ERP and Tracking Aggregate Spending for the Pharmaceutical Industry

Pharmaceutical manufacturers that are looking to implement a new ERP system will invariably ask about options for meeting requirements of the Sunshine Act, which was enacted to protect consumers by ensuring transparency in the reporting of financial relationships between pharmaceutical companies and health care providers (HCPs). While pharmaceutical companies generally purchase a software system specifically designed to track their aggregate spending to HCPs, the ERP system generates much of the information that is fed into the aggregate spend system.

Typically, money flows from pharmaceutical manufacturers to healthcare providers in three forms that are generally handled in three very distinct manners:

  1. AP invoices directly to HCPs

Vendors that are HCPs are defined as such in the ERP system. Any expenses that are booked in the ERP system directly to HCP vendors are pushed to the aggregate spend system via an integration. Typically, a relatively small number of HCPs become direct vendors in the ERP system. The process of setting up new vendors is generally a highly controlled process that lends itself to accurately defining and identifying an HCP.

  1. Employee expense reimbursement

Employees of the pharmaceutical company meet with HCPs and incur expenses that need to be reimbursed to them by the company. Assuming the company has an expense reimbursement system (such as Concur, for example), the expense reimbursement software generally just feeds the core accounting (general ledger) data to the ERP system, and sends the HCP spend information directly to the aggregate spend software. It is therefore necessary to have the HCPs defined in the expense reimbursement system, but the ERP system is not involved in this process.

  1. AP invoices to 3rd party vendors that benefit HCPs

While it is possible to capture this data in the ERP system (on a custom field linked to the PO or invoice) and push it to the aggregate spend system, there are some complicating factors that lead many companies to opt to manually enter these transactions into the aggregate spend software or else upload vendor documents directly to the aggregate spend software in addition to recording the invoices in ERP:

3.1  Timing

At the time that a PO or invoice is entered, do we necessarily know which HCPs will benefit from the spend? For example, speaker bureau invoices often arrive in advance of the list of attendees (HCPs)

3.2  Accuracy

HCPs that benefit from expenses incurred with 3rd parties can be very large in quantity. Ensuring that the correct HCP is selected and linked to an expense can be difficult, especially when many health care providers may have similar names (or even the same names). In such cases, AP clerks that have no direct knowledge of the circumstances surrounding the expense could have a difficult time selecting the correct HCP. Aggregate spend software systems typically have matching algorithms to accurately identify HCPs.

 

Why Tridea Partners?

Tridea Partners helps companies unlock the value of their business applications. By engaging Tridea Partners, you gain a partner that is committed to your business success. We work with you to automate your company’s unique business processes, integrate existing systems and people, assist with necessary business practice adjustments, and ensure the solution will scale with your company’s growth.

Personnel: Tridea Partners focuses on hiring consultants with deep experience in the Life Sciences industry and has gained extensive experience through the completion of over 100 ERP implementations in the industry.

Solutions: Tridea Partners has developed custom software solutions that enhance and extend Microsoft Dynamics ERP to support the needs of the Life Sciences industry, specifically project accounting, quality assurance and order entry.

Implementation Methodology: Tridea Partners uses an implementation methodology that addresses the challenges within the Life Sciences industry. This implementation methodology focuses around a detailed understanding of key business processes, segregation of duties, security and audit trails, collaborative configuration, sign-off and finally testing and system validation.

To learn more about how Tridea Partners can help you get the most out of your Microsoft solution, visit our website or contact us at info@trideapartners.com

Discover how Life Sciences Industry Software Solution can restore innovation, decision making, compliance and operations

The possibilities are really endless in the Life Sciences Industry with products created every day that are changing lives for the better. That’s a lot of weight for one industry’s shoulders and without a comprehensive Enterprise Resource Planning (ERP) solution in place, it’s easy to lose sight of these important end goals.

Time-to-market and profitability pressures are also more intense than ever before. Life Sciences organizations need to balance the manufacturing of existing products as well as the creation of entirely new products against the demands of the market today.

Discover how to manage all of this while also nurturing innovation, improving decision making, and streamlining your current operations

Research

Discover how your research teams can have intuitive tracking and management tools right at their fingertips.

