • Scanning devices: Read various types of unique codes applied at pack and aggregated levels, and transmit them to the cloud via WIFI, GPRS;
  • Cloud: Record the unique codes, format the recorded data into messages formatted as per the legislation requirements, and transmit the messages to a router defined by the secondary repository provider.

Several logistics operational processes are covered, per Annex 2 of the Implementing Acts:

  • Arrival;
  • Dispatch (including van sales dispatch, vending dispatch);
  • Returns due to damages or for reselling;
  • Destruction;
  • Modifications of shipping units (aggregation & disaggregation);
  • Product scanning during transportation/transit, for transloading;
  • Invoices, payment records.

Additionally, the cloud allows for several administrative tasks:

  • Load master data;
  • Upgrade software release;
  • Recall messages from the router;
  • User administration.

25.How and where can I acquire the technical specifications for the T&T equipment solution

Technical specifications might be found on the SGS OnTrack platform or the EUROPEAN COMMISSION webpage by using the link below Technical Specifications

26.Can we receive information about data which is needed to submit to SPoC before registering to OnTrack platform?

You can prepare for the registration by gathering information about your business; in particular by:

  • Assessing current physical process and identifying scanning events needed
    • How many working stations do you have?
    • Is there a Pick & Pack area? An outbound area?
    • Do you have trans-loading and ex-van sales?
    • How many hours during the working day and excluding breaks, will you carry out scanning for Pick & Pack activities in TPD Track & Trace?
  • Having the addresses and volumes per facility ready
    • What is the volume per facility for Finished Manufacturer Cigarettes (FMC) and fine-cut tobacco (roll-your-own/make-your-own)?
    • In which units you receive the tobacco products and in which units you send them further (e.g. inbound master cases, outbound 80 % in outers)?

27.What is covered in the “scanning unit”?

The “scanning unit” includes the equipment, comprising the hardware and software, that is necessary for the recording of the tobacco products purchased, sold, stored, transported or otherwise handled.

28.What happens if the Economic Operator realizes that he made a mistake after the amount has been calculated?

Before an Economic Operator proceeds with his reimbursement claim, he can contact the SGS helpline through the available options provided in the OnTrack portal and ask SGS to amend the appropriate fields. Depending on the level of amendments required, SGS might need to audit and validate the accuracy of the input.

29.Will SPoC provide the guidelines on how the T&T solution will be integrated with my local systems?

The SPoC will not provide this information. Any integration with an operator’s local systems needs to be carried out by the Economic Operators themselves. It is outside the manufacturers’ obligation. The Economic Operator can engage with a solution integrator to develop a solution that meets their individual requirements, but this will be at their own cost.

30.An Economic Operator might have been investing for TPD before the SPoC - how can he be compensated?

The participating manufacturers acknowledge the fact that a number of Economic Operators have been working in advance to accommodate the needed changes deriving from TPD 2019 and might have already invested in sourcing the equipment needed to read and transmit the recorded data to the repositories system before the SPoC model goes live. These Economic Operators will still need to apply through SPoC, provide their input and process their facility claims like every other Economic Operator.

When the process reaches the step of a reimbursement claim, an Economic Operator can provide proof of purchase or acquisition of the needed hardware and software, which may also include proof of investment made in the past towards TPD compliance. SGS might need to audit and validate the accuracy of proof of investment and will then compensate the Economic Operator up to maximum of the calculated reimbursement amount.

31.Can Economic Operators have a confidentiality declaration by the SPoC to ensure Data Protection and that all Economic Operators data are strictly managed with confidentiality by SGS, avoiding sensitive elements from being accessible to others?

SGS is treating with confidentiality all information provided to them. SGS has taken all necessary steps and security precautions in accordance with world-recognized industry standards as well as Art. 5(1) f and Art. 32 of the GDPR to minimize the risk of confidentiality, integrity and availability losses of any data provided by the Economic Operators processed by SPoC. The Data will be hosted and processed in Europe. The main data center of Microsoft is located in NL/Amsterdam, with DR (disaster recovery/fail-over) being located in IE/Dublin.

Please refer to clause 1 (d) of Part 1: SGS General Conditions of Service in the SGS On-Track Terms of Use available in the portal.

32.Which data is shared by SGS?

All data is treated confidentially and only processed to the extent it is necessary for the performance of the Single Point of Contact for the provision of equipment under Article 15 (7) TPD II.

Competitively sensitive data of the manufacturers or Economic Operators will not be shared with the Participating Manufacturers or Economic Operators. SGS shall keep confidential all information, instructions and documents that are submitted by the Economic Operators through the web portal and SGS shall not use or authorize or permit the use, copy or disclosure of Economic Operators’ submitted Information or any part of it except:

  • for the purposes of provision of Services by SGS to Economic Operators;
  • disclosure to the Participating Manufacturers (as defined in the SGS On-Track Terms and Conditions for Economic Operators) in order to enable them to validate claims and as part of management information in order to track the progress of claims; and
  • disclosure to its professional advisers, agents or representatives for the purpose of obtaining professional advice.

Note that the above shall not apply to Economic Operators’ submitted information which:

  • is in or comes into the public domain (otherwise than in breach of these terms);
  • SGS receives from an independent third party having the right to disclose the same;
  • was in SGS’s possession prior to the date of receipt from the Economic Operators; or
  • is required to be disclosed by law or by any statutory or regulatory authority

33.How will personal data be protected?

All data is treated confidentially and only processed to the extent it is necessary for the performance of the Single Point of Contact for the provision of equipment under Article 15 (7) TPD II. SGS processes data in accordance with Article 5 (1) (f) and Article 32 GDPR. It has taken all necessary steps and security precautions in accordance with world- recognized industry standards to minimize the risk of confidentiality breaches, integrity and availability losses of Participating Manufacturers’ and Economic Operators’ Personal Data that is processed to provide the Services. Data is stored in the EU with separate centers for the main data facility and the disaster recovery facility for back up.

About SGS

SGS is the world’s leading inspection, verification, testing and certification company. We are recognized as the global benchmark for quality and integrity. With more than 95,000 employees, we operate a network of more than 2,400 offices and laboratories around the world.
 

Visit our global website at SGS.com
 

Contact Us

What to know more about Tobacco Products Directive? Who is eligible to apply for reimbursement? How to register a reimbursement request? Do not hesitate to contact our support team.
 

  • You can contact us:
    • By Email using the button “Email us” below.
    • By Live Chat using the link available in the right sidebar
    • By Phone using the below phone number