How the Right ERP Supplier Can Enable Manufacturing & Distribution Compliance Globally

How the Right ERP Supplier Can Enable Manufacturing and Distribution Compliance Globally

The medical device industry faces many challenges in terms of following products along the supply chain. Because companies work with vendors around the globe, they must make predictions on local and international factors while ensuring traceability through the entire product lifecycle. At the best of times this is a challenge. During times of crises, like Covid-19, global demand for the same resources has increased while simultaneously impacting the medical supply chain. In addition, companies must continue to adhere to a host of regulations, including FDA Title 21 Code of Federal Regulations (CFR) Part 11 and Annex 11 for the European Union.

In  the U.S., medical device manufacturers are subject  to 21 CFR Part 11, which applies to records in electronic form that are created, modified, maintained, archived, retrieved, or transmitted under any records requirements set forth in agency regulations. To that end, computer systems must be ready for FDA inspections. The FDA has continued to update its requirements on 21 CFR Part 11. For example, in June 2017, the agency issued draft guidance, titled “Use of Electronic Records and Electronic Signatures in Clinical Investigations Under 21 CFR Part 11 – Questions and Answers.”

Specifically, the draft guidance addresses procedures to follow in order to help ensure electronic records and signatures meet FDA requirements and that these records and signatures “are considered trustworthy, reliable, and generally equivalent to paper records and handwritten signatures.” The document also addresses a risk-based approach for when to validate electronic systems, implement audit trails, and archive records related to clinical investigations conducted under parts 312 and 812.

Regulatory changes affecting companies

Complying with such regulations appears to be keeping members of the C-suite up at night. An Emergo survey found  that 66% of senior device executives are most concerned with regulatory changes that could affect their companies. As the survey noted, these concerns are not new and are coming as the international device market experiences rapid growth. According to Lucintel, a global management consulting and market research firm, the device industry could reach an estimated $432.6 billion by 2025. A crisis additionally layers in urgency around supply chain, quality and control to maintain patient safety and product integrity. At the same time, the industry is facing a host of changes, including the design and manufacturing of smaller, portable devices and the rising use of software in medical devices.

medical device robotic arm

The role of ERP

Enterprise resource planning (ERP) software has a proven track record in life sciences, particularly in the pharmaceutical arena. For example, it can help companies automate many back office functions related to technology, including tracing a product across its entire lifecycle. Markets and Markets recently estimated that the cloud ERP market size will grow from $24.5 billion in 2019 to $37.7 billion by 2024.

Despite ERP’s benefits and the explosive growth seen in this industry, companies have used legacy systems, requiring them to buy expensive in-house information technology (IT) solutions. Companies have purchased disparate off-the-shelf systems to address individual challenges and then struggled to interconnect process information. The time-consuming effort addresses immediate pain points but ultimately defeats larger organizational efficiencies.

In its 2020 Report on ERP Systems and Enterprise Software, Panorama Consulting Solutions asked 181 respondents about their experience with enterprise systems, vendors, consultants, and implementation. Of the respondents, 34% are now saying they are moving away from legacy systems.

Move to the Cloud

Although there is some dissatisfaction with vendors, many companies are turning to those that offer cloud-based solutions. They are seeing a shift in mid-market manufacturers that are running legacy ERP systems shifting to adopt Cloud ERP and finding a better total cost of ownership. In fact, 62.7% of the respondents had selected Cloud ERP. Cloud models are generally cost-effective for organizations looking to reduce implementation costs.

Warning Letters

Quality ERP platforms can help companies avoid warning letters in reference to tracking and traceability and streamlining critical processes to meet compliance. For example, the FDA issued an international medical device distribution company a warning letter for — among other problems

  • a “failure to establish and maintain adequate procedures for the identification, documentation, validation, or where appropriate, verification, review, and approval of design changes before their implementation, as required by 21 CFR 30(i),” according to the agency. The letter highlighted a procedure related to the validation and control of computer software that had not been implemented. In addition, the company had failed to validate software revisions made to its product, along with maintaining a proper design history file (DHF) for their device. The investigation snowballed from there with the inspection revealing several failures revolving around adequate documentation or processes involving quality control – including purchasing procedures, quality management of suppliers, and procedures managing the design control of product.

Another warning letter was issued for failing to maintain records per federal requirements. The agency had conducted an inspection to determine whether the sponsor’s activities and procedures related to a clinical study lined up with federal regulations. Such inspections are conducted under a program that looks at data and information contained in requests for investigated device exemptions, pre-market approval applications, and pre-market notification submissions to ensure they are scientifically valid and accurate. In the letter, the agency took the company to task for not maintaining records of adverse device effects and other required information, including device use and disposition records. The disposition records describe the batch number or code marks returned to the sponsor, repaired and disposed of by an investigator or another party, as well as the reasons for any method of disposition reports. As a result of these failures, study data may have been  adversely affected.

