Enterprise Resource Planning Systems Provide Supply Chain Traceability

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An ERP solution provides for the management of multiple business activities and traceability requirements resulting from regulations, customer demands, sourcing, and international business needs.

The industry pressures facing pharmaceutical and nutraceutical companies are innumerable, as manufacturers experience constant challenges from ever-changing government regulations and scrutiny from savvy customers. Competing pressures for traceability and serialization, product assurance, and consistent product availability demonstrate the industry’s supply chain complexity. In addition, adherence to industry-best practices regarding quality control standards and security management necessitates the use of a robust business management system and sound manufacturing processes to handle these requirements in a cost-efficient manner. An integrated and industry-specific enterprise resource planning (ERP) solution developed for the unique needs of the pharmaceutical and nutraceutical industries goes beyond the basics of accounting and manufacturing to provide a high level of control over data, inventory, quality, and traceability, which are necessary for today’s manufacturers.

Supply chain management involves the oversight of movements, processes, and interactions throughout a product’s lifecycle spanning from the acquisition of ingredients and services to consumer consumption, with the goal of streamlining the flow using the most cost-effective methods possible. Traceability within the supply chain provides the ability to track and trace a particular ingredient as it travels through the supply chain to locate the source of possible contaminations in the event of a recall situation. Traceability is a legal requirement for pharmaceutical and nutraceutical companies to provide accountability and transparency of the supply chain. It’s important to remember that it’s not just about traceability and cost-effectiveness; managing data effectively in the supply chain is of utmost importance. This data management is a key factor in supply chain management.

The benefits of ERP software

ERP software provides a dynamic system and data warehouse to maintain, organize, and store information for all stakeholders in the supply chain-including vendors, manufacturers, retailers, and distributors. With the complexity of interactions and quantity of data produced, an ERP solution provides for the comprehensive management of multiple business activities, as well as the traceability requirements resulting from stricter regulations, customer demands, sourcing, information requests, and international business needs. In addition, supply chain complexity exemplified by products often passing through 10 or more points of contact demonstrates the need for an extensive system to handle traceability needs. With a standard electronic format and the ability to transfer data, an ERP system allows efficient information exchange and system integration, with fewer errors than a manual system, to provide a highly competitive advantage in this industry.

Supporting accountability in the supply chain is no longer optional as regulatory reporting and recalls are ever-present within the pharmaceutical and nutraceutical industries. Increased regulation, such as meeting current good manufacturing processes (cGMP) compliance, necessitates the retrieval of accurate ingredient information quickly. Recall lists from FDA detail contaminations, undeclared allergens or ingredients, mislabeling, and impurity detection, among others, and the number of product recalls is only increasing. Preparation is key, as lack of readiness can be catastrophic to a manufacturer’s reputation and bottom line. Due to the complex nature of the supply chain, it’s imperative to have the automated functionality of an ERP solution to facilitate the traceability of every ingredient, material, and component that enters and exits facilities for regulatory and recall compliance. The reality is that preparing for a recall is now a regular part of doing business, and being prepared to handle recalls cost-effectively is a necessity in a competitive business climate.

In addition to regulatory requirements, consumers are driving transparency in the supply chain, requiring prescription drug, over-the-counter (OTC), and supplement manufacturers to engage in sustainability efforts to meet marketplace expectations. Procurement sustainability and corporate social responsibility are increasingly a focus for companies, and the visibility of supply chain management protocols provide a platform to achieve positive outcomes for not only businesses but the economy and the environment. This transparency also offers a way to boost brand image amid consumers' growing concerns about the sourcing and handling of the products they purchase and consume.

There are three specific areas of interest in regard to accountability in the supply chain within an ERP solution; understanding each topic fully and how they interrelate is important.

Traceability and serialization

Full, forward and backward, lot traceability provides the transparency manufacturers require, with the results that every company seeks to achieve in their supply chain management practices. This level of traceability is defined as control throughout the entire lifecycle of a product, including the origins of raw materials through their consumption. “Beginning to end,” “manufacturer to pharmacy,” and “farm to fork” are phrases used to describe full product and lot traceability, and while the terms may be different, the end result is the same. With impurity issues and labeling errors that frequent the news cycle, it’s vital to identify the source of contamination quickly to mitigate harm to consumers. More importantly, prevention of contamination through preventative controls and traceability capabilities is the key to ensuring the integrity of the supply chain. ERP software supports the controls and detailed level of traceability required for cost-effectiveness, added security, and serialization.

Traceability is important for the safety of the consumer, and it mitigates future financial tolls and other losses for a company. The lower the amount of control, the greater the recall window as there may be more items possibly contaminated, which in turn causes a greater financial impact. The tighter the control, the smaller the recall window. Industry-specific ERP solutions facilitate safe and cost-effective tools to help meet traceability requirements and provide documentation that audit trails are in place.


