Compliance with 21 CFR Part 11 Can Actually Help Improve Profits
By Jay T. Deakins
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.
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
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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 different factors for different customers, without intervention
by the salesperson or accounting department.
The best ERP systems have an integrated contact management module that readily
synchronizes with tools, such as Microsoft Word for word processing and Outlook
for e-mail, contacts and calendar. The contact manager should have all the capabilities
of the stand-alone software, including call history, follow-up reminders, templates
for letters, and forms. With a contact manager, you can readily synchronize a
BlackBerry® or other PDA to Outlook so all your information will be right in
your pocket, even on the road. The ability to tie individual contacts to a customer
will allow you to jump right to the sales order summary or order history with
just a click of the mouse.
Accounting
The major advantage of ERP software designed for manufacturing is the integration
of production and accounting modules, rather than a loose connection of two separate
software packages as so many facilities have done. Where two or more systems are
in use, there are almost always points of disconnect, where extra steps by accounting
personnel are required to keep information consistent and up to date. The short
response time required by 21 CFR means all information must always be current,
without intervention by accounting personnel.
Once an ERP system is fully implemented and in use by all departments, most of
the errors and many of the bookkeeping tasks performed by the accounting department
will disappear. Improvements to the business process will occur as accounting
personnel have more time to analyze and improve budgeting, income projections,
expense analysis, and procedures. Integrated systems can dramatically change the
operations of the accounting department. Properly implemented ERP systems change
the accounting role from a data entry position to a true audit and control function.
Reports
To assure rapid tracking in accordance with 21 CFR, software should be designed
for ease of finding information and viewing it in an appropriate format. ERP software
for pharmaceutical manufacturing should already contain most of the printed documents
you need, such as batch tickets, inventory reports, purchase orders, sales orders,
order summaries, customer packing lists, etc. It should also generate a full range
of user-specific financial reports, including invoices, receivables, payables,
balance sheets, and income statements, and have check-writing capabilities. And
where unique custom reporting is required, the system should provide easy access
to a data dictionary that lists every table and every field within the system
to permit interfacing with an outside report writer.
Implementation
Because of the complexity of ERP systems, implementation must be done in a careful,
pre-planned manner, with clear goals and milestones by which to measure progress.
The ERP vendor should be prepared to work with you in configuring the system to
mimic the way the business functions, rather than forcing your procedures to change,
except where a procedural change will benefit the company. Expect implementation
to take at least 90 to 180 days and possibly longer for large-scale enterprises.
In summary, the proper ERP system is an investment that will not only ease the
pain of 21 CFR Part 11 compliance, but will also pay out in terms of significant
improvements to your business process and profitability.
About the author: Jay Deakins is president of Deacom Inc., a producer of integrated
accounting and ERP software for pharmaceutical manufacturers. For more information,
contact Jay at 610-971-2278 ext. 11 or jdeakins@deacom.net.
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