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Microsoft Dynamics 365: Features and Benefits
Microsoft Dynamics 365: Features and Benefits 1400 1000 Xcelpros Team

Introduction to Dynamics 365

Cloud-based Enterprise Resource Planning (ERP) software continues to shine as more companies focus on moving away from archaic legacy solutions. Modern replacements can do more now than ever thought possible, including processing much more complicated tasks to fill current needs and requirements.

With ERP solutions becoming increasingly important to properly running a modern business, choosing the right one is a big deal. Once things like budget, time-frame, and availability are addressed – the final decision is often a compromise based on the needs of different departments like; Sales and Marketing, Operations, Customer Support, Financial Management, and more.

One of the best comprehensive solutions available is Microsoft’s Dynamics 365 line of products – designed as all-in-one enterprise resource planning solutions that help businesses stay competitive.

Microsoft Dynamics 365 is being used in more than 150 countries worldwide, with millions of customers, so it just might be worth understanding just how this popular solution benefits businesses.

Sales and marketing

While most departments stand to benefit from Microsoft Dynamics 365, sales and marketing departments will find many of its tools especially helpful. Microsoft Dynamics 365 Customer Engagement helps enterprises manage all kinds of professional activities – like marketing, sales, service delivery, and more – under one roof. For example, its native capabilities for data capture and customer relationship management help salespeople move more smoothly through every part of their day.

Regarding marketing campaigns, Dynamics 365 can automate much of a campaign’s launch so marketers can focus on other tasks that require more time and attention. It also enables cloud deployments by default which guarantees high levels of agility and flexibility without making existing investments obsolete.

Operations and customer support

Operations departments will benefit greatly from Microsoft Dynamics 365’s ability to integrate with CRM and other back-office applications. User management, reporting, and information sharing become much easier when all these different systems are operating on one platform.

Customer support teams can use online chat or emails to collect feedback from customers who contact them. Microsoft Dynamics 365 helps sales teams stay organized by setting up follow-up reminders, so they don’t forget about clients after an initial meeting.

Financial management and regulations

Microsoft Dynamics 365 provides financial departments with a single source of real-time data to manage accounts payable, accounts receivable, and more. Financial departments are often under immense pressure to deliver accurate numbers as fast as possible to management and stakeholders.

Microsoft Dynamics 365 will cut down on accounting errors by providing accurate data that is easy to access. This should make it easier for CFOs and auditors to find insights into improving business processes.

It’s also designed to meet compliance regulations such as Sarbanes-Oxley (SOX), Payment Card Industry Data Security Standard (PCI DSS), Federal Information Security Management Act (FISMA), Health Insurance Portability and Accountability Act (HIPAA), European Union General Data Protection Regulation (GDPR), etc. These regulations require companies across all industries to take steps to protect information held or transmitted on their systems against unauthorized access or disclosure.

This is an area where the functionality in Microsoft’s Dynamics 365 products is invaluable.

Business Intelligence

Monitoring critical KPIs along with real-time operational data can be the difference between succeeding and simply operating. Every company needs a way to track this information, allowing them to react to any scenario. The Microsoft Dynamics 365 Business Intelligence (BI) solution is designed to help analyze and monitor data from multiple sources and deliver information that can be used to make strategic decisions.

Business Intelligence departments choose Microsoft Dynamics 365 because of its ability to integrate with other Microsoft products. Another reason departments choose one software or another is the cost, and D365 has proven cost-effective and able to increase revenue through increased operational efficiency. Microsoft’s solution offers real-time insight into how a company is performing while providing a single source of information that can be accessed quickly and easily at any time. This enables a company to adapt its sales, marketing, and procurement strategies more quicker, giving them an edge over the competition.

Project Management

Microsoft Dynamics 365 offers project management departments their own robust tools to help manage and streamline their projects. These tools include time reporting, Gantt charts, and more advanced features like project prioritization and resource management. As soon as they launch Microsoft Dynamics 365’s streamlined Project Management module, users see how easier it is to organize tasks, track time on certain charges, and manage overall progress.

Also, with full integration into other modules within Enterprise Resource Planning (ERP), it becomes possible to seamlessly pull data from all parts of an organization into one central location, giving managers better insight into data across divisions without having to search for information or sift through emails manually.

In addition, Microsoft’s D365 Project Management can help alleviate an often overlooked problem in small businesses: meeting basic compliance requirements.

Let’s discuss the best offerings from Microsoft Dynamics 365 ERP for your business needs today-

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Final Thoughts on Dynamics 365

Regardless of the industry, implementing an ERP today is a big step. Pick the wrong ERP or fumble the implementation and risk significantly disrupting your operations. Microsoft’s devotion and investments into their Dynamics 365 products have topped millions in order to create systems that balance both functionality and affordability.

Because Microsoft Dynamics 365 is so affordable and user-friendly, it’s no wonder that businesses from all sectors choose Dynamics 365 as their system of record. Dynamics 365 has been adopted by over 1 million users worldwide since it was launched in 2016. To this point, Microsoft’s Dynamics 365 system is primed to continue as a leader going forward. It’s easy to get started with Microsoft Dynamics 365 today:

Streamlining Operations in an Automotive Company
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Streamlining Operations in an Automotive Company
Streamlining Operations in an Automotive Company 700 500 Xcelpros Team

By the Numbers

  • 10.5 millionThe projected sales of fully electric and electric/gas hybrid passenger vehicles in 2022 worldwide. China accounts for nearly 6 million followed by Europe at 30 percent with the U.S. in third.
  • 6.5 million and less than 4 millionThe number of these vehicles sold in 2021 and 2020.
  • 75 percentThe anticipated increase in zero emissions delivery van and truck sales in 2022.
  • 2000,000The production cap per manufacturer for a full $7,500 credit per vehicle. As of Jan. 19, Tesla and GM had already hit it. Toyota, Ford and possibly Nissan may also reach the cap this year.
  • Less than 1 millionThe total number of electric passenger vehicles sold worldwide in 2015.

Introduction

Automobile manufacturers and the thousands of people who supply and service them daily are amid three simultaneous revolutions. Each one of these revolutions by itself is set to be a significant disruptor. Managing them all together will require even established companies to rethink how they do their business. Even incremental improvements to efficiency will be paramount to success.

These growing revolutions include:

  1. 1.The rise of Electric cars
  2. 2.The development of autonomous and connected vehicles
  3. 3.The growth of Digital mobility

The rapid adoption and sales of electric vehicles will only increase as gasoline prices continue to rise, thanks partly to the ongoing Russia-Ukraine conflict in 2022.

As computer controls become increasingly commonplace—backup cameras, for example, have been a required safety feature in all new American-made cars since May 1, 2018—computerized versions are replacing mechanical linkages and parts.

A 2019 study by the Insurance Institute for Highway Safety (IIHS) concluded that while ‘rear cameras alone reduced collision rates by only 5 percent, combining a camera with rear parking sensors reduced the backup collision rate by 42 percent, and adding automatic rear braking to the camera and parking sensors lowered the collision rate by 78 percent.Hagerty stated

These autonomous controls are now becoming commonplace. One study shows backup cameras in the Honda Fit LX. Its base model had a list price of $16,190 in August, 2020.

So what do these numbers mean for companies in the automotive industry, especially operations managers?

They mean the former way of running a shop isn’t going to cut it any longer.

Diversifying the Supply Chain

Improving operations management in the automotive industry requires focusing on ways to streamline operations and improve efficiency. A critical area is supply chain management. Today, that means building a supply chain that looks radically different than it did ten years ago.

Ongoing supply chain nightmares leftover from Covid-19 still impact every industry, including consumer electronics. These days that includes cars, not just computers.

Quoting a U.S. Department of Commerce study, the median inventory of computer chips consumers held, including automakers, fell from 40 days in 2019 to less than 5 in 2021.

“If a COVID outbreak, a natural disaster or political instability disrupts a foreign semiconductor facility for even just a few weeks, it has the potential to shut down a manufacturing facility in the US, putting American workers and their families at risk,” the report noted, a danger that isn’t lost on car companies,” Cnet states.

