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QAD Inc.

Pharma/Biotech Overview

Research and drug development are expensive undertakings, with no assurance that a viable product will result.  Producing medicines consistently when temperature, weather, humidity and ingredients can affect the processing time and the yield isn’t easy.  And as one of the most highly regulated industries in the world, pharmaceutical and biological manufacturing is held to very high quality and documentation standards.  Only companies with flexible, adaptable supply networks have survived; only those whose systems are designed to keep pace with these rapid changes have thrived.

Pharma/Biotech Key Processes

Pharma/Biotech Design

All manufacturers are being pressed to introduce new products faster than ever before, but biotech and pharmaceutical companies are under pressure to recoup massive R&D spending quickly.  Being first to market with an important new medicine can mean billions in revenue.  Customers are savvy researchers today – they insist on having the latest and greatest treatments.  Clinical trials are hotly pursued for patients with rare or complicated conditions.  This has put pressure on manufacturers to utilize design talent wherever they find it – at suppliers, in joint ventures with competitors and universities or at independent research firms.  The need for collaborative design tools has skyrocketed – traditional methods of new product introduction are too slow, too costly and don’t provide the visibility needed in today’s fast paced environments where it seems like there’s a new breakthrough every day.  Pharmaceutical and biotech companies are grappling with:

Pharma/Biotech Design Issues

  • Rapid new product introductions are required to remain competitive and to justify investments in R&D
  • Design needs to incorporate not only the medicine itself, but also a cost effective, repeatable certifiable and high yield manufacturing process
  • Shared ventures help to distribute the investment of R&D resources
  • Effective phase-in and phase-out of medicines can maximize drug life spans and make or break the profitability
  • Global design teams and supply chains make visibility and communication more important than ever
  • Country specific regulations make certification, packaging and labeling challenging

Pharma/Biotech Design Metrics

You can’t improve what you don’t measure, and analytics and process measurements are basic to modern manufacturing methodologies such as six sigma or lean.  Many people say the drug design process can’t be measured – it’s too research intensive.  But effective development processes show up in many common business metrics:

  • Ensuring compliance with clinical trial and labeling regulations can make the introduction process smoother
  • Phase in and phase –out processes can maximize revenue from existing and new products
  • Fewer suppliers to deal with as the number of ingredients becomes more defined
  • Higher quality products as designing a repeatable high yield process eliminates many potential errors and pitfalls

Pharma/Biotech Plan

If you don’t know where you’re going, how do you know when you get there? Planning provides the roadmap to manufacturing success.  From high level sales and operations planning to ensure that the company’s strategic objectives can be met, right down to production schedules for each day at each work center or cell, planning is the heart of manufacturing.  Yet in biotech and pharma, yields can vary based on a myriad of factors.  Processing times are uncertain.  Cleaning and sterilization windows further restrict plant flexibility.

Pharma/Biotech Plan Issues

The one thing you can count on is that the real world rarely matches up to the plan.  So it’s important that you start with the best possible plan, and that you have visibility to react quickly when things go wrong.  Materials are late; curing time varies; shared resources like CIP skids are not available at the right time, workers call in sick, ingredients expire or vary in potency – the list of potential pitfalls is nearly endless.

  • Inaccurate forecasts may lead to excess inventory – or worse yet, patients who can’t get needed medicines
  • Poor planning can result in excessive unnecessary costs due to special freight charges to bring ingredients in sooner or to ensure stock on hand at dispensing sites.
  • Not taking demand seasonality or sales promotions into account can leave you without inventory to meet orders
  • Inaccurate inventory records can cause line stoppages due to shortages
  • Government regulators may shut down the line for potential infractions or inspections
  • Potency variations of ingredients may mean you need to reformulate a batch to ensure the proper balance
  • Expirations and spoilage may influence the order of production

Pharma/Biotech Plan Metrics

The results of poor planning can show up in virtually every performance measure:

  • ePedigree, CFR Part and other regulations require adherence to processes and procedures
  • Excess inventory from materials stocked to meet demand that never materializes
  • Large caches in queue at equipment may lead to spoilage, low yields or scrap
  • Lack of product availability may lead consumers to switch to competing formulations
  • High freight bills and expediting fees to bring ingredients in to make planned batches or to ensure availability at dispensing locations

Pharma/Biotech Source

It’s well understood that industry leading companies have the most effective supply chains.  In these companies, materials are intelligently sourced and many suppliers are treated like partners – integral parts of the design and delivery process.  Suppliers are chosen based on a myriad of criteria, possibly including their proximity to the manufacturing facilities, the price of the item, trade terms, their design expertise, and their delivery and quality reliability.  Each supplier’s performance is continuously measured and usually shared with the supplier.  In pharmaceuticals, purity of ingredients and continuity of supply may be paramount.

