Double Duty: Integrated ERP Software Provides Dual Benefit

Compliance with 21 CFR Part 11 can actually help improve profits.

For pharmaceutical manufacturers, there are many industry tools available to help them comply with the FDA’s record-keeping and lot-tracking requirements of 21 CFR Part 11. But perhaps one of the most overlooked applications is also one of the most effective ways to rapidly identify and track every single raw material from receipt through processing, packaging, and shipping, to the exact customer location: an integrated, pharmaceutical-specific ERP software system.

While it might appear onerous and costly at first glance, integrated Enterprise Resource Planning (ERP) software for pharmaceutical manufacturers can effortlessly track lot properties while optimizing and improving other business processes such as:
• Batch production
• Sales functions
• Inventory control
• Purchasing
• Quality assurance
• Accounting and financials
• Regulatory reporting

The basis for all regulatory standards, whether it is Sarbanes-Oxley, Section 306 or 21 CFR, is exactly the same. You must be able to show where you are, where you were, how you got there and prove that there are controls in place so that the process repeats. At the outset, implementing these control systems appears to raise the cost of doing business. The reality is that properly done, these controls allow your business to operate more efficiently, predictably and most importantly, more profitably.

Implementing an industry-compatible ERP system will not only meet the traceability requirements of 21 CFR, but also seamlessly link all departments, resulting in streamlined operations, maximized productivity, and increased profitability. In choosing a system you should consider both its ability to track every raw material from receipt through finished product delivery, and its adaptability to your unique manufacturing process. A single system should be able to oversee every area of your business without the necessity for separate software packages or expensive customization. The following discussion reviews some standard functions of modern ERP systems, including features that will help improve pharmaceutical manufacturing operations.

Example of an electronic bill of materials system.
To view photo larger, click here.

Batch Recipe Management
In order to comprehensively track raw materials, it is essential that an ERP system be able to handle batch formulations and all the related data - descriptive information, technical properties, quantities in user-definable units, costing information, notes, and history. For 21 CFR compliance, it is especially important to be able to track the lot numbers and identifying information for each raw material in each batch, as well as whatever other data is important to the process—QC data such as specific gravity, particle size, pH, chemical composition, specifications from supplier spec sheets, and certificates of analysis. In this way, every raw material lot is linked to a particular batch (and particular customer shipments), and the information can be retrieved instantaneously.

A modern ERP system should allow you to change formulations as production needs change, without any limitation on formula definitions. You should be able to enter your own batch information and make changes at will, defining each field and specifying the units. When a batch ticket is printed for a recipe, intermingling of instructions with raw materials is crucial for operators to efficiently and properly run the batch.

Electronic Document Management
A state-of-the-art feature that is of immense help in documenting and tracking materials is an electronic document management system. This can resolve paper handling challenges by allowing any electronic file— jpg, Word, Excel, pdf, etc.—to be attached to any sales order, item master, customer, vendor, purchase order, or accounting transaction file within an ERP system.

Two advantages of this capability are instant access to supporting data, and permanently secure electronic storage. A document can be viewed merely by clicking on it, eliminating the possibility of lost or misplaced paper records. Digital files are safely kept in one central location in a SQL server database. A few examples of the almost infinite uses for this feature include:
• Certificates of analysis attached to raw materials
• Formula or engineering information attached to the batch formula
• Delivery confirmation signatures attached to shipping orders
• Scanned delivery tickets attached to purchase orders

Inventory Optimization
The inventory tracking required by 21 CFR is automatic with an advanced ERP system. This capability can also streamline Material Requirements Planning (MRP), resulting in higher profits through the maintenance of optimum inventory levels and the avoidance of delays caused by lack of raw materials.

An ERP system should show a summary of all raw materials, flagging those that have fallen below internally set re-order points, and listing open purchase orders placed for raw materials and materials that have been issued to a job but not yet used. The purchasing agent should only have to review the materials that have fallen below re-order points to generate purchase orders. The purchasing component may be set to default to a certain vendor. The user should also be able to set up standard quantities for reorder. The ease of purchasing often means that a single employee can handle multiple jobs, including evaluating vendor performance in filling orders in a timely manner. Greater efficiencies are achieved by combining orders and avoiding last-minute ordering, with which generally leads to premium pricing and expedited shipping costs.

Some ERP systems permit negative inventory to allow for inaccurate bills of material and give paperwork time to “catch up” with deliveries. But this is not necessarily the most efficient way to conduct business. If your business philosophy frowns on negative inventories, your ERP system should have the option to refuse to allow such transactions. As a general rule, negative inventory and true lot control cannot co-exist.

Sales
For 21 CFR compliance, a company-wide ERP system gives immediate information on the final destination of every batch. You should be able to drill down into each sales order to see both the raw material lots used in its production and the exact batches that went into each shipment.

In addition, the ease of sales functions will free salespersons to spend more time selling and less time on documentation. Entry of sales orders should be almost completely automated once customers are entered into the system. Although many tools for salespersons are on the market, a company-wide ERP system will allow an easy entry of orders into the system and ultimately post information automatically to the general ledger and accounts receivable system. You should be able to instantly print packing lists, bills of lading, pick lists, invoices, customer statements, and other reports, as well as sales analysis reports.

Customers often negotiate special pricing, and may require customized forms for their shipments, and specialized markings on their products. The ERP system should integrate dedicated customer requirements into the customer records so that it need not be entered again for additional orders. Pricing should be automatically calculated based on diffe
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