The ramifications, especially for electric car manufacturers, means an inability to meet demands. Projected shortfalls for some major automakers, in large part due to the chip shortage, include:

  • 1.25 million vehicles: Ford’s shortfall last year
  • 1.15 million vehicles: Volkswagen’s shortfall
  • 1.1 million vehicles: the shortfalls for GM and Toyota

Relying on a single supplier or vendor for a key part is no longer viable. Car manufacturers need a supply chain that is robust and has alternative suppliers for all critical parts, including computer chips.

Lacking critical parts in any industry, not just the automotive, can put the brakes on production.

Learn how you can streamline the operations of an automotive company

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The Car Manufacturing Process

The car manufacturing process includes stamping sheet metal components for each vehicle’s side frames, doors, hood, and roof. A gasoline vehicle’s engine, transmission, and gearbox are key pre-assembled components. In an electric car, they are much simpler motors.

The Tesla Model 3 electric cars use one or two centrally-mounted drive units. Each drive unit has a three-phase electric motor, inverter electronics, reduction gears and open differential that drives a pair of wheels in a simple arrangement. Vehicles with two drive units have one in front and one in back, providing all-wheel drive. Tesla’s Model S/X Plaid uses three traction motors: one for the front and one for each rear wheel.

These differences can cause logistical headaches for automotive supply chain, warehouse, and vendor managers, especially when using individual software packages.

Automation in Automobile Manufacturing

“There is very little in the assembly line or supply chain that is not fully optimized, and even less left to gain,” one business insider states when speaking about automating the automobile industry.

According to this article, U.S. automakers buy one of every two industrial robots sold globally. The robots handle everything from welding to assembly and painting on the production floor. Their computerized “cousins” are also common in sales, handling customer queries in finance company call centers, scheduling service appointments, sending alerts and running diagnostics.

All of this automation consumes and creates one product: data. “A self-driven car produces about 1 GB of data per second,” this article states.

Managers do their best trying to make sense of this information to ensure their supply chain delivers what is needed, when and to the right location. They are also responding to inquiries from sales, letting warehouse managers know what products are coming in and going out.

The only effective way to manage this deluge of data is by working with a supply chain management software product designed from the ground up for data integration.

Using Software for Data Integration

Modular software designed with data integration reduces bottlenecks and speeds decision-making. How? By taking information from multiple points—the inventory of computer chips in the warehouse, the number of outstanding electric vehicle orders, vendor deals on a specific paint color, the number of available skilled technicians for key assembly steps—and presenting it as a uniform whole.

A modular, secure cloud-based system can provide insights to business leaders by processing information in close to real-time. It can help explain where supply meets demand. What key components are critically low in store, and which are adequately stocked?

Using technology tied to these modular software components prevents automobile decision-makers from pushing products they can’t produce while letting them use business intelligence to respond to changing demands.

Final Thoughts

The days of car makers cranking out gas-guzzling giants are already over. Electric vehicles are quickly becoming the new kings of the road. Taking advantage of the new technology requires stepping up your supply chain management software so you can respond to change when it happens.

A modern, modular enterprise resource planning (ERP) package has more than enough under the hood to help your automotive-related company keep running smoothly.

Handling Different Types of Purchase Orders in Microsoft Dynamics 365
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Handling Different Types of Purchase Orders in the Microsoft Dynamics 365
Handling Different Types of Purchase Orders in the Microsoft Dynamics 365 700 500 Xcelpros Team

By the Numbers

  • $35.88: The minimum cost of a PO according to APCQ.
  • $506.52: The estimated maximum cost of a manual purchase order according to APCQ.
  • $53-$741: The average cost range of POs according to CAPS Research.
  • $60,000: APCQ’s estimated annual cost associated with manually producing purchase orders.

POs and the departments that approve them

  • 8%: No approval required
  • 21%: Finance
  • 52%: Budget owners
  • 84%: Supply management

Introduction

Today, purchase orders (POs) are the lifeblood of all companies, especially manufacturers. Being able to use POs properly helps in several different ways, including:

  1. 1.Simplifying the ordering process, making it easy to find approved items and place orders.
  2. 2.Aiding in budgeting by helping you determine how much you need to spend and how much you need to sell.
  3. 3.Enabling accurate planning by providing insights into company performance.
  4. 4.Warning of unexpected expenses when a PO is submitted, providing time to research it.
  5. 5.Confirming the quantity and price of goods bought or sold, eliminating miscommunication.
  6. 6.Providing legal protection against errors in quantities or unexpected price increases.
  7. 7.Controlling spending by limiting who can place and approve POs.
  8. 8.Tracking spending by providing details into where your money goes.
  9. 9.Helping manage vendors by seeing who delivers on time at the agreed price and who is late or constantly complaining.
  10. 10.Improving inventory management by telling you what should be arriving compared to what actually arrives.

Types of Purchase Orders

Most POs used today typically fall into one of four types. An automated purchase order system helps manage each of these types of POs.

1.Standard Used for one-time orders such as office furniture.

2.Planned purchase orders (PPOs)Typically lacking a delivery date and location, they are used for restocking items at irregular intervals.

3.Blanket purchase orders (BPOs), also known as “standing orders.”While similar to PPOs, they lack the known quantity and have uncertain delivery dates. Vendors may place limits on amounts so they can deliver.

4.Contract purchase ordersThey are used to set the terms and conditions for future purchase orders. Their primary function is ensuring a smooth ordering process.

The Disadvantage of Manual Purchase Order Systems

The job of a purchase order automation system is to send each PO to the appropriate staff member for review and approval. These systems leverage existing purchasing processes and rules to perform their jobs while protecting your business at the same time.

Modern automated systems often counter significant issues associated with older manual PO processes.

Figure: 1Disadvantages of an Manual PO System

Disadvantages of an Manual PO System

Compared to modern, automated systems, manually created POs tend to suffer from a number of drawbacks, including the following:

  1. 1.They’re less efficient
  2. 2.They’re paper heavy
  3. 3.They lack accountability
  4. 4.They open the company to security risks
  5. 5.They lack process regulation
  6. 6.They’re often time intensive

Using an automated system for POs in place of any older, manual processes results in a number of benefits, regardless of a company’s size:

  • Increased cost savings
  • Reduced human input error
  • More visibility into the PO process
  • Increased flexibility and control

Most importantly:

  • Improved process efficiency

Improving process efficiency is usually overlooked in a businesses day-to-day affairs, but this boost to efficiency is huge and provides a number of key benefits, including:

  • Significantly reducing the time between orders being placed and shipped.

And

  • Providing a verifiable audit trail so a manager wanting to know the status of a requested item can get a real-time view of the order. If a discrepancy occurs, the PO provides a written record.

Want to learn more about handling purchase orders in Microsoft Dynamics 365?

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Benefits of a Modern PO Management System

According to a recent Altametrics blog, purchase order management “is an in-house procurement process implemented by businesses to ensure that every purchase is required, accounted for, and augmented for costs. The purpose is to ensure workers follow all policies and procedures before fulfilling a purchase order.”

Using a modern automated PO management system ensures that all orders are created, approved, and dispatched according to current policies and procedures set in place by the organization. These systems exist to ensure that your company has complete control of its purchasing and can make quick adjustments in the event of an emergency.

Once generated, these purchase orders are considered a binding contract

  • Company A agrees to pay the stated price for the listed items upon delivery from Company B.
  • Company B agrees to provide the goods on time, and at the agreed-upon price, terms and conditions.

If any mistakes are realized, a modern PO management system provides a streamlined way to quickly resolve any discrepancies.

Properly managed POs:

  • Eliminate overpayments
  • Reduce damaged goods
  • Save time
  • Eliminate inefficiencies

Modern PO management systems start by examining a company’s current methods to identify bottlenecks and ways to improve efficiency. These systems can strictly adhere to existing procurement policies and procedures using simple guidelines. This enables shop floor workers to make requests converted into accurate POs.