Pharma/Biotech Source Issues

Effective sourcing is a complex balancing act that involves weighing the relative merits of a host of complex details that may not always be quantifiable up-front.  With limited time for analysis, buyers use their “best guesses” to estimate the impact of a particular factor in a sourcing decision.  It’s no wonder many buyers skip the analysis and place orders with their tried and true vendors to ensure quality, potency and purity.

  • In consistent potency can affect batch yields and potentially even jeopardize certifications
  • Late deliveries or poor quality can affect your ability to meet demand by extending the processing of batches. It can also make use of shared resources like CIP skids problematic.
  • Contract manufacturers with specific domain expertise may offer assistance that other vendors cannot – and this expertise may result in significant cost savings in manufacturing

Pharma/Biotech Source Metrics

In many industries, the only metric applied to the purchasing department is purchase price variance (PPV).  In biotech and pharmaceuticals, sourcing decisions can have an even greater effect on every aspect of the business.  For example:

  • Supplier performance ratings can help determine if a supplier should be replaced or if contracts should be reallocated to multiple suppliers
  • Safety stocks are a function of lead time – so if lead time increases, overall inventory levels may rise and the potential for expiration, adulteration and spoilage increases
  • Poor quality materials may not show up until WIP, resulting in high rework or scrap charges or low yields
  • Purchase price variance is part of the story – but quality and delivery have an important effect on profitability and yields too.

Pharma/Biotech Make

Numerous studies have shown that better performing companies have almost universally adopted a “modern” manufacturing methodology.  The surprise is that it makes no difference whether it’s Lean, Six Sigma, TQM or something else; what matters is the commitment to a methodology for continuous improvement.  Continuous improvement is tricky in a regulated environment where process certification can take months.  By supporting ePedigree and CFR Part reporting requirements, effective enterprise applications can help you to maintain this commitment by giving you the visibility you need to manage your manufacturing processes.

Pharma/Biotech Make Issues

If everything went according to plan, even manufacturing pharmaceuticals and biological would be easy.  Unfortunately, there are a nearly infinite number of things that can go wrong in the process.  Everything from the weather to tiny variances in temperatures can affect yields.  Equipment breaks down.  Ingredients are missing or expiring; or deliveries are delayed.  How you respond to unforeseen events can make or break the company’s profitability.

  • Inaccurate inventory records result in ingredient shortages and leads to excessive scrap or spoilage due to expirations
  • You want to utilize lean manufacturing techniques like kanban and back-flushing to streamline reporting from the shop floor but hesitate to make changes to certified processes
  • You need specialized process capabilities that require you to out-source some or all of your manufacturing process
  • Ramping up for new products may have steep learning curves affecting efficiency and utilization rates – and costs
  • Unexpected equipment breakdowns require unplanned schedule changes or re-routing of orders
  • Shared resources like CIP skids can adversely affect your yield if they aren’t available in the right time window

Pharma/Biotech Make Metrics

Almost everything that happens in an organization affects what eventually happens in manufacturing.  The trick is in understanding the cumulative effects of all these decisions and achieving your goals despite unplanned events.

  • Batch level decisions affect both cost to manufacture and quality and yield of the final product
  • Inventory management decisions affect the ability to complete orders because of spoilage, purity or expirations
  • Breakdowns or set-up problems can result in late orders ; variable process times and yields can affect throughput

Pharma/Biotech Engage

Every time you interact with your customers, it’s an opportunity to cement your relationship – or not. Some research has shown that customers rate the ease of doing business with suppliers and the access provided to information about their orders as nearly as important as the actual products they buy. Your business processes and the enterprise systems that support them can make or break any customer engagement by making it seem effortlessly easy.

Pharma/Biotech Engage Issues

  • Poor business processes or inadequate systems contribute to loss of market share by frustrating or annoying customers
  • Customers like hospitals, insurance companies and buying groups want quotes to compare prices and trade terms to other competing medicines or generics before finalizing their formularies
  • Customers also want to have custom packaging to suit their dispensing habits or stocking policies
  • Returns of spoiled or expired doses must be handled quickly and cost effectively
  • Customers want to be able to quickly check the status of their orders by themselves

Pharma/Biotech Engage Metrics

If you treat customers well, you’ll be rewarded with repeat orders and word of mouth referrals. But treat them badly and watch your market share melt away. Beyond measuring calls to the complaint line, how can you be sure your systems and processes are not sending your customers straight to your competitors?