An important feature of an ERP solution’s traceability functionality is the added security it provides to ensure data integrity. Through user-role permissions that allow only authorized staff to perform various transactions, it provides the accountability, controls, data trail, and integrity that compose a valid traceability stream. This function significantly lessens the chance that data can be manipulated as it requires users with proper authority to sign-off with a forced authorization of transactions. Features such as e-signatures, established by FDA in 21 Code of Federal Regulations Part 11, use a user ID and password to signify a paper signature ensuring accountability of test results, the manufacturing process, and other transactions in the supply chain. E-signatures further supports traceability by imposing security structure and processes necessary to maintain quality control.



Serialization establishes a product identifier, serial number, lot number, and expiration date, providing a reporting mechanism to track supply chain movement-demonstrating authentication and proof that a product came from a specific facility. The US Drug Supply Chain Safety Act (DSCSA) requires serialization of items down to the individual package level, enables detection of fraudulent products in the supply chain, and mandates efficient recalls when necessary. In the fight against counterfeiting in the pharmaceutical and nutraceutical industries, this capability provides proof that a specific product came from a particular manufacturing facility. With a cohesive ERP system, real-time and immediate access to serialization data is readily available to meet these regulatory requirements.

Certificates of analysis and customer testing

A certificate of analysis (CoA) is a document of tests performed on raw materials or finished products as a part of the quality control (QC) process. It records and provides proof that a product passed specific conditions. The document affirms tested items meet the minimum QC requirements as determined by company standards, customer request, or regulatory requirements and acts as proof that the material passed the parameters set forth by the testing method. The more detailed the CoA, the greater value it has for the end-user. An ERP solution effectively automates, produces, and maintains this information within the system and allows real-time access for documented proof of conformance.

The information contained in a CoA varies but can be configured to include product description, lot number, formulation, the specific test performed, results, handling and storage of information, and other specific details. This proof of testing serves as documentation for auditing, as well as compliance with customer-specific standards. Tests can include analysis of the product or its performance and may include verification of purity, concentration, and contaminant testing. If a company feels that industry standards are not stringent enough, they may require stricter standards and request tests performed accordingly. For example, if a vitamin or supplement manufacturer produces and labels a product as “Premium,” they may elect to require testing that validates this label claim. Also, bulk intermediate products may need to meet particular color, quality, or other standards to be used as an additive in a customer’s finished good and require a CoA to attest that specific guidelines have been met.

An ERP solution is able to deliver capabilities to handle both customer-specific test requirements, as well as possible CoA documentation requirements including branding. The documented CoA can be retained in-house or shipped with the finished products to customers for their own auditing purposes. Easy organization and formatting of detailed testing information within an ERP’s centralized database is a necessity when multiple products and product lines are involved, as each requires documentation formatted to its specific needs. In today’s business environment, delivering to customer-centric requirements is key. Therefore, features such as customer-specific CoA’s and testing are critical to delivering overall value.

Real-time reporting and audit trail documentation

The real-time reporting capabilities of an ERP system assist with meeting compliance requirements, mitigating risk, and minimizing the effects of a product recall, ensuring that companies have the most complete, consistent, and accurate data. Manual lot and serial tracking and reporting methods are ineffective for time-sensitive product recall situations where items must be quarantined within an allotted period of time to avoid harm to consumers. Using an ERP solution’s traceability functionality provides the tools to automatically track inventory, serial numbers, lots, and product line information in real-time. When urgency is required, electronic reporting is the most effective way to ensure effective lot and serial number tracking.

Audit trails provide a step-by-step documented electronic history of materials from raw ingredient to the consumer, recording each time data are added, deleted, or updated, with the date/time stamp and user credentials indicating who entered the information and the specific transaction that occurred. As a regulatory requirement in the pharmaceutical and nutraceutical industries, this level of documentation is crucial when an auditor is on-site at a manufacturing facility as it maintains an objective historical record of established internal business controls. Without a solid audit trail, if serious defect or contamination is discovered, companies are forced to recall an entire product line as there is no way to trace back to the source and then forward to the affected finished goods.

Specifically, audit trail documentation includes transaction level detail including item, lot, date, and time and provides the ability to audit down to the transaction level. This documentation offers the ability to report on test history and results, which are data that support CofA documentation. While this level of detail entails maintaining a large quantity of data, from an auditing perspective pharmaceutical and supplement manufacturers need to ensure that they are able to respond quickly and drill into and provide detailed, accurate information. Handling the large amounts of data that comprise solid audit trail documentation, with the functionality to access information in real-time, makes an ERP solution the choice for manufacturers required to meet extensive and specific documentation needs.

Industry-specific ERP provides the tools and processes that support accountability in the supply chain for pharmaceutical and nutraceutical manufacturers seeking a robust system to meet their needs in a highly regulated industry. With features that include CofA generation, lot and serial number traceability, real-time reporting, and audit trail documentation, companies can meet strict compliance requirements and consumer expectations while maintaining cost-effectiveness. In an ever-changing and complex industry, the functionalities of an ERP solution support the accountability in the supply chain that is necessary in today’s marketplace.


About the Author

Daniel Erickson is product strategy manager at ProcessPro.