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By Peter Kowalke • October 30, 2020

How ERP Can Help Life Sciences Contract Manufacturers

Contract manufacturers in the life sciences space face a host of challenges, including regulatory demands, thin margins, changing requirements based on client needs and an increasingly competitive business environment. To meet these challenges, contract manufacturers need all they can get from automation and modern IT systems.
 
Getting the most from automation and IT requires enterprise resource planning software (ERP). An ERP system is a comprehensive, company-wide backend system for managing all aspects of a business—and it can help contract manufacturers a lot, especially in the regulated life sciences space where strict process requirements are the norm.
 
Some of the ways that ERP can assist contract manufacturers in the life sciences space:
 
Better Supply Chain Management
 
Because of the breadth and depth of products and services offered by contract manufacturers, there is often a wide range of suppliers and partners involved. Managing these suppliers is a massive task, requiring granular, real-time visibility into all aspects of the supply chain.
 
Without a modern ERP system in place, contract manufacturers often struggle with maintaining excessive inventory while simultaneously underutilizing their capacity levels. This can result in underperformance when it comes to delivering products to clients. An ERP system offers a window into each segment of the supply chain, automating inventory and capacity utilization and ensuring processes are running as quickly and efficiently as possible.
 
Enhanced Quality Control
 
One of the biggest complaints of life sciences companies that work with contract manufacturers is not having control over quality. And there are plenty of contract manufactures that are more than happy to turn out products at low quality for enhanced profitability.
 
Contract manufacturers can take advantage of ERP technology with built-in quality control metrics and practices to ensure they are producing products that meet the demands of their customers. These types of solutions offer peace of mind to customers as well, ensuring the end product will meet their standards while also complying with any required mandates and compliance regulations.
 
Easier Value-Added Service Offerings
 
Because the contract manufacturer space is so crowded and competitive, businesses need to go the extra mile to differentiate themselves for potential customers. In addition to typical planning and product production within the life sciences industry, many contract manufacturers offer value-added services. These may include research and development, warehousing, distribution, testing and trials.
 
These types of services are excellent differentiators, but also require the proper technology support to ensure they are fully integrated with other company processes, applications and data. Cloud-based ERP solutions support scalability and adaptability, helping contract manufacturers to seamlessly move into these new lines of business while integrating existing and new processes and data in a central repository.
 
Reduced Risks and Liability
 
Life sciences companies that work with contract manufacturers assume a certain level of risk and liability. At the end of the day, products are being marketed and sold under their brand, and these products need to reflect their production standards. These businesses are also turning over intellectual property and data to a third party, which is a risk for any company.
 
Contract manufacturers in the life sciences space can combat these issues through proper contracts and close communication throughout the client relationship. ERP technology can facilitate that relationship and also offer a direct window into operations and production for customers. Transparent practices and processes that are easily visible to customers will go a long way toward building a solid company reputation and maintaining good will with customers and prospects.
 
Improved Communications
 
Contract manufacturers are often subject to criticism, particularly when it comes to communication. Having a good, open dialogue with customers from project start to finish is absolutely critical to a maintaining successful customer relationships.
 
ERP technology can help maintain that open line of communication, since all details and phases of a project can be readily visible to customers through customer access to part of the ERP system. An ERP solution facilitates tracking, reporting and analytics, ensuring customers have quick and easy access to any information they might need at every stage of a project.
 
But Don’t Settle for a Generic ERP Solution
 
Contract manufacturers should strongly consider a cloud-based ERP solution tailored toward the specific needs of this industry, however. While most ERP solutions can be customized to meet the needs of contract manufacturers in the life sciences industry, this customization can often be an expensive, time-consuming process due to the extra validation and regulator considerations inherent in life sciences manufacturing.
 
Instead of customizing an ERP solution, contract manufacturers should consider pre-packaged ERP solutions that are tailored for their needs. These solutions come out of the box with the functionality and best practices needed by most life sciences manufacturers, reducing the implementation time and minimizing the risk of improper processes. These prepackaged solutions can still be customized for specific company needs, of course. These solutions just usually don’t need this level of customization.
 
For a deeper look into how cloud-based ERP can help contract manufacturers in the life sciences space, read our case study on how pharmaceutical contract manufacturer TriRX Pharmaceutical Services ramped up operations from nothing to production in less than three months with the help of SAP Business ByDesign.