Introduction

Customer Value Store (CVS) is one of America’s largest retail drug stores with over 4000 stores. The company earns an annual revenue of $24.2 billion, over two third of which is generated by pharmacies.

The company is facing some customer service issues at its pharmacies. An estimated 7.2 million regular pharmacy customers left CVC in the year 2000 leading to a $2.5 billion of forfeited revenue. 44% of this customer loss is because of service issues

All CVC followed a five step process to fill prescriptions as shown below.

Drop-off: In this first step the customer would deposit their script in the pharmacy and specify a pick up time

Data Entry: Patient, doctor, third party provider and prescription information was now entered in a central database

Production: The drugs to fill the script were counted and verified by certified pharmacy technicians in the production area which was near the shelves where medicine was stored.

Quality Assurance: A pharmacist reviewed each script to make sure that it contained exactly the right drugs in the right quantities and that all other details were correct. It is one of the most critical task that can never be delegated to a technician or other employee in the pharmacy

Pickup: After Quality Assurance, each completed script was sealed in a bag. Bags were stored in the pickup area. The technicians staffing the pickup window searched for the right prescription among the bags, verified customers’ identities and took any required payments from them.

Drop off Data Entry Production Quality Assuarnce Pick-up

This model is facing serious issues in terms of customer satisfaction. The issues include delay in delivery, longer queue, incomplete script fill, higher charges from customer due to insurance issues etc. To handle these issues the group proposes a 15 point solution as below.

Proposed Changes

1. Under the current system the customer mentions his desired delivery time during drop off. While this system is optimal from customer’s point of view it might not be the case for CVS. We propose an alternate system where the Delivery time is to be decided taking into account both the customer preferences as well as the order load. An IT solution to predict expected delivery timing should be put in place

2. Regular customers should be provide a swipe car that would record all the demographics and other necessary details of this customer, this would reduce the processing time and would reduce the waiting time at the drive thru

3. Insurance information must be stored in the swipe card to quickly identified and resolve any insurance issues.

4. 7% scripts encountered partial or complete stock shortages – this can and should be completely controlled through effective ERP integration with drug suppliers.

5. Also if shortages are inevitable, the shortages must be factored in while calculating the delivery time at drop off. In case of extreme delays free home delivery option should be offered.

6. A real time IT system to be implemented. The system will monitor the flow of script over different processes and provide a summary to be provided to tech of issues encountered in the script.

7. Each node in filling process must be provided with hand held devices/ computer terminal where the script flow information can be logged. This information must be collected in a central database which can be assessed by tech to know the current position of any script

8. This IT system through optimization model should decide the priority order in which the scripts should be processed

9. In case the script encounters a problem at any stage of filling and the order is expected to be delayed, real time update must be provided to customers. Automated SMSs can be a cost effective method to do this. However customers must be called in case of exceptional delays to reschedule the pickup time

10. (Tech) Staff manning the pickup counter to be provided suitable training so that he understands the overall filling process and is able to explain the customer the issues encountered.

11. Part time tech staff to be employed to assist in peak hours. These part time employees should ideally be science/medicine students who can be quickly trained to understand the filling process and are competent to address customer issues

12. There must be two separate pickup counters- one for normal delivery and the other for the deliveries with problems like delay, incomplete fill, insurance issues etc. The personnel at the second counter must be a better trained and better paid employee who can efficiently make the customer understand the issue and also provide the customer further direction as to how to get those issues resolved

13. The normal delivery customers should ideally be provided pickup at the drive through itself. So while the lower trained and paid staff can serve the normal deliveries at the drive through, the more adept tech must take care of problematic deliveries

14. Home delivery option to be provided at a nominal cost to reduce high load in peak time.15. Better incentives should be given to techs working at Pickups in late afternoon shifts, as this

is the time when pickups face maximum crowd and techs have to deal with angry dissatisfied customers

To implement the above solutions a new comprehensive IT system must be put in place. The components and the functions of the system are as follows

The system should be able to correctly predict the filling time required for a given script on the basis of order load and script nature. The pick-up time for the customer must be decided on the basis of the above prediction.

The system should be linked with the inventory database, the system should recognize any shortage of a drug and should accordingly decide upon the filling time

The system should store and process real time flow information of scripts over the processes within the pharmacy and also decide the priority of orders to be processed.

The priority must be decided on the basis of any optimization model with an objective to minimize the customer waiting time. In the event an order encounters any problem a fresh flow order must be obtained by re-optimizing and this would be a continuous process.

The system must provide automatic SMS updates to customers regarding their order status and communicate to them any changes in the delivery time

The system must also provide pick-up directions beforehand to the customer through SMS ie drive thru for normal orders and counters for the orders with some issue

The system must provide reminders to the employee handling the “Dr Call Bin”

Smart cards and data entry devices will also be need as part of this IT support system. Also to prevent stock outs an ERP integration of inventory and suppliers must be put in place.

Issues with proposed solution

Customers might have some problem with the 1st suggestion as now they might not always get their desired pick up time. The objection can be handled by an assurance of on time pick up, lesser waiting time and better experience.

Implementation of new IT system would entail costs which might be objected upon by the management, but the costs are negligible when the huge revenue loss due to customer attrition is taken into account.

Giving smart cards to regular customers is also a costly provision which might face some objections but this system not only makes the service more effective but it also improves customer loyalty and would give a competitive advantage to the company.

Employees might object to the 6th suggestion as they are now burdened with an additional task of logging the flow information in the central system. Their objections can be handled by communicating the advantages of this new system to them.

The solution also requires some additional hiring and training which will entail some cost. But we have tried to handle these objections by the use of part time employees etc.

Steps like automated SMSs are low cost solutions and should not raise objections

How to prevent backsliding

The following measures will ensure that there is no back sliding

A proper training module must be designed for the employees to familiarize them with the new system so that they do not revert to old procedures

The use of this new system by employees should be promoted by linking a part of their variable compensation with it

The new system must be leveraged as a competitive advantage and should be used not only to retain customers but also to acquire new ones

To retain management’s confidence in the initiative retention level of customers should be frequently evaluated and the incremental benefit due to this system should be highlighted

Customers must be suitably informed about this new system and initial effort must be put in to make them familiar and comfortable with it.