PO management systems also help to organize existing information. For example, they can create a real-time vendor management database showing which companies are approved. This lets buyers know who they can deal with to get what they need and when.

Another tangible benefit is the ability for workers to track the status of any current POs directly. Instead of having someone else take time away from their duties to provide an update, workers can quickly log into the system and find out themselves.

The best PO management systems make it easy to create and track POs and share the information seamlessly with other departments when included as part of an overall Enterprise Resource Planning (ERP) solution.

Procurement and Dynamics 365 Supply Chain Management

One of our favorite ERP solutions is Microsoft’s Dynamics 365, a modular ERP system that includes asset management and procurement functions in its Supply Chain Management module.

Located in the Asset Management > Common > Procurement > Work order purchase requisition section, this software shows a list of purchase orders related to work orders. It also shows how the purchased goods are used for assets, maintenance jobs, spare parts, and work orders.

This module can be configured to indicate any potential delays. The system can generate notifications giving management teams different options to resolve the issue

  • Wait out the delay or
  • Find an alternate supplier.

As well, work orders, job orders and purchase orders can all be tied to each other through the Supply Chain Management module. The end result is visibility:

  • Purchasing knows what items are in the pipeline,
  • The warehouse knows what is coming,
  • Production knows when the materials it needs will arrive, and
  • Sales knows when customers can expect delivery of their finished goods.

Note: Click here to see how to create a purchase order in Dynamics 365 Supply Chain Management.

Dynamics 365’s Supply Chain Management module also lets you control other aspects of the purchase order process. It provides a number of critical business functions, including creating purchasing policies, product receipts and invoices, and more. More than just a PO management program, Supply Chain Management also has direct ties to rebates, production controls, service management, transportation, warehousing plus sales and marketing.

By providing everything from an overhead view of your entire supply chain to the status of an individual PO, Supply Chain management provides companies of any size with the information they need to control their inventory.

The Bottom Line

Purchase orders continue to be an integral part of all businesses. Continuing to enter this data manually—and trying to keep track of it all on paper—makes the process cumbersome and prone to mistakes and expensive errors.

An automated PO management system, like that included in Microsoft’s Dynamics 365 solutions, helps reduce the number of manual inputs, ensures only permitted vendors are used, and simplifies the approval process, even automatically approving smaller purchases, debiting them to a department’s budget, or forwarding them to the correct department for approval.

Connecting this PO management system to your overall inventory control system is one of the best ways to ensure you always have the right materials on hand to meet your production and sales goals.

Managing Production Resources With MRP and ERP
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Managing Production Resources With MRP and ERP
Managing Production Resources With MRP and ERP 700 500 Xcelpros Team

At a Glance

Materials requirements planning requires:

  • Inventory control
  • Master production schedules
  • Sales forecasts

The most accurate MRP also includes communications with departments outside of production, keeping everyone aware of what’s going on

Introduction

An ERP (enterprise resource planning software) with an integrated MRP (materials requirement planning component) is a great way to boost production by ensuring materials arrive when the machines and manpower are available to use them.

Today’s top enterprise resource planning (ERP) software packages all include some form of MRP. These solutions helps the entire company, not just production, find ways to improve performance and boost profits.

Advantages of MRPs

Where MRPs shine is their ability to plan, schedule and control materials and their requirements, especially when managing inventory.

“The primary function of an MRP system is maintaining the right quantities of inventory. Inventory management includes what material is required, when it is needed and in what numbers,” one post states.

MRP’s are also great at helping production plants reduce human errors and working times by proactively planning ahead of schedule. For example, understanding what materials are needed and when, manufacturers are much less likely to run out of important ingredients.

Other materials requirement planning benefits of MRP software include:

  • Simplified work scheduling and distribution
  • Materials requirement forecasting, helping you determine what you will need and when
  • Typically lower complexity than an ERP that may include finance and marketing functions

Effective material requirements planning has three main components:

  • A master production schedule
  • Sales forecasting
  • Managing inventory

The first of these is the Master Production Schedule (MPS).

Master Production Schedules

“A Master Production Schedule (MPS) is the part of production planning that outlines which products need to be manufactured, in which quantity, and when,” a manufacturing blog states.

Figure: 1Key Benefits of Using an MPS

Key benefits of using an MPS

Key benefits of using an MPS includes gathering all information required for:

  • Building, improving and tracking sales forecasts
  • Determining desired inventory levels
  • Calculating required raw materials purchases to meet production requirements
  • Determining the labor mix of people and schedules
  • Balancing plant capacity with actual load

Schedule a call to know more about managing production resources with MRP and ERP.

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Providing this information requires a certain amount of information. To work effectively, an MPS requires six essential inputs:

  1. 1.Starting inventory: What is available right now?
  2. 2.Sales forecast: What do you expect to sell this period?
  3. 3.Current orders: How many orders are in the production pipeline?
  4. 4.Required products: How many of which products need to be produced to balance supply and demand?
  5. 5.Safety stock: What quantity of raw materials and subassemblies must be on hand to deal with spikes in demand?
  6. 6.Production capacity: How many products can your equipment and staff produce when everything is running smoothly?

Having all of this information lets an MPS help you determine your rough-cut capacity. This involves knowing how much time it takes to produce each product and your total productive hours. (When used with a modular ERP, you can also learn what causes bottlenecks and find ways to boost the time machines and people are manufacturing products.) Another MPS function is considering batch sizes in production runs. The total production run should be a multiplier of your batches.

With all of your data in place, an MPS lets you simulate planned purchasing and production. Working with other MRP components, you can create an inventory plan for each selected MPS. You’ll know exactly what you need to build the products.

Like every business though, it’s impossible for an MPS to function in a vacuum. A key part of the MPS is also required for your MRP: your sales demand forecast.

Sales Forecasting in MRP

Sales forecasting, also known as demand forecasting,works to anticipate customer behavior using historical data and other information. Accurate sales forecasts are important to production because they help in multiple ways:

  • Planning budgets and negotiate supplier contracts
  • Planning and track inventory, reducing the time between raw materials coming in and finished products going out (i.e., the turn rate)
  • Identifying production bottlenecks while letting managers make crucial decisions on tradeoffs

Demand forecasting works with MRP to determine material availability for potential sales. The BOM in turn determines the quantities of each raw material required to produce the final products. Using demand forecasting, an MRP can ensure that supply chain, production plan and expected demand match. You have what you need to keep your customers happy without overspending on inventory or missing crucial parts.

Demand forecasting also helps in supply chain management by planning production activities around expected delivery dates for each component. Instead of tying up all production resources to make everything at once, components can be produced when the raw materials arrive. The result is fewer bottlenecks caused by multiple processes requiring the same machines or people at the same time.

“Demand forecasting is a useful tool that can help businesses attain optimal inventory levels, efficient purchasing practices, and overall better supply chain management capabilities.

“When used in conjunction with MRP software, it can improve the efficiency and cash flow of your business by providing the necessary functions to utilize the data and use it to plan production better,” as mentioned in a previous post.

Effective materials resource planning requires access to sales demand forecasts, current and anticipated inventories plus a thorough knowledge of the production environment. The question is: Do you want to have different programs from several companies providing this information?

In this case, an ERP with MRP functions has some advantages over a less expensive stand-alone product.

Advantages of Using an ERP system for Production Planning

Previously mentioned, “An ERP in production planning keeps updating the status of materials in real-time and reorders them automatically when the stock needs replenishment. These systems also use a Just-In-Time scheduling strategy to further reduce the need for holding large quantities of work-in-process items.”

The inventory control system in a modular ERP also has the ability to automate inventory tracking by creating barcode and QR code labels. These can be attached to everything from individual items to pallet loads, and then scanned electronically. The result is an accurate inventory of raw materials. Knowing what you need improves your ability to meet customer orders on time, boosting customer satisfaction.

A modular ERP such as Microsoft Dynamics 365 can provide managers with a top-down view of a manufacturer’s operation. Unlike an MRP focusing solely on production, enterprise resource planning software can monitor more than just production status in real-time.

