Uncategorized

Master Data Management in the Pharma CDMO business. Neglected but necessary

What do you mean you don’t know how many packs of Product Family X we sold last year from our 3 manufacturing sites?” asked the supply chain director, of a midsize CDMO, her team?“Well, it is not so easy to reply to this, we will need some time. You know, every manufacturing site does not use exactly the same name for this product let alone that different markets (SKUs) have slightly different names for it. So, we will need someone who knows what products are included in this family and also some time and manual work to group them together and to gather this information”.At the same time, in another meeting room in the headquarters of the CDMO, the CFO asks his team to inform him about the revenue and profitability of the top 10 sales products and their evolution since last year. Therefore, one member of the finance team has to communicate with the 3 manufacturing sites, ask for this information, maybe clean up what he/she will receive and finally put it in the format that the CFO expects to see.

Reading the above, one can argue that there is nothing difficult with the above tasks. And in reality, indeed, there should not be. However, imagine this. One of the products in the above questions is Ibuprofen for customer X in three different manufacturing forms: Tablets, syrup and suppositories. Each of them is produced in a different manufacturing site of different countries. Experience has shown that a Spanish site can name such SKU like “Ibuprofeno”, a German Site may use the English term and call it “Ibuprofen” while a French site may spell it Ibuprofene. At the same time one SKU in 1 country may be spelled differently than in another country.

And it is not only Ibuprofen. Take its rival, Paracetamol for example. When I first heard about Acetaminophen I didn’t know that it was the same with Paracetamol. So, when I was asked to split the volumes of a specific customer in different products, I separated Paracetamol from Acetaminophen SKUs. And the same happened to me, when I was asked to look if we produce Vitamin C products in the company. I looked for Vitamin C, but I didn’t look for Ascorbic Acid. Nobody told me that they are the same.

If there is a system in place to group all Ibuprofens (including those with an “e” or an “o” at the end) together, and to tell people that Paracetamol is the same as Acetaminophen, and Vitamin C the same with Ascorbic Acid, life will be easier for those who want to look at the big picture. And it might be sound easy for those who work in the manufacturing sites and deal with them every day, but corporate people in finance or business development are not familiar with such things. So, when their boss asks them to gather together such information, they need more time than they should, to answer such simple questions.

The same problem, if not more intensive, is confronted when it comes to raw materials. How easy and accurate it is to report what our total spend on a specific material is, how many suppliers do we have and what the potential benefit would be in different scenarios evaluation?

And then it is not only the terminology. There are also human mistakes that happen every day. Someone can spell Allopurinol, Alopurinol (by missing 1 of the 2 “l”s). Or someone in one department spell instead of GSK, GlaxoSmithKline for example. Or one department spells Teva and another Teva Pharmaceuticals. Let alone that Actavis belongs to Teva now so if someone wants to find the sales towards Teva, he should probably also include Actavis SKUs in his calculations.

Here comes Master Data Management (MDM) whose definition in Wikipedia is “a technology-enabled discipline in which business and Information Technology (“IT”) work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise’s official shared master data assets”.

In other words, we need Master Data Management in order to make sure that there is a common rule between all 3 different manufacturing sites that says that whatever way the Ibuprofen SKUs are spelled in the artwork of the box, in our ERP system we will have a field that it should mention that all of them belong to “Ibuprofen” family. And the same for Paracetamol and Acetaminophen. When someone from the top management asks what is the total revenue, profitability or volume in bulk units of Paracetamol, the system should gather together this information with 1 click. And then with MDM nobody will be allowed to spell GSK, GlaxoSmithKline in our ERP system anymore. There will be a drop down menu somewhere which will only give you the option to select GSK.

I know that most of the above examples do not apply to small companies with 1 manufacturing site and 10 or 15 products, but for pharma companies with a bit more of complexity it definitely worth the time and the effort to try MDM. Even if it does not seem necessary now, if there is a vision to grow the company, MDM will become a necessity very soon. So, it is better for people in the mid sized companies to be familiarized with this.

Especially family-owned businesses that want to grow and maybe acquired by a private equity in the future, this is something that will definitely be required. People in private equities are usually not familiarized with the specific business and that is why they ask a lot of questions. And the more questions are raised, the more important Master Data Management gets.

It is not the simplest task in the world and definitely people inside the manufacturing sites who only look the picture of their site will not agree that this is necessary, because everyone knows the Ibuprofen SKUs and everyone knows that Acetaminophen is Paracetamol. So, they don’t need a system to tell them how to group the products. And it takes time to classify SKUs and to fill so many fields in the ERP system. So, why to do it?

And here lies the problem. Those who need Master Data Management are different people than those who need to feed the system in order for MDM to work. If the person who creates the SKU into the ERP does not fill at the time of the creation all the necessary fields, the corporate person who needs to answer to the questions of the CEO or the CFO, will never be able to see the advantages of MDM and he will be forced to group things manually and make assumptions where he is not sure.

I still remember, many years ago, the saying of our IT Director: “garbage in – garbage out”. He meant that the quality of information that you will retrieve from your ERP system will be the same with the quality of information you input to the system.

Important managerial decisions but also strategic decisions are most of the times based on trends and historical data and this kind of information needs to come fast and to be accurate.

This is why a corporate policy needs to be defined, where a RACI table will clearly mention who is responsible for what and ERP systems should have rules to secure that an SKU will not be created if certain fields are not filled. But something like this needs to come from the top. Directors of different departments (IT, Supply Chain, Operations, finance, business development, purchasing etc.) should agree that this is an important task and collaborate in order to establish a Master Data Policy. It will never look like a priority because everyone has its own everyday fires to put out, but if this works, the amount of time and mistakes that will be saved will be enormous.

Scroll To Top