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CHEMICAL INDUSTRY WHITE
PAPER:
HOW TO ACHIEVE QUALITY
ASSURANCE AND REGULATORY
COMPLIANCE GOALS WITH ERP
TECTURA WHITE PAPER
PUBLICATION DATE: MARCH, 2009
TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
EXECUTIVE SUMMARY
This paper examines how a fully functional
ERP system can address the quality
and regulatory challenges facing today’s
chemical manufacturers. Companies that
adopt these systems can automate key
processes and gain end-to-end visibility
PAGE 2
Quality defines a company’s ability to
produce better products than its rivals, while
regulatory compliance is a requirement
for doing business today and essential to
survival. Though very distinct, both are
critical considerations in this era of global
manufacturing and heightened security.
throughout the supply chain. As a result,
Ensuring quality and meeting safety
they can deliver safe, high-quality products
standards are top priorities for these
and maximize their business performance.
companies, yet many still entrust their
BUSINESS CHALLENGES
FACING TODAY’S CHEMICAL
MANUFACTURERS
inventory control, production control, and
Process manufacturers in the chemical
prone, difficult to update as regulations
industry play an important role in the world’s
change, and incredibly inefficient. They also
economy, with $500 billion generated in
can cost companies millions of dollars each
the United States alone (First Research,
year in recalls and regulatory fines.
quality control to manual or non-integrated
systems. Such systems often are error
October 2008). They also play a critical
role in people’s everyday lives, providing
the core components for pharmaceuticals,
plastics, snack foods, and many other items
that are used or consumed by millions
of people each day. With their products
serving as the building blocks to countless
other products, these companies must take
Process manufacturers can optimize their
systems to better meet safety and quality
goals. With innovative ERP solutions tailored
for their industry, these companies can gain
the functionality needed to improve control
and efficiency across the supply chain, while
enhancing their business performance.
Quality assurance and regulatory
INVENTORY CONTROL—
EFFECTIVELY TRACKING
INVENTORY THROUGHOUT THE
SUPPLY CHAIN
compliance are among the leading business
For process manufacturers, lot traceability
challenges facing process manufacturers.
is critical to quality control and an area that
care to avoid mistakes within their complex
supply chains.
TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
PAGE 3
many companies struggle with. All products
Using a fully functional ERP system, they
WHY CURRENT ERP SYSTEMS
OFTEN FALL SHORT
that go into the creation of a chemical
can record all of this information in a single,
compound and the end products coming out
centralized database. They then can access
Process manufacturers must deal
with variability across their entire
supply chain. For this reason, they
need ERP functionality that can help
them control, track, and streamline
these unique business processes.
Yet often process companies
implement basic, out-of-the box ERP
systems that lack the functionality
they need, including the ability to
store inventory records, control
recipes, do odd lots at production,
and track inventory at a granular
level.
of the production process must be tracked
and view this information for any raw
and traced, and this information easily
materials in their inventory, at production,
extracted into a report. This traceability
or that have been used in products shipped
must be maintained throughout the life of
to customers. Managers simply key in one
the product for regulatory and litigation
number and the ERP system lists every
purposes. Perhaps most important, chemical
place that lot was distributed, the production
manufacturers need to be able to check
orders, and other pertinent information.
that the quality has been tested on each
With bi-directional traceability, they can
individual product going into a production
start at either end of the supply chain,
environment to ensure it meets customer
tracing raw materials to the end product or
specifications and regulatory requirements,
tracing the end product to the raw materials.
and to avoid possibly tainting other products.
This capability is critical for effective lot
Many companies try to do these
tasks manually, usually with
spreadsheets. Others cobble
together homegrown systems,
hoping to gain the functionality they
need. This often results in disparate
systems that cannot communicate
with one another; lack robust
integrating mechanisms, such as
sales orders, production orders, and
purchase orders; and provide only
limited visibility into manufacturing
processes.
By not being able to reliably monitor
lot status, track every aspect of
production, and quickly access
critical information, companies risk
large-scale recalls, regulatory fines,
and lost business opportunities.
management and ensuring product quality
Although chemical manufacturers do record
and safety throughout the supply chain.
lots, many rely on spreadsheets, which can
prove time-consuming and costly in the
By having lot genealogy information at
event of a recall. Someone must manually
their fingertips, chemical companies can
review every production order and match it
quickly determine which batches need to be
to a sales order and a shipping document
recalled and avoid imposing a much wider
to determine where those products went.
recall. This can be the difference between
With an ERP system built for process
thousands and millions of dollars.
manufacturing, companies can automate
lot number procedures and achieve end-toend, bi-directional traceability of inventory,
components, and recipe materials.