Key benefits of using an ERP with an MRP module include:

  • Improved customer service by ensuring timely product delivery without sacrificing quality.
  • Smoother workflows by automating repetitive tasks in areas beyond the production floor such as the warehouse and order management.
  • Enhanced inventory control based on real-time access to information such as shipping schedules, sales orders, machine availability, staffing and key raw materials.
  • Equipment maintenance scheduling to ensure key machines are kept in good working order during planned downtimes, not crashing in the middle of a production run.
  • Better morale by reducing stress through enhanced coordination. One group is not left idle while waiting for another to finish.
  • Enhanced use of your workforce, maximizing people, not just machines.
  • Improved quality control by passing tests at production checkpoints.

The most important reason for using a modular ERP over a stand-alone MRP is communication: Data flows throughout the company. It’s not siloed in production, sales or inventory. Every department knows what is going on throughout the company.

For example, if a conflict or pandemic is identified near a key supplier, your supply chain management module can help locate a safer, more consistent supply. Knowing what products might be affected by materials shortages lets sales know what to push and what to back away from.

The Bottom Line

Effective resource planning in manufacturing is much more important than just assembling products. It means having plans that look at everything from the availability of the smallest components to ensuring key machines and staff are available at the right times. It also means having the money to stock up on materials when a shortage is expected. Balancing everything lets your company provide capital improvements without sacrificing quality or customer service.

Buying into MRP is no easy task; before diving in, take a close look at every ERP to ensure your company ends up with a system that can support your goals, now and in the future. What you need is a system like Microsoft’s Dynamics 365.

Also Read: Advantages of a Material Requirement Planning System (MRP) vs. Manual Planning

Best techniques for tracking and managing raw materials
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Best techniques for tracking and managing raw materials
Best techniques for tracking and managing raw materials 700 500 Xcelpros Team

At a Glance

  • 18% – The hike in the Raw Material Price Index from 2020-2021 with at least another 10% hike expected.
  • 60% – The increased amount of raw materials extracted, harvested and consumed since 1980.
  • 117% – The increase in raw materials costs for non-food agricultural materials since 2000.
  • 359% – The cost increase in rubber since 2000.
  • 62 billion metric tons – The amount of raw materials used per year in 2008, an 8-fold increase since the early 1900s.

Introduction

Today, manufacturing relies heavily on the ability to acquire raw materials, both directly and indirectly. Examples of direct raw materials are the chemicals, textiles, minerals and other components that become finished products. Indirect raw materials are components added to other parts that together make a finished product. Accurate tracking of these materials is a good way to determine if a company flourishes or fails. Both of these material types are listed as current assets.

Tracking raw materials typically starts when they enter a warehouse. Their value is calculated from the start of a given time and adding costs such as storage, shipping, processing and labor to determine total value. Before you can build, mix or blend your products though, you have be sure to acquire them. Obtaining the essential materials you need to create your products is the end result of an involved process.

Obtaining Raw Materials

One of the first things to do before you start acquiring raw materials for your products is sufficient planning. Raw material planning can be used to determine how quickly you use each item, but only once you understand your inventory turnover rate – the number of times you use your raw materials.

In a previous post, we stated that “Materials planning is the method used to determine the requirements and quantities of raw materials to implement production.” If you don’t have enough raw materials on hand, you can add delays to your production schedule, or even lose orders altogether. If you keep too many materials on hand, there may not be enough budget available for other projects, like capital improvements.

A critical part of materials planning is understanding lead time: how far in advance do you need to place orders with your suppliers to get what you need in order to satisfy your customers?

Being sure you can order what you need requires a procurement management plan that, “defines requirements for a particular project and lays down the steps required to get into the final contract,” including raw materials.

This plan sets and defines everything you need to manufacture your products: what to buy, who to buy it from and how much you’ll pay. This includes determining purchase costs plus delivery and storage costs, also referred to as inventory costs. Placing an order, or receiving one from a customer, often uses an order management plan.

If your departments are unable to report how much of a given product, or the raw materials required in the process, are on hand, entire orders can be lost. When production tells sales one thing, but inventory says something else, the end result can be chaos. This is where accurate, frequent, communication that tracks the flow of raw materials through the entire acquisition process becomes critical.

Inventory Management

“Inventory management is important to small businesses because it helps them prevent stockouts, manage multiple locations and ensure accurate recordkeeping. An inventory solution makes these processes easier than trying to do them all manually.”

A chef can make a large salad using a full head of lettuce but only a teaspoon of spices. Managing inventory is often similar: A manufacturer is likely to have some items they use in large quantities, such as active pharmaceutical ingredients (APIs). Equally important are the catalysts and other chemicals bought in much smaller lots. Like a chef making a salad, without their ingredients, they don’t have a product.

Inventory management not only tracks what you have on hand, it also looks at your supply chain: making sure you have options for getting what you need when you need it. One part of inventory management is getting your basic supplies: making sure your customers receive their finished products when they need them is another. Having viable shipping options to ensure your merchandise arrives on time means gathering even more information and constantly updating your options. A common option used by a large number of companies, especially retailers, is vendor managed inventory.

Start tracking and managing raw materials efficiently, schedule a consultation with Xcelpros.

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Vendor Managed Inventory

Commonly referred to as VMI, vendor managed inventory is when a company lets its suppliers determine the amount of product a company has in stock. If you walk into a grocery store you might see people who are not market employees stocking shelves. These are vendors – these employees track inventories, place orders, monitor shipments and stock shelves.

According to American Express, benefits of a VMI include:

Figure: 1Benefits of Vendor Management Inventory

Example of a Barcode

  • Improved efficiency You have the right quantities on hand to meet your needs without going overboard and having too much or too little.
  • Cost reduction Having accurate inventories means few if any disruptions to sales, thereby providing better customer service.
  • Reduced complexity Depending on your products, you may be able to reduce the number of vendors. The result is a predictable and reliable inventory schedule.
  • Data insights Your supplier can anticipate demand, helping you prepare for seasonal and market-driven trends.

Working with a single VMI has some negatives as well as positives. Three of the biggest challenges, according to AmEx, include:

  • Loss of control Someone else determines what products you have and therefore what you’re able to sell. Using a VMI also means an outside company has access to your private data. Data security can be a major issue, especially when you first start working with a vendor.
  • Limited options It’s tough to make a fruit salad when the only fruit available is an orange. Your product choices may be limited and you might become dissatisfied if your vendor fails to deliver at the best price.
  • Market agility Working with a single vendor reduces your ability to pivot when markets change. For example, some whiskey manufacturers were having problems selling their goods when the Covid-19 pandemic took hold. A few of the more enterprising companies were able to switch from making whiskey to producing alcohol-based hand sanitizer. Using a VMI might eliminate this flexibility to quickly change in response to market conditions.

Looking at your options and picking the best ones often comes down to software. Managing your raw materials and inventory accurately, especially when your company is growing and has distant suppliers, generates a lot of data. Managing this vast amount of data requires capable software.

Software Options

Depending on your needs, two types of software can help with your raw materials management, inventory management, order management, procurement management, stock management and resource planning needs:

  1. 1.Customized products designed to perform a specific function for a single industry with a company at a particular size. If your company is unlikely to grow, one or more of these products might be perfect for your needs. Using this type of software, you will likely need one product for each requirement. This is likely to mean using several different providers, potentially creating data exchange roadblocks. A second option offers greater flexibility, the option to handle many of these needs in a single package while also growing with you.
  2. 2. A modular Enterprise Resource Planning (ERP) product such as Microsoft Dynamics 365 Supply Chain Management is a large, versatile product capable of helping you track inventories from far-flung suppliers into, through and out of your warehouse. Microsoft Dynamics products are based in the cloud and offer added data security since they’re built on Microsoft’s Azure platform. Modular systems let you add sections when needed while maintaining constant communication between the modules. Using a system from the same company also ensures constant data flows, reducing inventory data errors.

The Bottom Line

Especially today, managing raw materials accurately requires a lot of work and attention to detail. Errors at any stage of the process – from ordering to shipping, storing or using – can result in expensive repercussions.

