CVS Pharmacy Case

Introduction to Company

• CVS Pharmacy is a subsidiary of the American retail and health care

company CVS Health, headquartered in Woonsocket, Rhode Island.
• It was originally named the Consumer Value Store and was founded in
Lowell, Massachusetts in 1963.
• By 2002, CVS was one of America’s largest retail drugstores, with over
4,000 stores and revenue of $24.2 billion.
• Over two-thirds of the revenue of CVS was generated by the
pharmacies
 Symptoms of the Problem?
• As the company grew, managers started to worry that pharmacy
operations were not performing well.
• Why?
• Anecdotes from both customers and employees indicated that many locations
had serious problems with customer service.
• However, the company’s pharmacy business, grew as quickly as the industry
average.
• Some interpreted this to mean that CVS did not in fact have serious problems.
 Symptoms of the Problem: PSI
• Objective of PSI
• To understand the true state of pharmacy customer service and to make any
required fixes, CVS launched the PSI.
• Staffed it with operations executives and managers, including
• Jon Roberts, the senior vice president of store operations;
• Josh Flum, the director of store technology;
• Mitch Betses, the director of pharmacy operations;
• Top pharmacy supervisor, a top pharmacist, and consultants from the BCG,
including Tom Grossi.
 List of Problems
• Exhibit – 1
• Exhibit – 2

“Well, we can’t have 67 solutions for the 67 problems we identified,”

Roberts said.
 Crucial Points
• Customer Safety
• Waiting time
Typical Layout of CVS Pharmacy
Waiting Time - 
 Questions worth to Ask!
• What is the need of improving the process?

• How much revenue loss is going to be there due to the problem?

• Why the light users are leaving?

• Why focus is on the service?

 Questions worth to Ask!
• What percentage of pharmacy defectors from CVS in 2000 were light
versus heavy users?

• How many prescriptions lost in 2000 were due to regular heavy and
light defectors separately?

• How much financial benefit would be there from improving the

customer service? (assume 60% improvement)
 Some more Questions
• How do you approach this problem?

• You are my consultant ☺

• I am giving you dollars

• So, from where should we start?

• How should I check that out of 6000 stores if there is any which has
not implemented the new process?