Wallgreens Operational Management

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DS 850 - OPERATIONS MANAGEMENT
Fall 2012

Table of Contents
I. Executive Summary2
II. The Company3
III. Current Operations8
A. Process flow for customers8
B. Process flow for prescriptions9
C. Technology used within the pharmacy11
IV. Theoretical Analysis of Existing Design12
V. Recommend Changes18
VI. Works Cited23
Appendix24

I. Executive Summary
Walgreens Inc. operates approximately 8,000 retail pharmacies and employs 240,000 people. The company’s stores are divided into retail and pharmacy operations, with over 60% of sales coming from pharmacy operations. The following report focuses on Walgreens store #6363, located at 3770 N. Woodlawn in Wichita, KS. The research and analysis is based on interviews with Virginia Lytle, RPh, and Lori Parks, PharmD, both pharmacists at this location. Considerable data was also gathered on-site.

Pharmacy operations contain two basic processes. The first is the prescription filling process, whereby the staff fills prescriptions submitted by phone, fax, electronic transfer, and hard copy. There are 4 phases of the filling process: order input, data verification, vial fill, and product check & storage. Target flow time for each phase is 3.5 minutes for a total flow time of 14 minutes. Analysis of data gathered shows that actual flow time for the final phase is 4.2 minutes and a bottleneck occurs at this station. The second process is the assistance of customers that arrive throughout the day at the counter or drive-thru. This process is not capacity limited, but high customer traffic during times of lower staff capacity does impact prescription filling flow times.

The report’s key conclusion is that the current staffing scheme is set to match staff capacity with peak prescription demand but does not accommodate the peak demand for customer traffic. Staffing schedules drop from 2 pharmacists to 1 just as customer traffic begins to peak. This results in capacity constraints to the filling process. Recommendations include better staffing flexibility, assistance from retail staff on an as-needed basis, remote assistance from off-site pharmacists, and the addition of a second pharmacist on a limited basis, all to increase capacity during peak customer periods. II. The Company

In 1901 Charles R. Walgreen created the first Walgreens drugstore in Chicago by purchasing the drugstore where he was a pharmacist (Walgreens). Walgreens business is a retail drugstore. They have about 240,000 employees dedicated to customer service. Walgreens had 7,944 drugstores on September 30, 2012. Each store carries approximately 18,000 different items on a typical sales floor of about 11,300 square feet (Walgreens). While Walgreens drugstores offer many retail items and services, it is clear that the pharmacy is still the focus of the Walgreens business. “Prescription sales were 63.2% of total sales for fiscal 2012 compared to 64.7% in 2011 and 65.2% in 2010” (Walgreens 2012 Annual Report, page 30). The pharmacy in store #6363 will be analyzed in this report. The company goal is well stated in their following vision statement: “To be ‘My Walgreens’ for everyone in America - the first choice in health and daily living ... owning the strategic territory of ‘well’” (Walgreens). Walgreens has three major objectives for fiscal 2013. First of all they want to execute the Alliance Boots partnership. Part of this objective will be to understand what it takes to become a global pharmacy. Their second objective is to expand “Well Experience”, an enhanced store concept with a more retail like atmosphere. Finally, they want to progress their function as a community player. They believe that these three objectives for fiscal 2013 will help them to reach their long term objectives of “double-digit growth in earnings per share, increasing return on invested capital, and top-tier shareholder returns” (Walgreens 2012 Annual Report, page 5). The pharmacy in particular has the objective to...
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