Finding the right software solution means evaluating your current and future inventory needs. What do you need now? Will solving today’s problem also work in 1-5 years or will it require an expensive overhaul?

The bottom line is that you should consider an investment in a modular product that can grow with your company over time, and not one that becomes obsolete the minute you expand.

Managing Chemical Compliance With an ERP
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Managing Chemical Compliance With an ERP System
Managing Chemical Compliance With an ERP System 700 500 Xcelpros Team

At a Glance

  • $700,000: A proposed increase to the maximum Occupational Health and Safety (OSHA) penalty for willful or repeat safety code violations.
  • $50,000: OSHA’s proposed hike in minimum penalties for these same willful acts.
  • $25,000: California’s additional safety violation penalties that are added to the federal fees.
  • $15,000: California’s maximum daily penalties for failing to fix these same issues.

Introduction

When used effectively, modern enterprise resource planning software (ERP) can help companies in several ways when it comes to chemical regulations:

  • Financial components of a chemical firm’s regulatory compliance solution.
  • Occupational Health and Safety Administration (OSHA) regulations.
  • Gathering, storing and managing material safety data sheets.
  • Gathering information from far-flung sources to create effective reports able to meet government criteria.

One study cited a multi-national corporation’s subsidiary using an ERP to comply with the Sarbanes-Oxley Act of 2002 (SOX).

“The findings demonstrate how managers can use an ERP to develop effective internal controls for the most common material weaknesses reported under SOX, thus providing insights into the crucial role of IT as a facilitator of control and reporting processes, and, more specifically, into the role, use and purpose of ERPs in relation to regulatory compliance,” according to the University of Greenwich.

Key points related to the chemical industry noted in this study include firms often failing to customize their ERPs for the specific requirements of the business, this applies specifically to chemical companies. Working with an ERP vendor experienced in the chemical industry helps ensure software works exactly as the company needs it rather than just installing an out of the box solution.

Unified systems like ERPs can help identify and evaluate hazardous substances. Manufacturers are then informed of the risk levels regarding the use and distribution of their chemical products. Identifying these hazardous substances early also allows manufacturers to act proactively, resulting in better safety.

Identifying Hazardous Materials With an ERP

Today, U.S. government regulations require the identification and labeling of hazardous materials. Modern ERP solutions can help create and manage safety data sheets (SDSs) along with any Globally Harmonized System (GHS) labels as required by the Occupational Health and Safety Administration (OSHA).

Each safety data sheet has 16 sections, 12 of which OSHA requires. These include:

  1. 1.Identification such as common names for the substance, recommended use of the chemical and restrictions on its use
  2. 2.Hazard(s) Identification such as signal words, pictograms and hazard statements
  3. 3.Composition and Information on Ingredients such as each substance’s Chemical Abstracts Service number
  4. 4.First-Aid Measures such as the most important symptoms
  5. 5.Fire-Fighting Measures such as the type of fire-fighting
  6. 6.Accidental Release Measures including emergency procedure and methods of containment
  7. 7.Handling and Storage including safe handling precautions
  8. 8.Exposure Controls/Personal Protection including OSHA Permissible Exposure Limits (PELs)
  9. 9.Physical and Chemical Properties such as the chemical’s odor, flash point and flammability
  10. 10.Stability and Reactivity including if the chemical is stable under normal temperatures
  11. 11.Toxicological Information including how the toxins are brought into a human body such as through inhalation or eye and skin contact
  12. 12.Other information including when the SDS was prepared or last updated

OSHA also suggests-but does not require-data on ecological impact, including:

  • The disposal of hazardous materials
  • The transporting of hazardous materials
  • Any other regulatory requirements, as needed

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An ERP manages regulatory compliance by comparing your existing SDSs to OSHA’s requirements. Once your safety sheets are updated to meet federal requirements, they are stored in a central repository for reuse. A single update ensures that all SDS are accurate when the same ingredient is used in several products.

That information can then be “chunked” and converted into the GHS labels. One method where ERPs excel is their ability to generate QR codes for labels automatically. Simply scanning the label with a cellphone can provide internet links to complete safety sheets.

When every second counts, such as in exposure to potentially hazardous chemical, workers don’t have hours to pour through filing cabinets looking for the right SDS. They might have a few seconds to scan a label, tap a link and then know what type of first aid to administer.

Other Safety Features in ERPs

Because ERPs access information from multiple sources, one way they help promote safety is by limiting access. When data access cards or passwords are linked to an ERP, they can help prevent unauthorized—and untrained—workers from accessing dangerous or harmful chemicals.

Your ERP can be used to restrict access to based on the individual’s role. This helps protect their help while also ensuring your data remains safe from prying eyes.

Using your ERP to monitor safety also lets you identify areas where more training is required. It can be tied to a learning management system (LMS). This in turn reduces the risk of workers with expired certifications or lack of skills.

Your SDS chemical management can help pinpoint at-risk employee groups, document recurring injuries, map frequent injury locations and then help you create a plan to correct them.

For example, many production employees are required to earn OSHA 10 certification. This ensures they have at least 10 hours of safety instruction.

OSHA 30 certification goes into greater depth when it comes to safety. Among its enhanced requirements are the following:

  • Hazard communication, which is useful in preparing and updating safety sheets
  • Materials handling, such as hazardous chemicals
  • Personal protective equipment (PPE)

Your ERP can identify which employees have active OSHA 30 certification, which have expired certificates and who lacks it. By denying access to unqualified workers, you reduce their risk of injury while also dropping your chances of being tagged for an OSHA violation.

Under a current proposal, OSHA provisions for willful and repeat violations could increase from a minimum of $5,000 to $50,000 per violation. The maximum fines would also go up ten fold to $700,000 per violation, Cal-OSHA states. These fines can change based on your location. For example, if a violation occurs in California, you can expect to pay as much as $25,000 for serious violations. These infractions can accrue daily penalties up to $15,000 for failing to solve the hazard issue.

ERPs and HazCom

OSHA’s Hazard Communication standard known as HazCom includes a checklist of 10 requirements.

These include the need to perform the following:

  • Train employees on the hazardous chemicals in the workplace
  • Instruct workers on how to recognize exposure to hazardous chemicals
  • Provide training on container label elements
  • Offer instruction on Safety Data Sheet (SDS) format and content
  • Explain to employees how to access SDSs
  • Update SDSs when new versions become available
  • Update the written HazCom program as needed
  • Explain to employees how to obtain a copy of the written HazCom program
  • Train employees on any in-house labeling system used
  • Make sure all container labels in the workplace are compliant

An ERP can ensure that data on any single chemical or hazardous material is thoroughly covered in your documentation. For example, each SDS can be linked to related labels and training materials. An update to the SDS ensures everything that flows from it is also current. That means your employees are safer as is anyone else who handles your products.

The Bottom Line

While some executives think of ERP’s, they consider ways to improve efficiency. The reality, however, is that ERPs can also be used to make workplaces safer for everyone. This is primarily achieved with constantly updated processes and carefully labelling and managing any goods and raw materials.

Creating and updating an SDS in your ERP, for example, allows you to link all critical information about a product including labels, handling guidelines, storage requirements, training materials, and more. Increasing the safety and handling for everything you store and work with not only reduces the costs of injuries and by ensuring OSHA compliance, but you also minimize the potential for fines and infractions, which further helps to increase profits.

Also read: 3 Ways to Manage Disruption in the Chemical Industry

Streamlining Production Process in Pharmaceutical Manufacturing banner
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Streamlining Production Process in the Pharmaceutical Manufacturing
Streamlining Production Process in the Pharmaceutical Manufacturing 700 500 Xcelpros Team
  • There’s a consistent demand to scale capacity when it comes to pharma manufacturing as healthcare demand continues to rise globally.
  • Cost-savings, shorter turnaround time, and enhanced productivity are some of the key criteria for top executives in pharma manufacturing companies.
  • Automation of production lines, minimizing raw material wastage, stakeholder synchronization, optimized resource allocation, etc. are some of the ways with which pharma manufacturing can be streamlined.