Chemical manufacturers also must store
Material Safety and Data Sheets (MSDSs),
of which there are approximately 1.3
million for the entire industry, with more
When process manufacturers receive
generated daily. The MSDS is part of the
products from suppliers, they also receive
record-keeping fiduciary responsibility of
specification sheets and certifications.
the manufacturer and supplies information
TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
PAGE 4
about storage, boiling points, toxicity, first
manifest, shipped in the proper containers,
MEETING QUALITY, SAFETY, AND
COMPLIANCE REQUIREMENTS
aid, as well as other safety information.
and shipped in the proper trucking
An ERP system designed for process
environment. Because all of this information
An ERP system designed for the
process manufacturing industry helps
companies consistently address
quality, safety, and compliance
issues. All standard processes are
documented, and all operations
and results are tracked and logged
to support detailed reporting
requirements. Features such as
traceability, lot requirements,
production statistics reporting,
specification management, and
change management provide the
control and predictability companies
need to detect and address
exceptions early, and consistently
produce the highest quality products.
By tracking items from cradle to grave,
companies can implement effective
recall procedures with complete
forward and backward traceability of
any material.
manufacturing allows companies to store
is housed in the ERP system, managers
and quickly access this information, ensure
can quickly respond to governmental
their customers have the most up-to-date
requests for reports. In addition to reporting
sheets, and validate that products have
on specific shipments, they can document
the right characteristics based on those
which products are being received on a
specifications. Companies creating new
cumulative basis and by whom.
chemicals can monitor the characteristics
of products throughout the manufacturing
process and then leverage that data to
create accurate safety and certification
documents for customers. Such ERP
systems also offer online services that
provide automatic updates to MSDSs.
Because safety requirements can change
without notice, these services help ensure
product safety, while reducing costs.
With countries on heightened alert for
bioterrorism threats, up-to-date, verifiable
information is critical for maintaining
regulatory compliance. Chemical companies
must place greater emphasis on hazardous
materials (hazmat) functionality, and
consequently quality control and lot tracking
and traceability. When chemicals come
into or out of a facility, an ERP system can
track lots and assure that all necessary
regulations are properly followed, including
that products are labeled properly,
addressed correctly on the shipping
Such ERP systems can alert chemical
companies when it is time to update their
hazmat documentation and allow them to
instantly access tracking information on
specific truckloads, canisters, or lots. In this
way, chemical companies can guard against
deficiencies in key safety areas and avoid
heavy fines during random government
inspections.
PRODUCTION CONTROL:
MAXIMIZING INVENTORY AND
MATERIALS
For chemical manufacturers, production
control is vital to ensuring efficient use
of inventory and materials. It requires
connecting lot management with customer
specifications, including tolerance levels.
Using an ERP system designed for process
manufacturing, companies can precisely
control how their product is made, the input
and output quality of the individual products,
and track potency levels. Based on this
information and their knowledge of customer
TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
PAGE 5
tolerances, they can avoid overselling or
ensures companies consume this inventory
underselling products, thus maximizing
in production and get dollar value for it at the
TACKLING UNENDING
REGULATION
inventory and profits. Similarly, by having a
end of the day.
Each year brings more regulations for
chemical companies. Regardless of their
size or whether they produce commodity
or specialty chemicals, these companies
must ensure timely compliance. For
many, the greatest challenge is locating
all the information they need when
they need it, such as during an audit
or a potential recall situation. To help
ensure regulatory compliance, chemical
companies need an ERP system that
can:
they can guard against mixing products of
•
•
clear measure of potency for each batch,
varying potencies and efficiently schedule
setup and cleaning shifts between batches.
Shelf-life often relates to customer shelflife, which can get complicated in some
supply chains. An ERP system can simplify
this process by enabling companies to
Managing leftover lot material is often
track shelf-life and link this information to
challenging, but keeping close tabs on
inventory status. They then can ship the
customer tolerance can simplify this
right product to meet customer expiration
process. Using this information, companies
requirements. ERP systems also can
can determine effective ways to possibly
automatically conduct stability testing, to
reuse or remix reagents and byproducts,
monitor product that has changing quality
avoiding waste. In addition, an ERP system
as it sits on the shelf. If the company finds
Centralize and simplify access
to information on manufacturing
processes
can reassign a new lot number to the
something that is deteriorating, they can sell
remaining quantity, further avoiding the need
it immediately, instead of finding out later
to discard leftover material.
when they have no choice but to dispose of
Be easily updated and controlled
from a single place as regulations
change
QUALITY CONTROL: MEETING
REGULATORY AND CUSTOMER
STANDARDS
the item.
ERP-based lot status systems further
aid with production and quality control by
•
•
•
Automatically collect, document,
and store the necessary validation
information required to prove
compliance
Easily run a report during a
regulatory audit
Link to an online system for
regulatory control
In environments where potency is a
concern, companies need to measure and
enabling chemical manufacturers to block
the usage of material that may have expired.
track expiration dates as part of quality
In addition, they provide inventory visibility
control. ERP-based quality control enables
by function within the corporation, so people
companies to do shelf-life expiration dating
in sales and on the production floor see the
and inline quality checks of products.
same data when they search the system
This helps avoid the costly problem of
and speak with customers.
inventory expiring on the shelf. With an
ERP system, chemical companies also
Being able to track recipe versions can
can do first expired, first out inventory
further support quality control efforts
management, which not only eliminates
and ensure customer satisfaction. A fully
potentially obsolete inventory, but also
functional ERP system enables chemical
TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
BEST PRACTICES
To maximize an ERP system, process
manufacturing experts recommend
several best practices, including:
•
Secure executive management’s
commitment to the project.
companies to manage variability via
price for the right quality. In addition, they
recipe version control and effectivity
can manage production processes more
dates. Companies for which seasonality
closely and incorporate planning into the
is a concern can then properly adjust
system. This can be particularly valuable for
formulations when necessary.
companies running on cycles of product, as
IMPROVING BUSINESS
PERFORMANCE
they can save time and money by making
With an ERP system designed for process
•
•
Make sure that some staff
participates in the implementation,
and that all staff is trained on the
system.