  • Providing access to records like ePedigree and proving compliance with local regulations is the will reassure customers about quality and safety of your products
  • Conversion rates of quotes to orders show that customers appreciate your products and the ease of doing business with you.
  • Low repeat order rates may show that customers are not satisfied after engaging with you. Measuring repeat order results may help you understand what you’re doing right.
  • Customers understand that sometimes things go wrong. How you handle adverse events or recalls can have profound effects on your products brand reputation
  • Sometimes a customer just needs the answer now – they want to check their order status or place an order by themselves. Sometimes they want to talk to a CSR in your call center. Measuring call volume and self-service visits can help you satisfy your customers varied needs by providing the right tool and the right service levels.

Pharma/Biotech Deliver

Even if you do everything right – you’ve got a great product that’s very effective, it’s high quality, the price is on target – you still may not achieve the market share you deserve if you consistently miss promised delivery dates or if you short ship items or ship the wrong items. Fast, efficient, consistent and accurate are the hallmarks of great companies’ delivery systems.  It sounds so simple, yet it can be very hard to achieve. Errors here can also jeopardize your process certification with the FDA or other regulatory bodies.

Pharma/Biotech Deliver Issues

Your team wants to perform.  They try their best to fill all orders quickly and perfectly, but system errors or cumbersome processes can get in their way.  Drop shipments and direct deliveries to multiple addresses are challenges in themselves.  ePedigree records must be maintained.  Customers increasingly demand special dispensing packs, special labeling or even bar codes and RFID chips to ensure safety.

Pharma/Biotech Deliver Metrics

Even beyond the obvious – are orders going out on time without errors – there are clues that can help you streamline your business processes and improve profitability while delighting your customers with perfect orders.  You need to measure your performance and then dig in to the underlying causes if you miss the mark.

  • Perfect orders make customers happy. Late deliveries point to problems in inventory or production management - or maybe poor forecasting. Lost market share can rarely be regained as patients switch to competing drugs or generics when your product is not available.
  • Shipping the wrong items may point to materials stored in the wrong locations or mismarked inventory – and it can land you in serious hot water with the government – not to mention endangering patients. Bar-coding or RFID can help solve this problem and improve performance by identifying materials correctly at picking and at put away.
  • When your inventory record shows an item is in stock but the bin is empty or the count is off, short shipments happen, followed by unhappy customers. Inaccuracies in finished goods inventory is a good predictor of future customer satisfaction issues.It also leaves gaping holes in the ePedigree chain, which can jeopardize your process certification and potentially shut down a facility.

Pharma/Biotech Service

In the unfortunate event of a recall, your ability to track and trace your product is crucial.  How you handle this type of event can mark your company as dangerously out of control or enhance your brand reputation if it’s handled in an orderly and efficient manner.  Give your CSRs easy information access so they can speak intelligently to consumer and customer questions.

Pharma/Biotech Service Issues

It’s costly to provide excellent service to customers, but it’s REALLY costly to provide bad service.  When the CSR has to annoy the customer by asking for information that should already be in your system, you’re slowing down your call turnover time.  That costs money through increased headcount.  When you can’t determine accurately when you will have inventory available for a customer you risk losing a sale.  Even worse than the out-of-pocket costs is the gamble you take with losing that customer forever.

Pharma/Biotech Service Metrics

By treating your customers’ goodwill like the valuable resource it is, you can cement that relationship and save money in the process. Good service can win you that customer for life. But how do you know you’re needlessly spending money and squandering customer goodwill?

  • Measuring the elapsed time from when the customer first logs the call to its final resolution can show you the effectiveness of your service organization
  • Skills tracking along with measuring training completed can ensure that you have technicians with the right skill set available in a reasonable time frame.

Pharma/Biotech Finance

Modern manufacturing methods put as much stress on the financial systems as they do on the manufacturing side of traditional restrictive enterprise applications.  Traditional cost accounting with its emphasis on work order variances and detailed material tracking and operation reporting doesn’t cut it when you’re making pharmaceuticals and biologics in batches with uncertain yields and process times.  Valuing inventory that expires or loses potency over time is not simple.  Electronic payments have largely replaced traditional paper checks.  Mergers, acquisitions, joint ventures, and intra-company supply and demand mean finance needs flexibility like never before.  Consolidations and eliminations, multi-currency, and automatic allocations are just a few of the items on your accounting team’s wish list.

