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by Daniel Harris,
Market Research Associate
Last Updated: October 22, 2016

Not only are chemical manufacturers regulated, the regulating agencies vary depending on the chemicals produced. The ATF, DEA, FSIS, EPA or FDA may be involved. Most likely, more than one agency will require compliance documentation.

The ingredients or the finished products may be controlled substances. Inventory storage can be problematic with chemicals. Some have particular storage requirements regarding temperature or humidity. Others should not be stored in combination, like chlorine and ammonia. Many chemicals have a limited shelf life. Some chemicals have strict regulations concerning disposal. Even shipping is regulated in many cases. The inventory system should assist with all of these issues.

Order entry and fulfilment has some interesting issues as well. If the chemicals are restricted, the order entry system must identify the customer securely. The required material safety data sheets (MSDSes) must be enclosed. The shipping labels must include any required warnings. The receiving system should mirror the order entry and fulfillment systems. The vendor should be securely identified. The vendor should issue an advance shipping notice (ASN). Any discrepancies should be identified by the system and sent to management so that the appropriate authorities are notified.

Standard features are:

  • General ledger
  • Accounts receivable
  • Accounts payable
  • Payroll

Firms that manufacture controlled chemicals generally have on-premise enterprise resource planning (ERP) systems. Firms that make less-restricted chemicals, particularly small and medium-sized companies, may choose to use cloud-based solutions.

Common Features of Chemical Manufacturing Software

Chemical manufacturers should examine the following functions to meet their unique requirements:

Available to promise, Capable to promise Available to promise (ATP) and capable to promise (CTP) are measures of manufacturing capacity. The system should calculate the ATP and CTP for any stock item, accounting for ingredients on hand and any work in process.
MSDS handling OSHA requires that the MSDS for a product be delivered by the seller, but only for certain customers. The system should have a repository of all MSDSes. The fulfillment system, based on information from the CRM system, should identify (or produce) any required data sheets for packing.
Integration with ERP If the chemical manufacturing facility is part of a larger operation, the manufacturing software must integrate with the parent software. It can either be a set of modules of an ERP system or or it can pass required transaction data.
Lot tracing and recall management Each lot must be identified and tracked. The ingredients of each batch must be tied to their individual batch number as well.
Recall management Recalls are initiated for two reasons. First, a problem in the process causes a product to become tainted or contaminated. Second, an ingredient is tainted or contaminated. In either case, the system needs to identify all of the affected batches and the customers that received those batches.
Hazard Analysis Critical Control Points (HACCP) compliance The system should support reporting for Hazard Analysis Critical Control Points (HACCP) management, in accordance with HACCP Principle 7: “Establish record-keeping and documentation procedures.”
ATF compliance If a chemical manufacturer makes explosives or any of the components used in explosives, it is subject to ATF oversight. The Safe Explosives Act, among others, details required compliance reporting, including reporting theft and loss.
FDA compliance If a chemical manufacturer makes products that are used in the manufacturing of food or drugs, the compounds may be regulated by the FDA. The system should provide all compliance reporting and support the petitioning process. The system should maintain records in compliance with the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.
Food Safety Inspection Service (FSIS) compliance If the chemical manufacturer makes products for agricultural purposes, it may be subject to FSIS-specific sections of HACCP, sections 326.6(b) and 381.606(b). The system should maintain records as mandated under section 417.5.
DEA compliance If the chemical manufacturer makes products or uses ingredients regulated under the Controlled Substances Act, it is subject to oversight from the DEA. The system should document compliance with the act and have access to a current database of controlled substances, regulated chemicals and analogues.
Environmental Protection Agency (EPA) compliance If the chemical manufacturer makes or uses products listed under the Toxic Substance Control Act, the substance may be regulated by the EPA. The system should maintain all compliant records as well as preparing a pre-manufacture notice (PMN) before a new compound is created.
Recipe management and batch sizing The system should include recipe management, including ingredient substitution and batch scaling. In some cases, ingredients are encoded to keep the recipes secret. Advanced systems can size batches to quantities of ingredients in stock.
Quality assurance The system should support quality assurance (QA) testing. The protocols should be documented and implemented through the software. The QA system should randomly identify samples for testing and compare test results against norms. Advanced systems will feature dashboards that will alert management to problems with quality.
Code of Federal Regulations 21 Part 11 compliance Strictly speaking, no software package can be 21 CFR Part 11 compliant because the rule stipulates administrative and procedural controls as well as technical implementation for electronic and hybrid record keeping. However, it can support 21 CFR Part 11 by completely implementing the technical requirements.
Current Good Manufacturing Practice (cGMP) compliance cGMP compliance is required for many regulatory agencies at the state and federal levels as well as for insurance purposes. The system should produce required compliance reports.
Yield variances The system should track actual yield versus expected yield for each batch. The system should report excessive variance based on user-defined thresholds and indicate if variances are so large that regulating agencies should be notified.
Packing & drumming The inventory system must be able to value and price items in different container sizes. It must also identify or generate suitable labels for containers.
Inventory storage planning Some chemicals require a specific storage environment. Some are dangerous to store in combination. The inventory system and receiving systems should notify any special requirements. Advanced systems will have three-dimensional models of the storage areas for products and ingredients and automatically check for potential storage issues.
Expiration tracking Both chemical ingredients and chemical products can have limited shelf lives. The system needs to track expired and close-to-end-of-life inventory.
Shipping Many chemicals have restrictions on shipping either via USPS or common carrier. The system should identify any special requirements and produce appropriate shipping labels.

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