Ensure that the ERP system has
sufficient flexibility to support a
changing environment.
•
Regularly update software, user
interfaces, and ERP systems to take
advantage of the latest functionality.
Refine lot control practices and
ensure that the ERP system
supports these processes.
more intelligent decisions about production
change-overs.
manufacturers, chemical companies can
A fully integrated ERP system provides
do more than meet customer requirements
manufacturers with greater visibility, so they
and regulations. They can improve
can see what is coming down the pipeline
business performance and gain competitive
and plan for demand. With this knowledge,
advantage.
they can increase productivity, deliver
By centralizing all information related
to manufacturing processes, chemical
•
PAGE 6
companies can improve efficiency across
departments. At any time, this data can be
products faster, and improve forecasting.
This leads to higher customer satisfaction
and allows them to deliver product at a
higher margin.
moved up into personal productivity tools,
The greater efficiency provided by a
such as a spreadsheet, and then back down
fully functional ERP system can benefit
so that it stays in the ERP system, where
manufacturers as well as their customers
others can access it. This avoids duplicated
and suppliers. Process manufacturers can
effort, redundant data entry, and data cost—
fill more orders and increase inventory turn
from storing the data in multiple places. It
rates. Similarly, purchasing requirements
also enables employees across departments
are reduced because chemical companies
to deliver better customer service and make
have more visibility into their supply chain,
better, more profitable decisions.
which allows them to give suppliers earlier
A comprehensive ERP system can also
contribute to higher margins. For instance,
companies can better use their inventory
and sell product immediately at the right
notification when they need product and
avoid the extra costs of booking products on
rush orders.
TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
Effective lot tracking and traceability
methods are becoming a prerequisite
for doing business in the manufacturing
industry. Many industry leaders are
now requiring chemical manufacturers
to demonstrate this ability before doing
business with them. An ERP system
built for process manufacturing provides
chemical companies with the tools they
need to produce quality products on time,
achieve regulatory compliance, and gain
the confidence of prospective customers
or suppliers. As a result, they can better
position themselves for new and more
profitable business opportunities.
ACHIEVING QUALITY AND
COMPLIANCE GOALS WITH ERP
Process manufacturers in the chemical
industry must manage complex supply
chains, while meeting strict quality and
compliance objectives. ERP systems
created for this industry help automate key
processes and provide end-to-end visibility.
Companies can then increase efficiency,
track products from cradle to grave, and
plan for demand. More importantly, they can
deliver safe, high-quality products to their
customers.
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TECTURA WHITE PAPER
HOW TO ACHIEVE QUALITY ASSURANCE AND REGULATORY COMPLIANCE GOALS WITH ERP
PAGE 8
ABOUT TECTURA
Tectura is a worldwide provider of business consulting services delivering exceptional
service and sustainable value through consulting, software and IT implementation. Our
diverse clientele includes mid-sized companies and divisions of larger enterprises in the
aerospace, life sciences, manufacturing and distribution, retail and service industries.
With more than 1,800 team members in 20+ countries, Tectura applies its industry
knowledge and best practices philosophy to provide Microsoft Dynamics® ERP, CRM and
technology solutions throughout the Americas, EMEA, and Asia Pacific. A Microsoft Gold
Certified Partner, we maximize our vast technology resources and deep Microsoft expertise
to deliver increased efficiency, project acceleration and a competitive edge.
Tectura delivers solutions for chemical manufacturers built on advanced Microsoft Dynamics®
ERP platform, in compliance with all the requirements of process manufacturing companies.
Tectura can help you:
•
Effectively manage formulation, packaging and pricing
•
Improve quality management throughout your processes
•
Comply with industry and government regulations
•
Track batches from points of origin to the consumer
•
Gain better control over production and quality
DISCLAIMER
This White Paper is for information purposes only. Tectura makes no warranties, express, implied, or statutory, as to the information in
this document.
Date of Document March 2009
The information contained in this document represents the current view of Tectura Corporation on the issues discussed as of the date
of publication. Because Tectura must respond to changing market conditions, this document should not be interpreted to be a
commitment on the part of Tectura, and Tectura cannot guarantee the accuracy of any information presented after the date of
publication.
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objectives of Tectura Corporation for future operations and projections of revenue and other financial items that are based on the
beliefs of, assumptions made by, and information currently available to Tectura Corporation. The words “expect,” “estimate,”
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