Pharma/Biotech Finance Issues

Government compliance mandates have put strict new controls on the finance team, in addition to the regulatory compliance required for pharmaceuticals and biological, but the business requires streamlined processes to remain competitive. Finance teams struggle to find the right balance between controls and the business’s emerging needs. The global economy means international business is the new normal while frequent mergers and acquisitions make chart of accounts and general ledger flexibility mandatory. Varying compliance regulations require localizations and complete audit trails; multi-currency transactions affect profitability; cash management is crucial; and reporting has to be quick and easy, precise and accurate.

Pharma/Biotech Finance Metrics

The finance team is used to metrics - much of accounting is designed to measure and report the business’s performance. But compliance regulations means new measures, new reports and new controls need to be put in place or the company and its officers can be at risk. Finance often struggles to put the right checks and balances in place to allow the smooth running of the business and still ensure traceability and confidence in the numbers.

  • Measuring inventory and COGS can be tricky in joint ventures or when expiration dating affects salability, if a supplier drop ships goods or if part or all of production is outsourced.
  • Intra-company shipments and orders require careful reporting to ensure profits and revenue are not over-stated
  • Cash flow projections can show whether DSO is on target and that out-going payments are in line with actual inventory levels
  • Project accounting can help determine the true cost of a new medicine and determine ultimate profitability

Pharma/Biotech Enable

When shopping for new enterprise applications, savvy buyers don’t just focus on long lists of detailed functionality. It’s more important now than ever that the infrastructure and architecture of the system is flexible and adaptable so that the business can react to changes quickly.

Pharma/Biotech Enable Issues

Companies today run a mix of applications from multiple vendors and their ERP system is usually the core or backbone of it all. The infrastructure and architecture of the ERP system are crucial. Master Data Management capabilities are key to ensuring consistency of data among disparate systems like LIMS and quality management systems. Systems have to be intuitive and easy to use. Analytics and business intelligence are also important to enable all the measurements you need to run your business well.

Pharma/Biotech Solution

  Basic Capability Advanced Capability Specialist Needs
Design Formula & Recipe Management Support for
Product Change Control (PCC)
Master Data Synchronization
Time-phased planning, costing and execution of capital project
Costing using Enterprise Edition
Product Lifecycle Management (PLM)
Plan Formula & Process
Lot Tracking
Batch Manufacturing
By-Products Co Products
Process Cell Capacity Planning
Inventory Optimization
Manufacturing Planning
Promotions Planning
Sales and Operations Planning
Rough-cut Capacity Planning
Operations Planning
Product Line Planning
Distribution Network Design
Materials Requirement Planning
Master Production Scheduling
Capacity Requirements Planning
Operations Planning
Demand Planning
Supplier Collaboration Portal
Kanban Planning
Distribution Resource Planning (DRP)
Finite Scheduling
Advanced Planning
Source Purchasing
Purchase Order management
Supplier Performance
Supplier Collaboration
Supply Chain Portal  
Make Formula and Recipe-based production
By-products and Co-products
Mixed Mode Manufacturing Manufacturing Execution Workbench
Production Scheduling Workbench
Lot Serial Traceability
WIP Lot Trace
Just-In-Time Sequencing
Shop Floor Control
Process visualization with full Kanban support
Rate-based scheduling
Repetitive/Advanced Repetitive
  Manufacturing Execution System
Automated Data Collection
Engage Sales Quotations
Sales Orders
Sales Analysis
Lot/serial allocation at order time
Buying groups
Customer Relationship Management (CRM)
Customer Self-Service (CSS)
Customer Schedules APM
Lot/serial allocation at order time
Buying groups Questionnaire for configured items
Features and options
Trade Management  
Deliver Direct shipping to retail stores
PO to third party to drop ship to customer or distributor
Standard shipping from the warehouse
Inventory Control (min/max)
QAD Consignment Inventory
QAD Supply Chain Portal (SCP)
Returns process including RMA, warehouse, and accounting orders
  Direct Store Delivery (DSD)
Service Contact Center
Call Tracking
Incident Management
Finance Financial Analytics
Management Reporting
Accounts Receivable
Accounts Payable
General Ledger
Banking/Cash management
Cost Management
Logistics Accounting
Vertex Sales and Use Tax Interface
Fixed Assets
Enhanced Controls
Enable Support for Sox, GAAP, IFRS, CFR Part , , ISO 9000, RoHS
Support for e-Pedigree QAD Business Intelligence (BI)
QAD Quality Management EDI eCommerce
Enterprise Asset Management (EAM)
EAM Projects
Lot/Serial Traceability
QAD Trade Management System (TMS)
QAD Warehousing
Consignment Inventory
QAD Pricing
Customers and Supplier Schedules
Trade Management
Advanced Pricing
Advanced Pricing Management (APM) for Medical