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Business Accent
Implementing ERP in the pharmaceutical SMB
Following a major upheaval due to WTO policies, the pharmaceutical
industry needs an ERP application that effectively integrates the functions
and data of all departments
In this era of globalisation and competition, companies are embracing various
management concepts to gain an “extra” edge over competitors. One
of the most hyped and expensive concept that started in the late 80s was ERP—Planning
of the Resources of an Enterprise. Resources mainly comprise four m’s—man,
machine, material and money. The optimum utilisation of these resources will
result in higher efficiency and better performance. This article focusses on
ERP in SMBs and SSIs.
The pharmaceutical industry is going through a major upheaval due to WTO policies.
The need is of accurate information and effective decisions. We have to increase
the level of computerisation for generating information. What is required is
an ERP application that effectively integrates the functions and data of all
departments, and reduces redundancy.
Pharmaceutical companies have typical business processes. The market of products
is dynamic with frequent introduction of newer upgrades. There are a lot of
regulatory requirements to be complied with and these require extensive control
over production, stores, QC processes and data. Hence, ERP is needed to keep
track of the data. ERP project broadly consists of three steps—evaluation,
implementation and maintenance.
Best practices
 There
are numerous articles and checklists available on the Internet about the best
practices of selection and implementation. Most of them talk of similar issues
such as top management and employee involvement. These fundamental points are
overlooked by companies. A group of influential people evaluates and selects
the package for a company. They are not aware of the finer points and complications
in the current system. This information is available with end-users who don’t
have a say in the selection process. Another problem is the level of scrutiny
of the product before purchase. People at the top-level are generally not aware
of the day-to-day activities of departments, and this reflects on the way they
evaluate a product.
An organisation should involve maximum personnel at the evaluation stage. Once
the management decides to implement ERP, they should take decisions on two basic
issues, expenditure and time frame for completion. The company should then send
the information to all personnel about the same. One project manager (PM) and
a core team for evaluation and implementation should be formed comprising two
levels of personnel from each department. The PM should set realistic time frame
for all activities and control to check any project lag. The team should create
an inter-department business process flow document.
The next step for the team is to identify the critical issues and then do an
ABC analysis of the same. The output of this activity will form the charter
for scrutiny and evaluation of the ERP applications.
Initially, the ERP vendor should provide details such as cost of the application,
licence charges, any recurrent costs, free and paid support, man-days of consultants,
hardware and software requirement, details of all modules along with features
and a list of ready-made reports, cost of modification of forms and reports.
The general tendency is to browse through the client list and then call some
of them randomly to get their feedback. Our calculation for implementation and
completion of the ERP project is more or less based on the input from these
random clients. This is where we make mistakes in our estimates. Each client
and its quantum of work are different from the other. The most compatible ERP
is identified and finalised. Here, the next phase of the ERP project starts.
The most crucial phase
The implementation stage is the most crucial phase. The PM and the core team
have to work together to complete this phase.
There are three parts in an application—master data, regular transactions
and reports. Master data in an application mainly consists of data that is entered
once and normally not modified over a period. It forms the basis of our day-to-day
transactions and reports. A common example of master data is Item Master. Implementation
starts with identification and entry of master data in the application. One
must be careful while collecting and entering master data in the application.
The accuracy of the data is vital.
This is the time when a company can think of making changes in codes, segregation
and nomenclature of the master data. Many ERP applications have restrictions
in terms of length and format of entries. Companies might need to make adjustments
in their existing system to adopt the ERP application.
The ERP vendor should be asked to provide a detailed plan for entering the master
data, enumerating the process and sequence to enter data.
This process will take some time, but if done properly and accurately, the foundation
of the application will be sound and strong for faster implementation. It should
be communicated to the ERP core team and all users that once a transaction is
made using a particular master data, that master data cannot be deleted from
the system. For example, we have a vendor master entry called Syringe. From
the Purchase module of the ERP, we create a purchase order in the name of the
above vendor. Once, it is released, we cannot go to the vendor master and delete
the vendor.
After feeding the master data into the system, the end users should check it
thoroughly.
An important thing at this stage is to maintain the momentum of the activities
until they go live. Certain departments tend to slow their efforts or do not
complete their tasks on time, thus leading to overall slowdown of the project.
We move to the next sub-stage—entering regular transactions and testing.
Here, we need to ponder upon a particular scenario. The PM and the core team
have to decide about the amount of backlog data that should be entered to run
the system and bring it online. Here, we need a clear understanding of the complete
business cycle, from sales forecast to realisation of payment. Further, until
the system is not live, users will have to enter data in both the systems parallel
to each other.
Typically, in pharmaceutical companies, planning is done 2-3 months in advance,
and then purchase orders are raised. Delivery time varies from 2-8 weeks. For
example, a purchase order is raised in October and the material is received
in stores in January. If we do not enter the purchase order backlogs from October,
then we will not be able to do a GRN entry in the stores module for the month
of January. Hence, it is important to decide and enter data as per the business
cycle.
Simultaneously, reports should also be checked. Normally, ERP applications have
reports in various layouts and content. Normally, the trend is to print all
the reports. Once ERP implementation is done, one of the goals should be to
minimise the printing activities. Users should be accustomed to reading reports
on-screen. This will also reduce the cost of printing in a company.
A thorough checking and testing of transaction data and reports should be conducted
at the implementation stage. This will normally take about 2-18 months, depending
on the size, product line and divisions of the company.
Finally, it is the time to go live. The users should stop working on the parallel
systems.
The longest part
We have evaluated and implemented an ERP. The general feeling is that it is
the end of the ERP project. But, this is where the longest part of the ERP project
begins.
You have to start with making a daily programme for backup of the ERP data.
There should be enhancements of the system in terms of reports for effective
decision-making.
Documentation is another major activity. Problems start the moment a particular
user quits. It takes time to re-train another user and all the procedures are
not clear at the onset.
Regular refresher training should be provided to the end users for lesser-used
features.
ERP undergoes changes regularly due to changes in the business environment.
These include regulatory, legal and political changes. Users should be trained
to know these changes and keep the system in optimum condition.
ERP projects are time and resource consuming by nature and many of them fail.
The reasons for failure have not been dealt with in this article. An ERP package
should never be modified.
Hence, the ERP project should be evaluated thoroughly, implemented as it is
and adopted throughout the organisation. The success of the ERP project is when
people adopt the ERP system and say, “this is how we do things around here.”
The author works with a pharmaceutical company as Business
Systems Analyst. The views expressed here are her own and not necessarily those
of her employer.
She may be reached at ipbasu@rediffmail.com
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