Why exceptions management will become a core skill for the pharma supply chain

April 26, 2023

Though the Drug Supply Chain Security Act doesn't go into effect for another six months, many businesses in the pharmaceutical supply chain still aren't prepared for exceptions, the errors that occur when transaction data is missing or doesn't match a shipment as delivered.

Currently, exceptions management may only be a negligible annual expense, or not even explicitly recognized as a cost center; it may be acknowledged as a subset of shipping and receiving tasks. However, as businesses across the pharma supply chain adopt EPCIS, and subsequently must deal with complex exceptions, they can spur cascading expenses. Whether you're in danger of financial pain from DSCSA exceptions depends on what you know about them, what you've done to plan for them, and whether you adapt your operations when they occur.

With DSCSA's final enforcement deadline in November 2023, you need exceptions management in your company's toolkit, and the sooner the better. Six months isn't a lot of time to prepare for the threat exceptions pose.

Exceptions costs in real time

As you and your partners onboard EPCIS, you'll know immediately when exceptions begin impacting your operations and costing you money to resolve (and they will). This could mean the loss of your product: If you need to return or even destroy goods because you and your trading partner can't resolve an exception, they're simply not getting into the hands of patients, and you're losing money.

Disruptions to supply chain continuity force tough decisions. If product isn't available as ordered in a timely fashion, the next move may be to order a generic or find another brand, which can add great difficulty to filling a simple order (and potentially startle the patient, adding stress on the pharmacy end). And if you're losing inventory that you need, you might move on to conversations about increasing production to compensate.

Further, pharmacies won't tolerate unusable product sitting while its status is sorted out. Space is limited and expensive.

The cost and disruption of these situations will be felt sharply. You're operating in an environment where failure is not an option, so once these cases occur, you'll likely reach for the phone; shortly thereafter, LSPedia will help your team sort it out and get your costs under control.

Then again, you may not immediately notice all the costs you've incurred, or realize the damage that DSCSA exceptions are doing to your bottom line. Think of it as an example of "boiling frog syndrome," the notion, though apparently apocryphal, that a frog won't respond to the water around it heating up until it's already too hot to escape.

"Quiet" exceptions costs

Let's say your business experiences some disruptions related to exceptions, but not showstopping ones: reoccurring or occasional situations where someone on staff has to dedicate time to working through data errors on inbound transactions.

They check the data, scroll through EPCIS files, email or call your suppliers, and so on, until the matter's figured out. Daily supply chain operations may be more difficult, but are not being ground to a halt. However, they're only able to progress "normally" because someone has taken on this additional burden.

The cascading impact will first be felt by that person's colleagues, of course, or by an entire team if the responsibility is shared. Depending on the flexibility and responsiveness of such a group, and again, assuming that the errors aren't serious enough to halt business, they may even get good at it. It's still inconvenient and draining, but each problem is immediate and won't wait for solutions at the structural level. With time, your team starts training newcomers to reproduce a lengthy, time-consuming set of operations to resolve these problems.

At this point, the problem has been normalized, and your team is now dedicating a significant portion of their schedules to working through disruptions, rather than doing what you hired them to do. The "quiet" costs are in operational efficiency or even additional FTEs simply to continue at the rate of business you had before.

It might be a few months before someone links exceptions to why performance has suffered. Your targets for the quarter, or the year, are not where you want them to be; there may be more customer complaints or less revenue; key partner relationships could be harder to maintain or even become antagonistic. All of these damage your bottom line.

How exceptions management controls costs

There are two components to exceptions management that can control exceptions costs: tools and training. The former can help resolve or even automate the process for your business and your partners; the latter gives you more control and flexibility, supplementing one-off fixes with commonly understood processes and discrete SOPs.

Essentially, exceptions management is going to be a major factor in ensuring steady business operation under DSCSA. It controls costs by preventing issues that cause lost product, by keeping you from paying more in staff costs/FTEs when handling errors inefficiently, and by preserving your partner relationships.

High-quality systems for exceptions management, led by LSPedia's OneScan and Investigator solutions, are already designed to automate exceptions management and compliance, adapting to regulatory changes for you.

If your organization is at risk of letting DSCSA costs snowball, that may not be the full extent of your problems. If there's room for persistent exceptions in your supply chain operations, there's room for showstopping ones, and these can make audits harder or even invite regulatory scrutiny.

If you need to understand more about your organization's requirements, try signing up for a DSCSA class to get expert guidance geared to your business.

You can also schedule time to talk with LSPedia experts directly or write to to get an overview of where you are and what you need to do next.