ERP for Compliance and Traceability in Regulated Industries

Companies in regulated industries, like pharmaceuticals, food and beverages, and electronics, have a swathe of compliance regulations they need to adhere to. From the factory floor, to the warehouse, and other departments, there are regulations that need to be followed, monitored and tracked so that reporting and other requirements are observed. In many cases, compliance requires the ability to trace what and from where materials or parts were sourced, how they were transformed in the manufacturing process, and when and to whom the final product was shipped. An ERP system for compliance and traceability in regulated industries provides all the tracking and reporting capabilities needed.

Why ERP is needed for compliance and traceability

Often companies choose point solutions to address their compliance and traceability requirements. Point solutions, however, require significant investment in integrating the solutions with other applications in the business. These days, manufacturers can have compliance and traceability as standard capabilities in their ERP system, providing a complete and fully integrated solution. This allows different organizational functions to work together rather than operating in separate silos.

Compliance requirements

There are several areas that need to fulfil compliance regulations.

System security

System security authenticates people who want to access computers and software. Defining each employee’s roles in the process – and knowing what they can access – makes it easier to ensure compliance.

Procurement

This is an area where compliance controls can be flouted because processes are paper-based and manual. Using an online portal to engage with suppliers makes the process transparent and minimizes document handling to reduce potential fraud.

Manufacturing

Companies can improve compliance in the manufacturing process by tracking how products and components are used through the production process. Identifying specific lots of finished goods is critical for identifying defective items. If the manufacturing function has traceability on components, it can ensure that material requirements planning does not use expired or non-compliant items.

Warehousing and inventory

Businesses need to track the location of inventory items in the warehouse so they know that the items were stored in the correct place and under the right conditions. Traceability also allows companies to retrieve sub-standard stock and report when items have past their expiry date.

Quality control

An ERP system for compliance and traceability in regulated industries must provide a quality control system that tracks the quality of not only materials and products but also identifies processes that might negatively affect quality. Visibility throughout the value chain is necessary to ensure quality and to remain compliant. Reporting on processes may be important for functions like product design so that ISO and QS certification is maintained.

Supplier management

This involves the processes for monitoring and evaluating suppliers based on a set of standards. These standards establish clear guidelines and expectations for suppliers to follow. This helps to mitigate risks of supplier noncompliance.

Traceability requirements

Many international regulations require businesses to track their entire value chain at a detail level. For example, food and beverage manufacturers have to track at the ingredient level, whereas electronics manufacturers need lot traceability. The ability to have forward and backward traceability, with automated documentation creation, is important to reduce the load and effort of traceability on staff.

An ERP system for compliance and traceability in regulated industries includes a traceability solution to equip manufacturers with detailed reporting of the complete production process. It has information on who touched the product and when it was in process, to what operations and equipment it went through and how a process worked, as well as what materials were used and where they came from.

Effective traceability is implemented by integrating several functions of the organization.

• A warehouse management system with functionality to track serial numbers, lots and bin locations and management of serialized stock items
• Inventory management that records traceability and quality data of materials and products
• A manufacturing operations management system that allows companies to measure and monitor product quality.
• A customer complaints capability for capturing, managing and resolving customer issues, including the review and escalation of product defects to enable recalls and prevent future problems.

Recalls

Traceability should also include the ability to handle product recalls. These are becoming a common, and costly, fact of life for many companies in regulated industries. The system needs to include the ability to run mock recalls to accelerate the time to completion of a recall, improve governance and quality systems, ensure compliance and meet regulatory reporting requirements.

Food traceability requirements

To meet the requirements of legislation like the Food Safety Modernization Act and the Safe Quality Food Standards, manufacturers must be able to identify and trace every ingredient used in the manufacturing process, tracking everything from receipt, to storage, processing, packaging, shipping and delivery to the customer location. They also need to have detailed audit trails of all transactions and show they can implement a recall process successfully.

Electronics traceability requirements

Lot traceability is a must for electronics manufacturers to comply with health and safety legislation. It enables companies to maximize quality control by tracking products, materials and processes, as well as by facilitating effective recalls.

How an ERP improves compliance and traceability

Manufacturers have to comply with an increasingly stringent regulatory environment that requires strict compliance and which focuses on prevention rather than reaction. This requires them to monitor and report on a variety of criteria across different departments to ensure they are fully compliant.

By integrating all the various processes of a company, an ERP system for compliance and traceability in regulated industries can ensure that no part of the business goes unchecked. It provides auditable compliance to whoever requires it, whether it be for government, industry, legal, partner or customer needs.