Around the world, we continue to see rising demand for access to quality healthcare. Side-effects of the recent pandemic significantly added to this demand. This has placed a lot of pressure on pharma and biotech manufacturing companies, who are finding it difficult to:

  • Streamline research and development (R&D) processes.
  • Reduce overall costs and improve time to market.
  • Ensure 100% safety and regulatory compliance.
  • Enhance production capacity.
  • Expand market reach.

Pharma manufacturers must constantly upgrade their game regarding R&D, operations, production, and distribution with newer technologies and strategic business moves. With signs indicating the industry is poised for extraordinary growth, it’s becoming a given that manufacturers will need to invest in leaner, more agile production processes.

According to the 2020-2027 Pharmaceutical Market Size Report, by Grand View Research, the global pharmaceutical manufacturing market size was valued at USD 324.42 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 13.74% from 2020 to 2027.

These growth stats put focus on the need for ramping up production without compromising on safety, all while ensuring consistent profitability.

Key Factors in Pharma Manufacturing

Before we look into how manufacturing in pharma companies can be streamlined, we must consider some key processes involved.

1.Robust R&D: For pharma and biotech companies, continued investment in laboratories is essential in ensuring long-term success. With Robust R&D comes increased chances for innovation, which can define a pharma company’s overall market position in terms of being the first to manufacture a ground-breaking formula. The strategic movement towards streamlined manufacturing begins with ensuring superior, quality research in the labs.

2.Raw Material Acquisition and Distribution: Whether it’s small-molecule or biological drugs, pharma companies typically depend on an intricate network of raw material manufacturers and distributors to acquire safe and superior-quality products. In addition, complex formulations require compounds manufactured across multiple facilities to be stored and transported in optimal conditions. Manufacturers could be dependent on multiple different suppliers for raw materials globally.

3.Managed Production Lines: Today, pharma companies are more dependent than ever on fast-paced production lines backed by technology-enabled batch manufacturing, serialization, and traceability. Bridging the gap between hardware and software for streamlined drug production can make a huge difference in speed to market.

Manufacturing Process Issue/ Roadblocks How Technology Can Help
R&D Prone to human error, slower processes Automated data integration and analysis, AI for molecular identification
Supply Chain Highly complex, data discrepancies or duplication, missing information, stock-outs Centralized SCM for real-time visibility, centralized data access, real-time stakeholder communication, inventory management in ERP
Drug Manufacturing/ Production Shop floor to top floor communication glitches, communication time-gaps, human errors in reporting/ record maintenance Automated production lines, report generation in ERP, real-time communication between shop floor and top floor
Quality Control Counterfeits, fake drugs, human errors, formulation errors Computerized serialization, use of blockchain to ensure drug safety

4.Competent Supply Chains: Healthcare is a global business and, now more than ever, pharma manufacturers are dealing with complex supply chains involving multiple stakeholders spread worldwide. Ensuring that these supply chains are competently managed is critical to ensuring the overall streamlining of pharma manufacturing.

5.Quality Checks: When it comes to drug manufacturing, anything less than 100 percent is often unacceptable. Pharma companies are well aware of the perils of lawsuits, license cancellations, and other dire consequences regarding quality management. At every stage of pharma manufacturing, quality checks are paramount to ensuring drug safety and compliance with all required healthcare regulations.

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How Can Pharma Manufacturers Streamline Their Production Processes?

Pharmaceutical companies are embracing newer and newer technologies for quicker results, better process management, and enhanced productivity. Still, there’s a lot more that pharma manufacturers and their CDMOs can do to enhance the overall pharmaceutical production process for significantly better results.

  • Integrating new technology in the lab is proven effective in accelerating research and innovation. Leveraging Big Data and Analytics for data collation, integration, and insights generation from clinical trials can expedite the process and ensure accuracy and transparency. Similarly, computational permutations are effective in molecule identification for a particular drug. Gene sequencing, digital record maintenance, computerized medical equipment, etc., are becoming game changers in strengthening R&D and the production process typical in pharma manufacturing.
  • Pharmaceutical shop floors can and should be well-integrated with the IT infrastructure on the top floor. By embracing software-managed production lines, manufacturers can leverage automation for faster and error-free processes. Similarly, production supervisors can benefit from the automated data flow from an Enterprise Resource Planning (ERP) system to and back from the production lines. This software can manage tasks like reporting and serialization to save time and cost.
  • Newer technologies and software for SCM are becoming pivotal in helping pharma companies stay on top of complex supply chains and distribution networks. IoT solutions are leveraged in pharma manufacturing and distribution for real-time monitoring and communication. Better shipping times and inventory management become possible through effective data analysis. Many companies also use blockchain to ensure data security and encryption while managing complex supply chain networks globally.
  • The use of blockchain and comprehensive ERP software (for serialization) are also helping manufacturers ensure drug safety. Since these tools and technologies provide the option of complete traceability (from production to patent), drug counterfeits become extremely difficult, if not impossible. Drug quality and safety are major concerns for manufacturers, and optimal use of technology can ensure quality checks, thereby saving efforts, costs, and time.

Final Thoughts

Pharmaceutical manufacturers are embracing newer technologies for better production and profitability. With these technological advancements, companies could achieve their manufacturing goals without compromising quality and safety.

  • Newer technologies and software such as IoT, Artificial Intelligence, Data Analytics, SCM, and ERP play important roles in streamlining manufacturing processes in pharma.
  • Pharma companies need to reinvent themselves technologically to keep up with the complex and ever-expanding canvas of global healthcare.

Resources: Workflow Software for Improved Healthcare Solutions

streamlining-the-label-management-process
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Streamlining the Label Management Process
Streamlining the Label Management Process 700 500 Xcelpros Team

At a Glance

  • $10 million: The average cost of recalls to food companies that can are caused in part by inaccurate labels.
  • $65,000: The average cost of incorrect labeling based on a 2020 survey. Of that group, 61 percent said mislabeling costs exceeded $50,000.
  • 10-26%: The number of products mislabeled every year according to a survey of 300 IT directors in the U.S., UK, France and Germany.

Introduction

Labels serve three primary purposes in a consumer’s eyes. Labels help to:

  1. 1.Identify the contents of a product
  2. 2.Identify the product name
  3. 3.Promote the brand image

In combination with well-designed packaging, certain label parts could be considered one component of an effective marketing campaign. From a business perspective, though, labels need to do much more than tell consumers what is inside. Efficiently labeling and tracking is the best way to monitor a product’s performance, along with ensuring customer safety is the best it can be. This is especially true when it comes to certain industries like pharmaceuticals.

Packaging and Labeling

There are many key points to note when it comes to packaging and labeling, including the following:

Definition:

Labeling refers to the text, design, symbol, logo, instructions and use suggestions printed on the product package. Labels are designed to inform and attract customers by providing information.

Objective:

Labeling provides all information required by the governments in the geographical location where the product is marketed, sold and used.

Focus:

While exterior packaging is about appearance, labeling focuses on what’s inside. For example, products are required to accurately list the primary ingredients and their nutritional value when it comes to food. Labels on medicines must include active and inactive ingredients, allergic reactions, and harmful side effects.

Label designs are usually simple and formal. They may follow a government or company template. These can require a set list of data fields such as country of manufacture and expiration or “use by” date. Hazard information is typically posted where a customer can see it before making a purchase.

Effective label designs also include inventory tracking options while also meeting government requirements.

Inventory Tag Controls

“When paired with a competent asset or warehouse management system, inventory tags can be scanned to inform your supply chain of changes in your current inventory. This practice helps build end-to-end visibility among all parties, from supplier to customer, as your inventory moves through your warehouse,” according to a blog post by CamCode.

Inventory tags can be integrated into a product’s label design. The most common inventory labels we see doing this are bar codes. Barcode are a series of vertical lines—generally black—of varying widths interspersed with white gaps. QR (i.e., quick response) codes are a form of bar code generally in a square or rectangular format with black blocks and white spaces.