Quality ERP

A quality ERP system can prove useful on a number of fronts, including ensuring strict compliance. Many companies use multiple vendors to provide spare parts and other ancillary materials. These vendors, along with distributors and servicers, could be located around the world. ERP can help medical device companies ensure their vendors are in compliance with the applicable regulations e.g. SAP’s Business ByDesign comes with traceability and trackability, as well as add- on functionality for Electronic Signatures to document compliance, address recall situations, and ERES compliance.

In addition, systems can be customized for a particular client need. For example, if a company partners with vendors in Europe and China, documents can be easily translated in various languages. In addition, one ERP application has the ability to let each individual user chose their

med tech

preferred language (English, Spanish, Chinese etc.). Quality ERPs use an agile approach to the implementation of the application, allowing company-specific customization on a granular level to meet their needs. Some support the smooth functioning of a global operations with capabilities to convert to different currencies, collaboration and project management functionalities.

A quality ERP can also help with traceability, such as device history records (DHR), which comes under current good manufacturing practice (cGMP) requirements in the quality system regulation (QSR). These requirements  highlight the methods used, and the facilities and controls for the design, manufacturing, packaging, labeling, storage, installation, and servicing of all finished devices intended for human use. Quality ERP solutions permit traceability through electronic signatures, validation of signatures, and process controls to enforce standard operating procedures, ensuring that compliance requirements are observed in a digital format are cost-efficient and easy to manage.

Other potential benefits include:

  • Configurability to better meet and manage departmental and regulatory requirements
  • Real-time business intelligence and analytics
  • Ability to streamline business processes
  • Pre-programmed industry best practices for improved workflow processes
  • Ease of access, including smartphone, tablets or desktop

ERP Globally

ERP also can help in complying with regulatory bodies outside of the U.S. The European Union has its own regulations surrounding the use of computerized systems in regulated activities, known as Annex 11. According to consultancy EduQuest, Annex 11 provides a guide to areas of compliance that require documentation. Although Annex 11 applies to drugs, or medicinal products, EduQuest said that it has applications for medical device companies as well. EduQuest notes that the focus of the European document is on risk- based quality management of computerized systems, while the FDA highlights electronic records and  signatures in open and closed computer systems. Specifically, Annex 11 highlights that risk management is important for the entire lifecycle of the computerized system, with patient safety, data integrity, and product quality being the ultimate goals. There may be the need for a number of risk assessments at various stages the system’s lifecycle. In addition, personnel working on the system’s validation activities must be qualified in order to perform their tasks. ERP systems can serve as a way to simplify these processes.

More specific to medical devices is ISO 13485, a standard that spells out the requirements for a quality management system (QMS). The goals of the document are the following:

  • Demonstrate compliance with regulatory and legal requirements
  • Ensure the establishment of QMS practices for safe and effective medical devices
  • Manage risk effectively
  • Improve processes and efficiencies as necessary
  • Gain a competitive advantage

China has become a major player in the device market. In 2017, the country announced a final revision to the 2002 Medical Device Classification Catalogue, which will came into effect August 1, 2018. As law firm Ropes & Gray noted, these changes will have a major impact on device registration, manufacturing and distribution.

med tech instruments

Challenges

There are a number of challenges when selecting the right ERP system. For example, the medical device industry has seen an uptick in mergers and acquisitions over the  past few years. These deals present a challenge in terms of integrating quality systems. As mentioned earlier, many executives view the cost of ERP implementation as prohibitive. However, cloud-based ERPs can reduce costs dramatically while offering small- to medium-sized companies comparable benefits their larger competitors now enjoy. The cloud offers unlimited space versus in-house technology, eliminating the need to purchase extra components. In addition, the cloud allows for quick implementation of changes—a must in this time of increased mergers and acquisitions and differing QMS.

Conclusion

The cloud models also mean that organizations do not need to lean on their information technology (IT) staff to support the ERP application with management, maintenance and updates. Rather, companies can work with ERP vendors directly to reduce their risks and costs. While some companies may balk at the potential cost of replacing legacy system, those moving to the cloud are poised to maximize the returns on their ERP system investments. Quality ERPs can transform organizations accelerating profitability, simplifying regulatory compliance, while growing their businesses and increasing their ability to react.

Irrespective of a company’s location, the cloud should prove transformative by eliminating costs associated software implementation. The savings resulting from adopting such a platform could be invested in other areas, including R&D. The study by Panorama sited the most common reason respondents sited for note choosing cloud ERP was “lack of information or knowledge about offering.” Don’t let this limit the benefits your company could achieve – information is readily available.

ACLOUDster is a global alliance of SAP Cloud Partners who have a recognized expertise in SaaS business software. We think that customers deserve to receive real expertise, in every country, industry-specific.