Getting More Out Of ERP

Oracle's ERP package even allows users to track inventories of reagents in the lab in the R&D process. "Lab people typically laugh at ERP, but when I tell them they use tons of reagents and they need to run their laboratory as a manufacturing environment, then they realize the need for ERP in managing their supply of reagents, their product planning, and in controlling their costs," says Oracle's Pillai. "If you ask the CFOs, they always understand the importance of these kinds of things." Other industry-specific functionality in ERP includes certain critical aspects of the sales and invoicing process. SAP R/3 allows for chargebacks, tracking special prices negotiated for certain large customers, and calculating rebates for wholesalers. "SAP provides full price visibility so that the pharmaceutical company can manage these contracts more effectively," SAP's Binder says. Finally, ERP systems are useful for tracking product shelf life, a critical function for drug manufacturers. "Every product has an expiration date," Cardarelli notes. "The manufacturer needs to verify that the right date goes onto a product and to track the product in the supply chain." These industry-specific processes unique to the pharmaceutical business, particularly those related to FDA compliance issues and validation, add a great deal of cost to any ERP system's implementation, Cardarelli points out. "All these systems people are using require regulatory compliance through validation," he says. "If these ERP processes are not properly validated, these companies will end up with major fines." He believes the cost of implementing electronic record-based systems and validating them "adds about 30 percent to the cost of implementing ERP versus implementing the same system in another industry." In the case of SAP, the pharmaceutical industry vertical package comes with a built-in set of tools to test the system for compliance. "It has tools to test the