Speed is the main advantage of using a barcode or QR code label. Handheld and machine scanners can read the barcode information, sending it to inventory tracking software. That software can then automatically update inventory counts, eliminating the need for manual checks. The result is a fast, more accurate inventory update. A critical part of inventory tagging with barcodes is using the right type. Before creating any labels, companies should ensure they understand any regulatory or equipment-based requirements for the barcode type, label size, and label material type.

Figure: 1Components of a Barcode

Example of a Barcode

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Different Types of Barcodes

Barcodes primarily come in three different types:

  • Numeric only with a row of numbers beneath the bars
  • Alpha-numeric with a row of letters and numbers
  • Two-dimensional (QR is one example) using a series of small dots arranged in a unique pattern

The type of barcode a company chooses often depends on its industry and how the product will be used. For example, the Postnet format encodes destination information using long and short lines. Retail items often use the Universal Product Code (UPC).

The U.S. Food and Drug Administration (FDA) has several requirements for barcodes. While the FDA does not require a specific code format, it mandates the barcode include the drug’s national drug code (NDC) number. Machine-readable information on blood and blood components must be on those labels.

“This new system is intended to help reduce the number of medication errors that occur in hospitals and health care settings,” according to the FDA.

These FDA rules apply to manufacturers, repackers, labelers, and private label distributors of human prescription drug products, biological products, and over-the-counter (OTC) drug products to protect consumers from dangerous side effects or worse.

Labels alone are not enough. However, companies need to be able to accurately track their inventory as well as safely manage any recalls or other issues with products. This only works when you have the right software in place.

Inventory Tracking Software

Software like Microsoft Dynamics 365’s Supply Chain Management includes several powerful inventory management features helping these businesses thrive today. For example, Supply Chain Management can automatically assign serial numbers based on manually entered (or scanned) batch numbers.

Dynamics 365 Supply Chain Management also makes creating and tracking barcodes for released products easy. This modern inventory management software also works with the GS1 bar code and QR formats for use on shipping labels.

Microsoft says, “Unlike older bar codes, GS1 bar codes can have multiple data elements. Therefore, a single bar code scan can capture several types of product information, such as the batch and the expiration date.”

With a system like Microsoft’s Dynamics 365 Supply Chain Management, you can use a predefined list of application identifiers to define the meaning of your data and connect it with GS1 codes. Microsoft suggests, “The setup of the application identifiers defines how the system should interpret a bar code and save it as a value in the system.”

The Bottom Line

With today’s focus on consumer safety, proper labeling and tracking of products, especially when it comes to pharmaceuticals and medicine, will continue to be of utmost importance, including efficiently dealing with government regulations. Today’s businesses need to ensure they’re taking advantage of inventory tracking software that lets them easily create labels that help track the flow of raw materials, from work in progress to finished goods.

Programs like Microsoft Dynamics 365 Supply Chain Management can create unique QR codes that contain a list of ingredients, allergy information, serial and batch numbers, hazardous warnings, and safety data sheets. Solutions like these let your warehouse staff scan products and send information wirelessly to any device on the network more efficiently than ever before. Is your labeling solution up to speed?

Resources: Packaging vs Labeling

Warehouse management challenges in the pharmaceutical industry banner
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Warehouse Management Challenges in the Pharmaceutical Industry
Warehouse Management Challenges in the Pharmaceutical Industry 700 500 Xcelpros Team

At a Glance

The pharmaceutical industry faces some unique warehouse management challenges. Many of these issues can dramatically impact medications, even though they may not exist in industries such as general retail.

Key issues facing warehouse managers include:

  • Keeping portions of their facilities at the correct temperatures to prevent medications from spoiling.
  • Following federally-mandating good manufacturing process rules.
  • Security issues for products and intellectual property.
  • Inventory controls.

Warehouse issues specific to the pharmaceutical industry include:

  • Temperature control: Active pharmaceutical ingredients (APIs), precursor chemicals, and manufactured drugs frequently require controlled temperatures. A general temperature range for a cool, dry place is between 59-77° F (15-25° C). Some products, such as vaccines, may require freezing. Exposing drugs to the temperature outside their effective ranges can cause chemical changes and reduce a drug’s effectiveness. For example, Baystate Health states that medications containing hormones do not work as well when exposed to colder or hotter temperatures.
  • Humidity control: Moisture condensing inside packages can impact a medication’s effectiveness. Baystate Health states that blood glucose strips exposed to humidity will give inaccurate readings.
  • Light exposure: Exposure to ultraviolet light from the sun and other sources can change the chemical structure of some medications. The light exposure causes photodecomposition, reducing the medication’s potency. Light exposure can also cause side effects after administration, such as phototoxicity and photoallergy, a 1997 post in PubMed states.
  • Adhering to the Food and Drug Administration (FDA) Current Good Manufacturing Process (CGMP) standards for warehouses, processes, and drugs: Includes keeping careful track of item locations within the warehouse.

According to Kanban, the FDA’s CGMP warehouse standards include the following:

  • Contamination prevention: Storage must allow inspection and cleaning.
  • Identification: Each drug must have a unique, traceable code that identifies the lot’s status, such as approved, quarantined or rejected.
  • Distribution Procedures: Written procedures describing the distribution process for each drug including recalls.
  • Storage Procedures: Written procedures describing the storage conditions for each drug are required.

Some pharmaceuticals require only temperature controls for specific ranges. Other medications require climate-controlled environments affecting temperature and humidity.

Figure: 1Pharmaceutical Warehouse Management Challenges

Pharmaceutical Warehouse Management Challenges

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Following GMP Rules

GMP SOP states that following the Good Manufacturing Process (GMP) rules enables manufacturers to:

  • Protect medicines and raw materials for medicines during storage
  • Prevent finished product degradation
  • Avoid contamination from other materials
  • Prevent damaged or expired products from being shipped

Warehouse managers also face the challenge of keeping track of three types of items appearing on the packaging bill of materials governed by GMP procedures. Each of these item types requires unique lot numbers:

  • APIs, precursor chemicals and other starting materials
  • Packaging materials
  • Printed materials

All warehouse managers face inventory control requirements. Those in the pharmaceutical sector also deal with intense government scrutiny.

Receiving Shipments

Other GMPs in the pharmaceutical industry require materials arriving from suppliers to be reviewed based on their use. For example, it’s important to check starting chemicals to confirm they are:

  • From a source approved by the company
  • Free of damage and defects
  • Labeled with all required information
  • Have a unique identifier
  • Registered in the company’s inventory database
  • Quarantined until quality control tests are performed
  • Stored appropriately and safely, such as in a temperature-controlled section or “Dangerous Goods” area for flammable and toxic materials

Unlike retail goods warehouses, pharmaceutical warehouse managers should also set aside an area for raw materials to be tested and confirmed to meet all required standards. A similar section should exist for any materials that fail these tests, GMPSOP states.

Sampling and Testing

Sampling and testing should be done in a room having sections with positive air pressure (i.e., the air pressure is higher than that outside, preventing contaminants such as dust, microbes, pollen, cleaning agents and lubricants from entering) and negative air pressure (i.e., the pressure is lower than that outside to prevent materials from inside the room going outside). An airlock with positive pressure keeps out external contaminants. With the airlock sealed, the inner testing can have negative air pressure to keep chemicals from contaminating the larger warehouse.

Other sampling room requirements include clean instruments and appropriate personal protective equipment (PPE) as required by the federal Occupational Health and Safety Act (OSHA) and the FDA. OSHA has a downloadable brochure on warehouse safety.

Storage and Tracking Inside the Warehouse

“Lack of control over material movement in the warehouse can, and has, led to defective products,” GMPSOP states.

General warehouse practices (GWP) require that:

  • Received unused goods and finished products are quarantined until approved for release.
  • Items have correct status labels (e.g., current, expired, etc.)
  • Unique identifiers are visible.
  • Products are stored by type when appropriate.
  • Access to toxins and addictive drugs or chemicals is stored separately. Access is limited only to approved personnel.
  • Materials are tracked as they move through the production facility from the Receiving area to Production and then to the Shipping.

