Why ERP in an

Pharmaceutical
Industry
ERP Assignment

By,
Rakesh Melangi
G14040
GMP 14-15

Introduction:
Pharma industry is highly regulated with many regulatory agencies dictating
how to control and process their product. In this scenario compliance
responsibilities have been growing in complex set of regulatory requirements
going beyond the concept of quality and financial reporting systems.
Compliance with these new regulations can be costly and time exhaustive with
high human and capital investments on one side and severe financial
implications for non-compliance on the other side.
With these aspects in mind the evaluation of having an ERP application need to
be based on focus search of applications with capabilities to support the unique
needs of the industry.
Today Pharma industry is faced with myriad of challenges including constant
industry level change in process and regulations, competitive pressure both in
terms of new product and price, increased governance requirements associated
with risk and high cost for research and development. Quality, consistency and
efficiency along with CRM have become imperative to enable profitability.

Requirements for an ERP package solution in Pharma:

An ERP solution for pharma industry needs to address its manufacturing and
financial process including formulation, costing, quality control, material
management, production planning, accounting, budgeting, forecasting etc.

Present scenario:
Most on shelf ERP packages support the needs of financial and accounting
functions. But when it comes to purchase inventory, manufacturing and sales
they dont always meet the unique needs of pharmaceutical industry. This is
because of the fact that most applications are designed for discrete
manufacturing instead of process manufacturing.
So when an ERP package has to be selected following features have to be taken
into consideration:

1.

2.

Effective management of Variability

Consistency and quality are two most important factors of Pharma industry. An
ERP solution must provide full visibility into available raw materials, inventory
and product characteristics. This solution must deliver and define
manufacturing, quality characteristics, yield, routing and costing details. Variable
characteristics such as Ph., moisture content etc. should be well defined.

Improved Predictability of scaled production

In a batch run a product is expected to be of some specified quality defined by

range of acceptability. When the manufacturer scales up or down the ERP

application needs to predict the yield and deliver consistent results in terms of
quality and quantity.

3.

Accurate product costing

Accounting for material and operational cost are the biggest challenge in any
manufacturing process. An ERP application should support multiple valuation
methods. All cost such as ingredient costs, WIP costs, packaging, labor costs,
overheads and quality tests along with transportation should be captured and
electronically assigned to individual product or batch. The application should be
able to capture, measure and compare actual vs. standard costs of these
products to facilitate an informed decision.

4.

Support multiple units of measure

Multiple units of measure are used in pharma industry i.e. goods may be
purchased in one unit and stocked in inventory in another and finished goods are
sold in yet another measure. Hence the ERP solution must allow process
managers to manage inventory in terms of bulk units such as weight or quantity,
packaging units or any random attributed measure at the same time.

5.

Efficient inventory
expiry date tracking

management

through

accurate

Management of expiry dates is a challenge as the effectiveness of products is

time dependent. An ERP solution must help improve inventory management by
offering better shelf life tracking through basic methods such as LIFO FIFO etc.,
which are used during purchase and sale of goods to the final consumers. It
should also provide safety net, which alerts the company about shipping of
certain products or drug formulations to countries where it is prohibited.
ERP can also provide solutions where the end user inventory is monitored for the
stocks and replenishment can be planned accordingly.

6.

Track and trace

Traceability is crucial for the company not only in terms of regulatory
requirements but also as a matter of profitability and efficient management of
value chain.
An ERP application must also simplify the procedure to
demonstrate compliance with both regulatory and customer requirements. The
record of quality product and maintenance should be easily accessible to
different stakeholders.

7.

Facilitate ever growing regulatory compliance

The ERP solution must help companies to manage and monitor their Current
good manufacturing practices along with regulatory compliance of different
regulatory authorities.

8.

New product development and production

An ERP solution must help pharmaceutical companies to reduce operations cost
and risk and in the process maintain the records necessary to pass clinical trials

and simplify the process of bringing the products in to the market. The ERP
solution must support and facilitate collaboration between various subsidiaries,
regulatory authorities and joint venture companies to bring out an efficient
supply chain.