Development

Discover how you can have real-time access to production processes and overall business operations to ensure development goes smoothly and issues are addressed before they cause major problems.

Regulatory Compliance

Discover how you can be sure the appropriate controls, audit trails, security, and documentation requirements are met for today’s regulated environment.

Release to Market

Discover how you can have proper project accounting and advanced requisition systems in place to control project costs.

Discover how Microsoft Dynamics ERP manages all this and more with the following functionality

  • Microsoft Dynamics ERP provides rich functionality to support production and commercialization processes.
  • Microsoft Dynamics ERP automatically documents and captures how a given business process is transacted in the ERP system, supporting key compliance requirements for the FDA including 21 CFR Part 11, Standard Operating Procedures (SOPs) and Good Manufacturing Practices (GMPs).
  • Microsoft Dynamics ERP supports serial/lot control, quality assurance, system validation, and requisition management (including ‘Punch Out’ to lab vendors).
  • Microsoft Dynamics ERP breaks out cost allocations for projects.
  • Microsoft Dynamics ERP enables you to improve product quality and safety, reduce organizational risk, and increase customer satisfaction through controlled document management, audit trails, and electronic signatures.
  • Microsoft Dynamics ERP captures and manages costs, including time and expenses associated with performing clinical trials

Why Microsoft Dynamics and Tridea Partners?

Tridea Partners helps companies unlock the value of their business applications. By engaging Tridea Partners, you gain a partner that is committed to your business success. We work with you to automate your company’s unique business processes, integrate existing systems and people, assist with necessary business practice adjustments, and ensure the solution will scale with your company’s growth.

Personnel: Tridea Partners focuses on hiring consultants with deep experience in the Life Sciences industry and has gained extensive experience through the completion of over 100 ERP implementations in the industry.

Solutions: Tridea Partners has developed custom software solutions that enhance and extend Microsoft Dynamics ERP to support the needs of the Life Sciences industry, specifically project accounting, quality assurance and order entry.

Implementation Methodology: Tridea Partners uses an implementation methodology that addresses the challenges within the Life Sciences industry. This implementation methodology focuses around a detailed understanding of key business processes, segregation of duties, security and audit trails, collaborative configuration, sign-off and finally testing and system validation.

To learn more about how Tridea Partners can help you get the most out of your Microsoft Dynamics solution in the cloud, visit www.trideapartners.com or contact us at info@trideapartners.com

Life Sciences ERP Solution

Microsoft Dynamics AX provides a Healthcare nonprofit more value while streamlining IT operations

In 2013, University of Colorado Medicine first engaged Tridea Partners to complete a rapid deployment of Microsoft Dynamics AX and simplify the delivery of financial reports, at the same time improving service levels for thousands of subscribers by providing more timely reporting with the details and in the formats they require. Today, Tridea continues to support the company’s ERP environment. “We can truly count on Tridea as our partner. They resolve issues promptly, respond quickly to everything we ask for, and are enjoyable to work with. Because they empower us to use our own skills more effectively, we accomplish better outcomes with less effort.”Rick Schwartz, PMP, Senior Project Manager, University of Colorado Medicine.

The story at a glance

Client: University of Colorado Medicine

Industry: Nonprofit – Healthcare business services

Solutions and services:

  • Microsoft Dynamics AX 2012
  • Microsoft SQL Server Reporting Services
  • Microsoft SharePoint Server
  • Tridea Partners implementation services and ongoing consulting

Business outcomes:

  • Improve service levels for healthcare professionals and clients with timely, efficient delivery of standardized and specialized reports
  • Enable improved financial control with greater visibility and current information
  • Reduce IT administrative workload, expenses, and the complexity of the technical environment
  • Provide planning and operational framework for realizing optimal value from technology

Download the full case study on University of Colorado Medicine here.

4 Ways Cloud Benefits Life Sciences Businesses

What can your Life Sciences Company Accomplish in the Cloud?

In our new guide we’ll share the 4 reasons why life sciences and the cloud belong together!

In a life science business, there is no lack of data related to product development, clinical trials, production (in-house and contract manufacturing), quality assurance, costing, the supply chain and other areas of the operation. How do you make sense of it without investing in compliance, data processing and analytical technologies?