When possible, warehouse managers should have separate sections to store damaged or returned goods, recalled items, “not for sale” samples and when identified, counterfeit materials.

Labeling

Another challenge for pharmaceutical warehouse managers is accurate labeling. GMP rules require labels to include a familiar name and Unique Identification Number that must be different from the supplier’s lot number. The UIN must be recorded in the lab, on the facility’s computer system, and in production. GMP SOP suggests not referring to the IUN as a batch number.

Other requirements unique to pharmaceutical labeling include:

  • Expiration dates
  • Barcodes for additional tracking options
  • Status indications, typically in the form of a color code
  • Quarantined products
  • Items being held for investigation
  • Rejection labels when an item fails to meet required standards
  • Approval and/or release labels indicating the item can proceed to the next step in the supply chain

Security Challenges

Medicines and other pharmaceutical products are in high demand, making them tempting targets.

Warehouses should have secure physical storage areas for raw materials and finished products.

In addition, Avcostar states that the formulary, drugs, and drug components are expensive and prone to theft. It suggests performing a risk analysis audit that includes where known security breaches occurred. “The company can then focus on identifying and eliminating the most vulnerable posts and systems against malicious access, modification or deletion of data, enhance access control to systems and data and implement new cybersecurity best practices,” Arecont Vision Costar VP of Marketing Jeff Whitney states.

The code of federal regulars 21 CFR Chapter 1 requires control of all production stages, including system validation and audit trails. Refer to this article from Cornell Law School for detailed information.

Solving Challenges

Effective use of warehouse management computer systems, such as the warehouse management module in Microsoft Dynamics 365’s Supply Chain Management, can help track inventory management in pharmaceuticals accurately and manage these challenges.

The module “has a wide range of features to support the warehouse facility at an optimal level at any time,” according to Microsoft. Among the warehouse module’s functions are:

  • Workflow support
  • Using mobile devices
  • Full batch and serial item support
  • Label printing and routing
The need for data to transform industrial operations
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How Data Management Helps in Optimizing the Manufacturing Process
How Data Management Helps in Optimizing the Manufacturing Process 700 500 Xcelpros Team

Introduction

What side of the Covid-19 divide is your company on? Are you still trying to do business the same way you were before the pandemic? Or are you adapting to a more modern world, ready to use technology to help your business grow?

Either way, it’s clear the effects of the pandemic are still being felt throughout the business world and were likely to see the same results for much longer.

45% of respondents were dealing with sudden materials shortages

41% percent saw sharp drops in demand

30% percent were experiencing worker unavailability

Source: McKinsey

Each of these effects adds increased strain to supply chains worldwide. One such issue saw 111 cargo ships off Long Beach, California, on November 10, 2021. No matter what your company produces, odds are some of your products were stuck on those ships. Newly enacted—but not imposed—“container dwell” cargo container fees reduced the line of ships.

Four foundational technologies can be applied to the value chain, according to McKinsey:

  • Connectivity, data and computational power, which includes the Internet of Things (IoT), cloud computing and blockchain
  • Analytics and intelligence in the form of advanced analytics, machine learning, and artificial intelligence
  • Human-machine interactions using virtual and augmented reality plus robots and automation
  • Advanced engineering, which includes using renewable energy and additive manufacturing

Some companies are using these technologies to drive growth through process optimization.

Benefits of Process Optimization

Process optimization in manufacturing covers three vital areas:

  1. 1.Improved machine uptime. Using a data-based approach, companies can reduce downtime and increase the overall use of their equipment, Machine Metrics states. Using advanced analytics, companies can determine the causes of unplanned downtime. Clean, clear data lets manufacturers attack the worst offenders first.
  2. 2.Faster responses to issues at the machine level. Analytics looking at alarms and where workers are when they occur helps improve training, equipment layout, and other issues.
  3. 3.Improved maintenance. Using IoT sensors, the equipment can be used until it nears—but does not reach—the point of failure. Parts are replaced when needed instead of too early or only after a key machine is shut down.

Each of these steps involves digital manufacturing operations applied to the overall manufacturing process.

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Digital Equipment Is Critical

The only way to achieve these goals is by collecting and thoroughly analyzing data. Objectively analyzing data lets managers discover where bottlenecks are occurring and what’s causing them.

Downtime analysis lets managers analyze why some machines are down more often than others. Are they not operating because of unplanned maintenance, a lack of personnel, jobs, or machine setup, or is it something else?

Having computers perform predictive analysis, companies estimate when a tool will need replacing before it damages a machine or wipes out products.

Lean Manufacturing

Lean manufacturing is another way of looking at the production process. Lean manufacturing looks at a plant’s current process and asks: how can it be done more efficiently? How can the company’s goals be achieved while paying less for energy, such as by using energy from renewable sources, and also generating less waste? How can waste items be used to lower operating costs?

Examples include using “waste” to create new products, replace existing packaging, or fueling an on-site power plant.

Companies following a lean strategy seek to reduce and ideally eliminate waste, improve quality, cut costs and reduce time, according to TWI Global.

In an online article on Lean Manufacturing, TWI Global states there are now eight “wastes” in lean manufacturing:

  1. 1.Unnecessary transportation
  2. 2.Excess inventory
  3. 3.Unnecessary movement of people, equipment or machinery
  4. 4.Idle people or equipment
  5. 5.Over-production of a product
  6. 6.Making a product overly complex by adding unneeded features
  7. 7.Defects that are expensive to repair
  8. 8.Unused talent and ingenuity

While lean manufacturing has three benefits—saving time and money, being environmentally friendly, and improving customer satisfaction—it also has three disadvantages. These are:

  1. 1.Placing employee safety and wellbeing below achieving company goals
  2. 2.Focusing on the present and not on the future
  3. 3.Lacking a standardized method

Companies will want to balance the benefits and the costs to see if lean manufacturing works for them.

Recycling and Green Manufacturing

Green manufacturing seeks to reduce environmental impacts while still producing quality products. This includes source reduction to reduce the waste initially created. Recycling—using or reusing wastes as ingredients in a process or as a substitute for original feedstock—and green product design are key components.

In a report by two Carnegie Mellon researchers, the top waste minimization actions cited by large hazardous waste generators include:

  • Improved maintenance schedule, recordkeeping or procedures: 8.9%
  • Other changes in operating practices other than different equipment: 8.0%
  • Raw materials substitution: 7.1%
  • Unspecified source reduction activity: 6.5%
  • Stopped combining hazardous and non-hazardous waste: 5.1%
  • Ensuring materials were not in inventory past their shelf-life: 4.1%

Each of these green methods involves cost. They provide opportunities to expand a company’s supply chain in terms of raw materials sources while opening the door for new and different products.

Determining What Works Best

Ultimately, companies must find a combination of production process optimization methods that work best for them and their customers.

One common requirement shared by Industry 4.0, process optimization, lean manufacturing, and green manufacturing, is a requirement for data: the more accurate the data, the more accurate the forecasts and predictions.

Obtaining this information requires sensors that can measure flow and wear. On top of that, you need software that aligns the entire operation, from executive suites to the shop floor. It requires a digital network to help ensure consistent product quality, integrates with the shop floor, control waste, and spot opportunities.

Final Thoughts: Five Ideas to Spur Innovation and Growth

Competing in today’s technological world requires a willingness of top management to examine the production process and ask:

How can we do more with less? Consider these five ideas that may help your company achieve its goals.

  1. 1. Work with an innovation partner that can help your company gather the data it needs to grow.
  2. 2. Create a plan that covers your immediate needs while allowing room for growth, including in unexpected directions.
  3. 3. Include training existing employees and hiring new ones with the skills you need not only today but will require in one, two and five years. These people can help ensure you grow the way you want.
  4. 4. Invest in IoT sensors, especially at critical points in the production process. The sensors provide the data you need to make the hard decisions.
  5. 5. Spend the money now on modular software that provides the necessary control and data analysis. A modular system lets you start with one piece, such as Supply Chain Management, and then add others when the budget permits.

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