So here’s a Human Kaizen Fail.
A few weeks ago I went to drive my friend in for knee surgery, and because she lives in a rural area the surgery was performed three hours away and the pharmacy was about 20 minutes from her place. We left the surgery and drove to the pharmacy (2.5 hours after leaving the med facility or roughly four hours after the completion) only to be told after 20 minutes of inane questioning (why did you have surgery that far away from here and other pretty irrelevant issues) that they did not even have the pain medication for my friend that was now starting to really feel it.
But oh, it gets worse.
The pharmacy tech then tells my friend that is obviously in pain “Well, you can call around to the other CVS’s to see who has it.” I almost lost it because the nearest one was 20 plus minutes away and why did this person waste our time (and allow my friend to sit in pain) with the questions about why order from this location (closest to her residence). If they had known they didn’t have the medication, why was the doctor not informed immediately so we could have figured out an alternative solution (or location) on the drive and NOT have my friend sitting in pain for the additional four hours it took for us to get the medication?
Ultimately we ended up procuring the painkillers at a different chain, but how much needless pain and potential damage did my friend have because of this poor process?
Why should the company care?
Let’s do a conservative calculation as to how much this broken process costs CVS directly. Assumptions:
- 9,600 CVS stores (per Google search)
- $10 profit per transaction (possibly high)
- 1 transaction per day lost because of process per store (probably extremely low)
- Assume no cross-selling of other products (we put back $25+ dollars of high profit margin purchases and left out of frustration)
- Assume client does not transfer any other purchases/prescriptions to competitors (somewhat conservative as people don’t like to change providers and insurance has restrictions)
This is a loss of $35M a year of profit just from the pharmacy and $50M+ a year total. If the number is closer to 10 lost transactions a day that is a third to a half BILLION in lost profit a year.
Even if it costs CVS 1% of the profit to revamp and execute the process, this is a tremendous impact to the bottom line that stockholders should be demanding.
I guarantee that CVS employees have seen this issue repeatedly and yet it still happens. Maybe they are not empowered to make suggestions or changes. Maybe some employees do call around and assist the clients, but this is not an SOP and disseminated to all stores. Yet given the magnitude of the money I would be willing to bet that CVS wishes their employees addressed this situation earlier. Almost $10M a week is real money lost, even when considering the chain had $125B in profit last fiscal year.
The lesson
If you have a store of some capacity, look at the processes of inventory and communication with your customers as you are probably losing many sales and customers because of staff untrained in making the client experience smooth.
And CVS, you can pay me $50k for the $500M of profit I just handed you. We both win but even more importantly we just saved your customers a ton of physical and emotional pain. What is that worth?