In the cloud, life science companies can take advantage of the most powerful analytical tools available today. The cloud also supports your growth with cost controls or profit erosion. As leading life science companies are undergoing transformation into digital business and other are preparing for transformation initiatives to become compliant, more relevant and more competitive, the cloud is the single most important enabling element.

Get your copy of A Guide to Transformation in the Cloud, here

To learn more about how Tridea can help you get the most out of your Microsoft solution in the cloud, contact us at info@trideapartners.com

Specialty Pharma: Integrating ERP with Contract Manufacturers and Third-Party Logistics Companies

It is very common for specialty pharmaceutical (pharma) companies to work with Contract Manufacturing Organizations (CMOs) and Third Party Logistics companies (3PLs). A typical scenario is for the pharmaceutical company to procure the active pharmaceutical ingredient (API) from a vendor and have it drop-shipped to the CMO, who will add other ingredients as well as perform the manufacturing service. Often, the product is then shipped to another CMO that will perform the final packaging of the product and ultimately send it along to a 3PL that performs warehousing and sales order processing services. Dynamics AX has excellent functionality for properly tracking and accounting for all of these steps, as well as a robust toolset for importing the data to process each step in the supply chain without the need for manual intervention. It is important, however, to work with the CMOs to determine their capacity for providing data for integration into the ERP system prior to beginning the ERP implementation process, as this can occasionally be a significant limiting factor in the system design.

Many pharma companies desire to trace lot numbers from raw materials through finished products in their own ERP system, as opposed to relying on the CMO for this documentation. This means that the CMO must transmit lot number data for integration into ERP as part of the transaction records. Unfortunately, providing detailed inventory transactions with lot numbers in a timely manner is not something that all CMOs can offer. For example, if the CMO offers to send over the quantities and lot numbers of API received from vendors and the quantities and lot numbers of finished goods that they have produced, but cannot send over “real time” the quantities and lot numbers of the API used in the production of each individual batch of finished product, the pharma company must resign itself to simply “back-flushing” a standard quantity of the ingredients used in production (per the Bill of Materials). This, of course, means that the ability to do in-house lot tracking is lost. However, there is still significant value to even this limited type of integration. As long as periodic stock count “true-ups” can be sent by the CMO to ensure that the back-flushed quantities are accurate and leaving correct inventory balances, the pharma company has gained the ability to maintain a perpetual inventory for both the finished goods and the API at the CMO locations. This, in turn, allows for inventory planning and control functions such as MRP to be managed using the ERP system.

While it is common for 3PLs to handle the entire sales management process (sales order processing, shipping, invoicing, accounts receivable, cash application), they sometimes simply perform warehousing duties, leaving the pharma company to advise them of orders to be shipped and to perform all billing and accounts receivables processes in-house. This latter scenario generally lends itself to a simple communication flow, whereby the ERP system transmits the sales order information (customer, ship-to address, items, quantities, etc.) to the 3PL, and the 3PL sends back confirmation of the quantities and lot numbers shipped. It is the when the 3PL handles the entire sales process that more decisions need to be made regarding integration points. To keep inventory quantities and accounting up to date in the ERP system, it is necessary to at least receive summarized updates of quantities sold and revenue, as well as summarized cash and AR updates.  Often this is deemed sufficient, as any attempts to track detailed sales and accounts receivable data is redundant with the services being provided by the 3PL. Presumably, such data is easily obtained by reports from the 3PL. However, should the pharma company desire to bring this data into ERP, most 3PLs can provide detailed sales data as well as details of cash receipts and credit memos. The one area that sometimes proves challenging is the application of credits and payments to invoices (the “marrying up” of the documents). For example, after transmitting that a particular credit was applied to a given invoice, if a change is made and the credit is re-applied elsewhere, that change would need to be transmitted as well. The challenges of having to handle these types of updates in order to “mirror” the 3PL often lead pharma companies to choose to simply rely on the 3PL for managing and reporting on all Accounts Receivable details, and to not bring that data into the ERP system. It is important to discuss with the 3PL the desired level of integration and, based on their business processes, determine what type of integration is manageable.

This article was written by Matthew Boese, Partner at Tridea Partners, a Gold Certified Microsoft Dynamics Partner.