The Role of ERP in the Pharmaceutical Industry [3 Benefits]

There has always been an impetus on the pharmaceutical sector to invest in technologies that improve product quality and patient care. In the coming months, these investments are expected to accelerate, fueled in large part by recent global events. 

According to recent research, the COVID-19 pandemic has accelerated digital transformation in the pharma industry by more than five years. One focus for pharma organizations has been on heavily investing in various digital technologies, including cloud computing and cybersecurity.

In addition, as they seek out ways to streamline processes, improve efficiencies, and comply with strict regulations, these organizations are considering the benefits of ERP software. 

Today, we’re taking a look at the important role of ERP in the pharmaceutical industry, including how it can be used, what it can achieve, and what the future holds.

The Role of ERP in the Pharmaceutical Industry

Across the pharmaceutical sphere, there are strict industry regulations that all businesses, big and small, must adhere to. As a result, these companies are turning to automated tools, like ERP systems and supply chain management systems, that make it easier to streamline their processes across the supply chain. 

ERP can simplify efforts at every touchpoint, from manufacturing to delivery. Manufacturers can use ERP software to track raw materials, maintain inventory, organize packaging, and more. At the same time, businesses can use these solutions to improve operational visibility and boost overall profitability. 

Relying on outdated legacy ERP systems or manual processes is not only time-consuming, but it leaves room for human error, which could result in costly compliance issues. In some cases, errors could pose a direct threat to patient health, so it’s critical that business processes be optimized.

For decades, processes were either manual or conducted via clunky software systems that only managed one part of a workflow. As a result, team members faced many challenges, including:

• Lack of visibility into end-to-end business processes
• Difficulty tracking product batches across the supply chain
• An inflexible and inefficient production process
• Miscommunication across the supply chain and distribution channels

Now, modern companies are looking to various forms of technology to help them digitize and automate their processes. Among these are ERP solutions, which can help automate and optimize every aspect of a business, including:

• Sales
• Quality assurance
• Batch production
• Inventory control
• Back-office functions (HR, accounting, etc.)

When an ERP platform aligns with the organization’s strategic goals and is fully adopted by the workforce, it can deliver a host of transformative benefits. A few of the most important ones for pharma leaders include:

• Optimized, more cost-effective production processes
• Quicker access to real-time business data
• Easier to manage and track products and ingredients
• Easier to manage stock levels
• Easier to manage quality assurance levels
• Easier to meet compliance standards
• Easier to review and report on data via ERP dashboards
• Fewer manual errors
• Improved profitability
• Improved customer experience

3 Benefits of ERP for Pharma Companies

The aforementioned benefits are impressive, but they could be said about many industries, especially those in the healthcare sector. Let’s take a closer look at the pharma-specific ways that ERP can make a major difference:

1. Formulation and Pre-Formulation

Understandably, there are strict regulations that govern the drug manufacturing process. This includes guidelines around how employees should formulate and monitor raw materials, as well as how they should handle finished product yields to produce a batch. 

In the pre-formulation stage, employees must follow rigid processes that include:

• Defining drug production procedures
• Scheduling drug production stages
• Measuring drug production quantities

With an ERP system in place, pharma companies can automatically manage these formulations, while having confidence that the margin of error is minimal. Moreover, they can do so without keeping constant watch over productions, which optimizes productivity across the board. 

2. Drug Product Costing

There are many different factors that go into assigning a cost to a drug product. Among other considerations, companies must calculate the expenses associated with:

• Procuring materials
• Managing raw materials
• Monitoring the supply chain

Without a centralized ERP platform, these costs are individually recorded in separate departments. As such, any time this data is changed or updated, it can take a while for the new numbers to be in-sync. This makes it inherently difficult to nail down final product costs. 

In contrast, with an ERP solution, all authorized employees have instant, centralized access to the same data. When a change is made, everyone sees the update and knows the effects it will have in real-time. This makes it easier for your finance department to track costing variables across departments. 

3. Inventory Management and Scalability

It’s always been vital for pharma companies to ensure effective inventory management. The recent pandemic underscored this concern. 

With ERP, companies can track and trace products in real-time. They can also use serialization to manage inventory and avoid time-consuming bottlenecks and potentially devastating stock-outs. Most platforms also include traceability functions that enable companies to perform rapid recalls if required. 

What happens if demand suddenly outpaces supply? ERP software can alert companies to this imbalance before it occurs and can then help them alter their manufacturing activities to keep pace. This is made possible with predictive analytics (If you’re interested in this particular functionality, be sure to look into cloud ERP software).

An Industry Game-Changer

As technology continues to alter the way we do business, it’s no surprise that the pharma industry is taking note. This is a sector marked by strict rules, complex processes, and a discerning client base. 

As the role of ERP in the pharmaceutical industry continues to become more significant, successful business leaders will be those who are willing to embrace these new tools and conduct any business process reengineering necessary to align their processes with new technology.

Our ERP consulting team can walk you through the next steps, starting with initial planning and ERP software selection. Get in touch with us below for a free consultation!