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Southwest Airlines

In: Business and Management

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Supplier Management, Planning, and Materials
Student Name: Jesse Meyer-Appel
Due Date: upload to Moodle by Midnight Saturday, October 5
Assigned Value: 25 points
Sustainability comment: As you formulate answers, keep in mind that this MBA in Design Strategy program seeks to develop leaders who embrace innovation and sustainability to manage today’s complex business environment.
Pharmacy Service Improvement at CVS
We have all had experiences of waiting in line at retail stores, but there is often extra anxiety associated with dropping off and picking up a drug prescription (“script”). Nobody wants to wait for long periods of time only to find out that the wait does not yield the desired result—a properly fulfilled transaction.
Below is the new fulfillment process that was rolled out in the later part of 2002 and it included three (3) major changes: 1) The first three steps are completed while the customer is present at the CVS drop-off counter, 2) DUR is combined with the QA step, and 3) the box that held scripts was replaced by an online virtual queue that was viewable at all workstations.

First 3 steps completed while customer is present DUR is combined with QA 1. What are the key problems with the current business process that the Pharmacy Service Initiative (PSI) team is attempting to resolve?
RESPONSE:
Drop Off: Un-manned drop off window.
Data Entry (No Refill Allowed, DUR Hard Stop, Insurance Check): Many scripts allowed the customer to refill the prescription at least once. Customers could lose track of how many refills were allowed, however, and drop off an ineligible script. When this occurred the system printed a label for the ineligible script, which was put in a “Dr. call bin.” A tech would periodically take the contents of this bin and make phone calls or send faxes to doctors’ offices asking for their approval to refill the prescription. If the tech reached the doctor immediately and the doctor approved the refill, the script proceeded to the next step in the process. If the doctor rejected the refill, the label was put in a “Dr. denied” box near the pickup area; customers learned about refill denials when they returned to pick up their prescriptions. The DUR generated a hard stop for 20% of all scripts. Over 90% of hard stops were resolved by pharmacists without involving the prescribing doctor. Seventeen percent of all scripts encountered a problem during the automated insurance check. The majority of these problems were easy to resolve; they were due to date-of-birth errors on the script or to a customer’s having changed jobs or insurers. Some errors of this type could be resolved by the data-entry technician alone; others required a phone call to the customer. Other insurance problems were harder to resolve and required a phone call to the insurer and/or the prescribing doctor. Scripts were filled even if insurance problems were not resolved. When this was the case, the customer was asked to pay the full amount of the prescription at pickup.

Production and Quality Assurance: The only problem identified at the production step was insufficient inventory to completely fill the script. Seven percent of scripts encountered partial or complete stock shortages of the required medicine.
Pickup: Team members documented a variety of issues at the pickup window. The most common were unpleasant customer surprises: unauthorized refills, scripts that had not been paid for by insurance, or scripts that were simply not ready yet. Some of these issues prevented fulfillment, causing customers to walk away from the pickup window without medicine and with a bad impression of CVS customer service. Even when problems could be fixed, the resolution process took a long time and increased wait time for other customers in line. The situation at the pickup window was worst between 5 p.m. and 7 p.m., when customers came after work to pick up the prescriptions they had dropped off or called in earlier. Most CVS locations found it difficult to staff this time period simply because pharmacy employees did not want to work then. 2. Which problems do you expect the new fulfillment process to reduce?
RESPONSE: There will be a better unification of the first three processes and a massive effort made to alleviate the issue of no one being at the counter for drop off. That would be the first thing. Then with the combining of the insurance check and data entry while the customer is present, any problems that would have arisen if they weren’t there could be fixed immediately to ensure the best customer service and efficiency. If there were a delay in the insurance check, the customer would know about the delay and not be angry about the wait. They would alleviate the majority of the issues they had with drop-off because that is based on human capital. At least one person would be in the front to alleviate this. With a better customer service system and restructured IT and systems, this would also help alleviate all of the problems that coincided with these problems.
The DUR process was folded into Quality Assurance step – DUR no longer part of Data Entry. Both DUR and QA are done after prescription is filled. DUR should not be done when customer is present; don’t want customer to get the impression that the drug could be harmful because they might be less likely to take it. Also, DUR is done at pharmacist’s station during QA – more efficient use of pharmacist’s time to check filled prescription for accuracy and deal with any problems revealed during automated DUR. However, pharmacists could argue that it makes no sense, and is in fact dangerous to fill prescription before DUR is completed. PSI team had to “sell” the new process using communication efforts that were persuasive and effective. Also, changes were mandatory, not optional, so team used both hard sell and soft sell techniques to win pharmacists over. There were a total of 7 elements in the PSI program that all CVS pharmacies had to adopt – they couldn’t pick and choose among the 7.

3. Why are the first three steps of the fulfillment process so critical? Which key problems are being addressed?
RESPONSE: The first three steps of the fulfillment process are so critical because they create the most process inefficiency. Wasted time is wasted efficiency. Data entry is completed at drop-off while customer was still there this made it easier to verify customer insurance information. Insurance check is now done with customer present. This used to be they’d just make sure your name, address, and birth date were on prescription and let you go. There is a “new” drop-off window away from cash register where pick-ups are done. Clerks now enter data into computer while you are still there. CVS was missing the opportunity to identify and resolve problems early in the process, when the customer is still present. Under the old system no one would look at script until 1 hour before pick-up. This is not enough time to resolve any problems. The clerk then asks for best number to reach customer in case of a problem, which is a huge simple change from the their previous organizational structure. Staff can also inform customer about insufficient inventory at drop off instead of customer finding out when they come back for pick-up. This is the new automated in-stock check. Also, box that held prescriptions was replaced by an online “virtual queue,” which can be displayed on all workstations in the pharmacy. Virtual queue tells techs and pharmacist what prescriptions to work on filling next. To boil it down, the three key problems that are being addressed by PSI are simplicity, intuitiveness, and sensibility in decisions and actions. Previously it was a very unorganized and confusing process that pharmacists had to go through. With the combining of the first three processes in person for everyone who goes to the pharmacy and then combining DUR with QA, they have eliminated multiple unnecessary steps. This allows for the best process efficiency.…...

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