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Pharmacy Service Improvement at CVS A Case Solution
The operational performance of CVS had been consistently declining as both the employees and the customers had pointed out that most of its locations were doing quite poorly in terms of customer service. This resulted in a high rate of defectors although the customer acquisition rate was greater than that but the business did not seem to be in a sustainable position. It was found that the prescription fulfillment process was quite tedious with the high level of operational inefficiencies due to poor processes which resulted in delays and many times inabilities of the pharmacy to provide with their prescriptions on time resulting in frustrated customers who often would switch to other pharmacies. There was therefore a need to take steps to improve the level of customer service offered at CVS. The staff was untrained and low paid, the prescription fulfillment process was long, and the IT system was not upgraded which is why it has been suggested to hire trained and educated staff who would be well versed to manage customer queries efficiently. Also, having a customer service team would allow for managing issues pertaining to doctors and insurance providers in cases where doctors would have to switch the prescription since the previous prescription would not be covered by the insurance. Because a separate wing would be overlooking the issue, this would help in increasing the level of efficiency and reduce the customer issue resolution time.
Following questions are answered in this case study solution
What changes do you recommend to CVS’s existing pharmacy fulfillment process? What IT changes, if any, are required to implement your changes?
How can you be sure that the new process you propose will be an improvement over the existing one? How can you be sure that it won’t make things worse?
What groups, if any, are likely to have problems with your proposed solution? How will you deal with their objections? users?
How will you ensure that there’s no backsliding—that there won’t still be wooden boxes in use six months from now? How can technology be used to prevent or inhibit backsliding?
Does PSI represent a significant opportunity for CVS? Would improving customer service be of significant financial benefit to the company?
What percent of pharmacy defectors from CVS in 2000 were light versus heavy users?
Case Analysis for Pharmacy Service Improvement at CVS A
1. What changes do you recommend to CVS’s existing pharmacy fulfillment process? What IT changes, if any, are required to implement your changes?
Firstly, CV’s pharmacy fulfillment process should focus on developing an IT system that would cater to the heavy users. These customers would file an average of 40 scripts in a year and would usually defect because of poor service. Hence, it would be essential to retain them by creating a system that would automate the entire process. This would mean that the drop-off and the data entry process will be merged so that the patient details are entered into the system at that very moment when he would provide the pharmacist with the prescription so in case any problem arises in the system it can be solved immediately while the customer is still present. Also, it would be essential to link all the databases so that all the customer-relevant information is linked and can be easily extracted. Apart from this, I will also recommend that CVS should have a separate customer service team which would be directly responsible for managing the bottlenecks in the DUR process and making calls to the doctors, and for checking the insurance terms with the providers in much detail. This will help in smoothening the overall process for the customers as the doctor bins will no longer be required. Also, CVS will have to focus on the training of its employees who are working at the pickup section and by offering them with a decent range of salary as they will e directly responsible for managing the customers and the additional cost of training will be offset by the increase in revenue as previously due to inefficient staff CVS lost $2.5 billion in revenue as customers switched to other pharmacies. Also, CVS can introduce a messaging system for its customers when the prescription would be ready for pick up or when there would be an error against their prescription as then the customers would be alerted in advance.
2. How can you be sure that the new process you propose will be an improvement over the existing one? How can you be sure that it won’t make things worse?
I believe that the new process will ring about improvement because it is focused on reducing the number of steps in the fulfillment process which will help in increasing the overall process efficiency and reduce the time involved as the drop-off and data entry process will be merged and customer data will be entered into the system immediately. Also, doctor call bins will no longer be required as any issue detected will be solved immediately with the customer being present. Also, the customer-related issues will then be outsourced to the customer service team that would be responsible for contacting the doctor and the insurance companies to resolve the relevant issues pertaining to the insurance coverage or the medicine not being in the formulary. Hence, the process of switching the prescription by coordinating with the patient, doctor, and the insurance company will be outsourced to the customer service and will result in efficient resolution of customer issues. The customer service team may add up to the inefficiency in the process as they may not be working in the office with the pharmacists. However, having interconnected customer databases would allow the customer service team to effectively coordinate and track the patients' track record and accordingly minimize the possibility of miscommunication. Also, as the company would hire and train its new staff, their education and experience level will reduce the chances of mistakes they might make at work and also help in improving the overall customer service as these new pharmacists will be in a better position to respond to customer queries at pickup and drop off counters and even would be able to better determine if a hard stop would be necessary under DUR issue. Although the payroll expense will increase as a result, but the customer defection rate of 60-90% will reduce which had costed a loss of $2.5 billion in 2000.
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