Question

What are the key features of the existing fulfillment process at CVS ?

Answer 1

CVS had grown to become one of the largest retail drugstores with $24.2B in revenue of which $16.1B was generated by their pharmacies. Despite the growth in revenue along with 8.5 million new customers, CVS lost 7.2M customers during the same year. Growth potential was being held back by unhappy customers leaving CVS for another pharmacy. Compounding the issue was the fact that switching pharmacy services were relatively easy, but most customers did not realize this yet. This only added to the urgency of addressing the problem as soon as possible.

Executives at CVS formed the Pharmacy Services Initiative (PSI) which uncovered 67 different process related issues and observed that staff would encounter issues with 40% of all customers they worked with during their shifts. Service-related issues affected 44% of heavy users who left while also affecting 13% of light users. Most of the customer’s complaints revolved around wait time, which was often a result of various issues that occurred before they reached the pick-up window. The PSI team looked at each of the 5-steps in the fulfillment process and uncovered many inconsistencies and inefficiencies at the drop-off window, the data-entry process, and the pick-up window.

During fulfillment, 27% of all prescriptions encountered a “substantial problem” either with Doctor approval, drug interaction safety checks or third-party payment verification. Most of these issues were resolved by the technician or pharmacist during the fulfillment process, but this didn’t mean that the customer would be satisfied when they came to pick-up their order. 16% of the customers at observed locations did not get what they expected when they arrived at the pick-up counter. Problems ranged from uninsured prescriptions at unreasonable prices to unfilled orders along with long wait times at the pick-up window line. Customers typically requested pick-up times after work between the hours of 5-7PM which made it a stressful time for staff. A bottleneck formed at the pick-up window which resulted in longer lines and longer wait times for customers arriving during these hours.

The PSI team was faced with the difficult task of changing the fulfillment process so staff could provide better service while maintaining safety precautions and preventing any backsliding into other issues.

The PSI team needs to adjust the fulfillment process to take away the bottleneck at the pick-up window and resolve issues earlier in the process. They should also keep in mind that a new enterprise resource planning (ERP) system would also improve communications with 3rd party payers, suppliers, and doctors. The process changes must work for all 4,000+ franchise locations so careful consideration of each location must be factored into the decision. Careful monitoring of the new fulfillment procedures and the ERP system integration will need to occur to ensure that new issues are not created. The number of customers who leave CVS is the best metric to measure success.

Short-term: Design a flowchart of the new fulfillment process where customer information (including contact information) is entered into the system when they drop off their prescription. Technicians would be able to communicate any issues about 3rd party payments and obtain customer approval for another brand immediately. If doctor approval was required, the customer could be made aware of a possible delay and a more appropriate pick-up time could be scheduled. This would avoid many of the hold-ups and delays at the pick-up window. Add an additional drop-off window and shift staffing to the drop-off window during the 3 different peak times of the day. Processing the Rx information into the system earlier in the process will also allow the system to check for low stock immediately and the product can be ordered quicker. The new fulfillment process will be presented to regional representatives at CVS who can provide input about how the newly proposed fulfillment process would work at their locations. Any pushback by staff would be addressed by emphasizing that the goal is to reduce customer issues and to ease the tension at the pickup window. The immediate goal would not be to reduce staff or cut anyone’s hours but to add value to the customer and address issues at the front end of the fulfillment line.

Mid-term: Implement the new procedures starting with pilot locations throughout each region to test the process and identify any new issues that might be caused and correcting them. Other stores will adopt the new fulfillment procedures once the pilot stores are showing significantly less issues at the pick-up window and no (new) significant issues at the drop-off window. Ensure that training for supervisors is provided by managers and staff who worked in the successful pilot locations and training time is given to all staff across each store.

Begin looking for the new ERP system that would interface with the new fulfillment process and doctor’s offices, health insurance companies and product suppliers. This system would reinforce the benefits of the new fulfillment process by making customer information easy for staff to access and input at the drop-off window. The system will improve stock availability, communication with 3rd parties, utilize customer data to prevent duplication in the data entry process. The ERP system would reduce phone calls and faxes by allowing doctors and insurers to input patient information viewable by pharmacy techs.

Long-term: Purchase and implementation of the ERP system will take more time since it involves more than just CVS operations. Begin by working with the regional CVS representatives and representatives of various 3rd parties who interface with CVS to be sure the new system will add value to all parties involved. Once there is buy-in, purchase the system and begin implementation at pilot locations building the system out across all 4,000 locations in the same way that the new fulfillment process was implemented.