1. Does PSI represent a significant opportunity for CVS?

Would improving customer service be of

significant financial benefit for the company?

Yes, although CVS attracted 8.5 million new regular customers over the course of one year,
approximately 7.2 million customers left CVS during the same period. These regular customers
accounted for an estimated 55 million annual prescriptions, which would have contributed to $2.5
billion in revenue.

Customer service would be an easy order qualifier to improve in order to retain current customers
since the industry is already known for poor customer service. This improvement would impact both
light and heavy users, and would further increase their customer base as more and more consumers
switch from competing pharmacies to CVS.

2. What changes do you recommend to CVSs existing pharmacy fulfillment process? What IT changes,
if any, are required to implement your changes?

We do not recommend any major changes to layout of the pharmacy fulfillment process; however we
would like to see other improvements within certain steps.
Data Entry:

We would like to see an implementation of a better IT system, a system in which prescriptions are
also defined by start and end dates in an attempt to minimize needless DUR hard stops created by
conflicts of drugs.
Inform remaining refills explicitly with customer and on easy to read drug cases. Ask patient if CVS
should contact doctor at each instance of last refill.
As customers drop off their prescriptions, have a form ready to be filled out. This form should ask
questions regarding changes made to insurance carriers, jobs, weight, DOB, or any other significant or
pertinent data that would disrupt the flow of the production of the prescription.

Production:
CRM to distinguish which prescriptions are from heavy customers and light customers.
Increase buffer from 1 hour to 2 hours, and file prescriptions electronically instead of paper and
bins.
Stack employee work schedules to accommodate busy times, especially after regular working hours.

Pick up:
Train techs to ease customer inquiries.
Open up 2+ windows fed by a single line to decrease wait times.

3. What percent of pharmacy defectors from CVS in 2000 were light vs. heavy users?

We determined that approximately 92.5% of customers were light users and the remaining 7.5%
were heavy users. We calculated these percentages using the data given in the HBS case.
In the year 2000, PSI team analysis indicated that approximately 7.2 million regular customers left
CVS during the year. These customers took with them an estimated 55 million annual prescriptions
that contributed to $2.5 billion to revenue. Therefore, 55 million annual prescriptions divided by 7.2
million regular customers equals an average of 7.64 annual prescriptions per regular customer.
If a light user is defined by having an average of 5 scripts a year, and if a heavy user is defined by
having an average of 40 scripts a year, then the results should indicate that light users account for the
majority of regular customers. Using a system of equations, we calculated the light users to account
for 92.5% of the regular customers, and the remaining 7.5% to be heavy users.

4. How will you ensure that theres no backslidingthat there wont still be wooden boxes in use six
months from now? How can technology be used to prevent or inhibit backsliding?

The prevention of backsliding can never be guaranteed, but we can indicate a few recommendations
that will ensure CVS to continue making progress.

Installing an easy to use IT system for technicians and pharmacists, alike.
Extensive training to ensure technicians and pharmacists fully utilize this system properly.
Standardized IT technology so that CVS employees across this nation can communicate and share
vital information with ease.
A creation of a knowledge base so that employees can easily look-up information.
Employee support.