Driving Growth in the Life Science Industry with ERP

Doug Novak | CEO

Do You Like Football?

I love watching the game as it deals with the complex task of moving eleven men and a vulcanized piece of rubber (a football to the uninitiated) inch by inch and yard by yard to the end of a 100-yard field for a score; a momentary win. I say momentary because the other team gets the ball next to try and do the very same thing the other team just did to them; score. At the end of the contest the team with the highest score wins. Sounds simple right?

Actually, its anything but simple. Football is a game filled with strategy, well devised plays, and the sheer will to overcome the opponent in front of you. Football is complex.

Running a business is complex. Success in business takes precise strategic planning, a tolerance for risk, and a willingness to modify or outright change how things get done. During the game, coaches and players review game film to determine which plays are working and which aren’t. Similar to football, successful businesses use their own version of a playbook and game film to guide the next moves of the business.

Why ERP?

An ERP (Enterprise Resource Planning) system allows for the integrated management of key business processes. This data is entered by each department and delivered in real-time which allows for quicker decision making and better planning. Growing companies can really benefit from ERPs to gather all their disparate data into one system to provide both big picture visibility and drill-down into the minute details — all in real time. Like in football, where coaches make play adjustments to help the head coach better manage the game, an ERP system helps business leaders make adjustments to their business strategy quickly to adjust course in real time.

A successful discussion around ERP begins by defining a business’s needs and management expectations. Let’s use the life sciences sector as an example.

The business of life sciences is steeped in complexity for it’s not only mired (and for good reason) in government regulations but companies in this area spend years devoted to the conceptualization and development of their critical products. After all, these products are primarily designed to extend the most precious of commodities; life. Imagine some individuals devise a new and innovative way to drastically reduce the recovery time from a common injury.

They form a company and then secure the funding to begin R&D. After some time, maybe years, the company emerges from their R&D and clinical trial phases, then transitions quickly into the testing and commercialization stages. Is it time for an ERP system?

It’s a New Game

It is recommended that Life Science companies implement an ERP system 6-12 months prior to getting final approval and going commercial with their product. Many of these companies are tracking multiple team’s KPIs in disparate systems and at different times, making it difficult to get a holistic view of the business. Typically, companies are using applications such as QuickBooks, Microsoft Excel spreadsheets or some combination of other applications or systems that are not integrated or providing real-time analytics. So, if suddenly their product passes FDA approval and the company goes commercial, change can start promptly.

A number of life science companies grow significantly in a short period of time. A growth spurt from zero revenue to hundreds of thousands of dollars in just a few months isn’t uncommon for a solid life science company with a strong product offering. Having a well-designed ERP system in place when growth begins can significantly help avoid the headaches of data integration, provide visibility, and increase efficiencies to proactively manage the growth.

Air it Out or Run it?

As the company grows, so does the need to hire more people and do more with less. The cloud has become the go-to for cost conscious companies who want to keep headcount and infrastructure costs low while having access to their data 24/7/365. Cloud computing allows company data to be stored securely in the cloud and removes the worry of building server rooms, managing disaster recovery, or hiring an IT staff. Scalability is key to growth while keeping expenses down. Choosing a cloud-based ERP system allows companies to scale up without having to add additional human resources. Those who prefer to keep their data in their own hands are free to utilize an onsite solution as well with their own IT admins and data centers. Life science companies have the option to go either way with their ERP system — through the air or on the ground.

FDA Regulations

The FDA’s Good Manufacturing Practices (GMP) regulations play a crucial role in overseeing the products produced by life sciences companies because these products have direct impact on the body. The FDA strives to ensure these products are in the best interest of consumers. Consequently, companies must adhere to a specific level of quality during the manufacturing process, as failure to do so would result in non-approval by the FDA. Certain Enterprise Resource Planning (ERP) vendors, such as QAD, have analyzed the FDA regulations in detail, allowing them to incorporate specific features into their systems that meet the FDA’s requirements.

Size Doesn’t Matter

In case you haven’t yet gotten the message, ERP systems are not just for the big boys. Manufacturing companies of any size, even a mom and pop shop, can benefit from an ERP system as long as their focus is on long term sustained growth, such as Life Science companies. Conversely, if a business is only looking to add 1 to 2 people over a five-year period then an ERP system isn’t for them. The initial buy-in for an ERP system averages around $100,000, so only companies with an appetite for strong growth need to consider buying and implementing an ERP system.

Again, I recommend that companies make the investment before they go commercial so the system is in place when growth happens. The critical controls that ERP provides such as distribution, supply chain, invoicing, etc. need to be in place on the first day they begin shipping the product. Without an ERP system, the efficiency and effectiveness of the business could suffer, causing problematic service, lost revenues or even regulatory non-compliance.

Game Changer

Today’s ERP is a critical management tool for a significant competitive advantage

Today’s life science companies face unprecedented financial pressures, unique market demands and increasing compliance requirements. As the pace of business just keeps accelerating, growing life science companies need a superior way to manage vast repositories of data and information.

An ERP doesn’t have to be complicated or costly to be effective. Industry-focused, integrated, affordable ERP systems offer growth oriented companies of all sizes cost-effective options:

Game On.