Aliw del Rosario July 27, 2012
Operations Management Case#1 Prof. Third Dacanay
CVS Pharmacy
1. Change A: Employ a Phone Specialist with the following functions:
- Take phone orders, including voicemail orders
- Take phone messages, including voicemail messages
- Take fax messages and orders
- Prioritization of provider calls/faxes
- Use standard forms and process for faxing providers
- Timely call/fax providers
- Attend to drop-off window or in-store counter when not on the phone or
doing fax work
Change B: Fulfillment Specialist/Customer or Patient Relations Specialist
- Ensure all scripts are processed
- Ensure accurate filing, grouping and prioritization of scripts, including IVR
scripts
- Provides prompt notification to customers prior to pickup date of reasons
for pending date to pickup drugs
- Inform Customers of MDs that have pending responses causing pending
pick-up dates
- Notify patients of necessary refill authorization
- Notify or verify with doctor and customer of incorrect dosage
- Give feedback to customers whose orders are still pending because of
unauthorized refills, payment issues including third-party payment issues, or
even hard stops as prescribed in the DUR
- Coordinate and follow up orders of OOS drugs
- RPh can focus on Production and QA and necessary involvement in Data
Entry
- Minimize misfiled orders
Change C: Standardized Computerized Order Form/Scripts (maintained by IT)
- Computerized form that requires necessary fields to be filled out so as to not
miss any pertinent data
- Automatically gives an alert for out of stock drugs in order to inform the
customer of soonest possible time of pick-up
- Does away with hard to read handwriting problems
- Automatically gives an alert for medication no longer manufactured
- All scripts are recorded and prioritized
- Releases acknowledgement number for every script to be provided to
customer as well
Change D: IT Specialist
- OOS determined at drop off stage through alerts in online form
- Ensuring of accurate pill images in system
- phone/pabx/IVR system and fax maintenance
- forward IVR held scripts to Data Entry including “D” queue
- online database for customer profiles that include necessary documentation
of customer communications
- computerized order taking system maintenance
- online inventory corresponding to the entry of scripts to provide OOS alerts
including medication that are no longer being manufactured
- synchronization of hardcopies and soft copies of forms, documents, profiles
- maintenance of all cash registers
- instead of boxes for pending transactions, everything will be computerized
and the list of “MD will call back,” “Dr call bin,” “Dr denied,” and the like will
all automatically be populated based on the synchronized customer profile
form that records customer transactions and orders. Such customer profile
form shall have the real time status of each and every order of the customer
enabling the system to automatically add information on these virtual boxes.
Change C: Ample and Efficient Signages
- Customers will find drop-off easily
- Customers will easily find the location of Pharmacy
- Signages that light up especially in the evening
2. Although there are apparent problems in each of the stages in the fulfillment process at the CVS
Pharmacy, an enormous part of the problems in the existing CVS fulfillment process roots from
problem areas in the Data Entry Stage. Customers become irate and dissatisfied when they leave
the pickup counter empty handed and the main cause of this would be the lack of quality
processes within the Data Entry Stage. Common issues such as unauthorized refills and payment
issues and the like would be minimized if there were strict controls in the Data Entry. There
should be an added employee, a fulfillment specialist to give feedback to customers whose
orders are still pending because of unauthorized refills, payment issues including third-party
payment issues, or even hard stops as prescribed in the DUR. The fulfillment specialist shall
promptly inform the customer of the pending pickup date due to doctors who have not yet
responded or insurance issues etc. This is to hasten the fulfillment process, minimize queuing at
the pick-up station and leave satisfied customers upon leaving the pick-up station. This provision
shall involve the customers in the fulfillment process and for them to understand the cause of
pending pick-up dates, which is more often not caused by the pharmacy. When customers are
informed of the reasons for pending pick-up dates they shall get involved in following up on their
doctors’ responses to the pharmacy and in coordinating with the third-party payment providers
such as insurance companies, thus hastening the fulfillment process and managing expcetations.
This shall also free up time for techs to help in production and be present in the in-store drop of
counter and drive-thru and to never leave these stations unattended and also leave more time
for techs to take phone orders as well. This will also give more flexibility to RPhs to focus on
production and quality.
Also, many problems will be resolved by an in-store IT specialist and Phone specialist who can
focus and key functions that will enable the other employees to focus on their respective
functions.
The involvement of IT and the integration of pharmacy information and technology shall
standardize processes and minimize problems. The IT system has eased problems on every
stage, taking out OOS issues-finding out OOS at the initial stage, maintenance of databases-
allowing the system to give alerts for risk factors (including “refill too soon” and “no refill
allowed”), incorrect or insufficient data, communication problems, software and hardware
maintenance, synchronization of hard copy documents and soft copy documents and providing
aid in hastening the fulfillment process.
The process for the fulfillment shall be the same except it shall be enhanced with added aid of
technology that would standardize and computerize the processes in each stage to minimize
errors and inaccuracies, and human capital to specialize in key functions and would allow all
other store employees to focus on their own key functions.
Each added change directly addresses and corresponds to the listed problems listed under every
stage of the flowchart.
The changes proposed would ease the work of the current employees and address all current
problems, therefore there would be minimal to zero resistance from current employees.
3. The only possible groups that would likely be objectionable at first would be the techs and RPhs
as the additional human capital would intervene in their current processes in data entry. But
although these new employees will break their routine and often point out errors by the techs,
they would later find out how these new employees would make their work easier.
4. Long term solutions that address the listed problems under each stage of the fulfillment process
by computerizing most processes and standardizing them, and with the support contributed by
the fulfillment specialist, IT specialist and phone specialist, there would be no other direction but
forward. Getting more involvement from the customers and getting them to understand that
the pharmacy has nothing to do with the delay will encourage more support, managing their
expectations, hastening the fulfillment process and increasing satisfaction upon leaving the pick-
up station.
5. PSI presents tremendous opportunity for CVS, through identifying problem areas and being able
to provide necessary changes, CVS is faced with an opportunity to be the market leader for
customer satisfaction and increasing a relevant amount of pharmacy customers and
prescriptions per year instead of losing them. Without the opportunity brought upon by PSI,
CVS’ yearly profits shall continue to fall since its decline in 2001. Even with a relevant increase in
profits in 2002, numbers shall fall if there shall be no improvements employed on the in-store
processes as customer service satisfaction is still the best and the long term marketing strategy.
To steadily increase profitability, CVS shall acknowledge the findings of PSI and apply the
necessary changes in its operational strategy-increasing support employees and enabling
operations through technology.
CVS has a potential to increase profits by retaining customers and gradually increasing them per
year.
Actual:
Year 2002 2001 2000
Net Optg Rev 24181.5 22241.1 20087.5
COGS 18112.7 16544.7 14725.8
margin 6068.8 5696.7 5361.7
Opex 4862.6 4577.1 58.2
Optg profits 1206.2 1119.6 1303.5
Non-optg exp 50 288 98.5
pre-tax income 1155.8 1407.6 1205
income tax 439.2 296.4 497.4
net income 716.6 413.2 746
Potential: (with increased opex because of increased salaries and IT infrastructure due to applied
changes)
Year 2002 2001 2000
24465.2
Net Optg Rev 1 22241.1 20087.5
COGS 18112.7 16544.7 14725.8
margin 6352.51 5696.4 5361.7
Opex 5034.81 5034.81 4058.2
Optg profits 1317.7 661.59 1303.5
Non-optg exp 50 288 98.5
pre-tax income 1267.7 373.59 1205
income tax 439.2 296.4 497.4
net income 828.5 77.19 707.6
