Lack of Products Supply to the Customers - Case Study Example

 CVS Company Subject: Lack of products supply to the customers Introduction Despite the fact that this company is the largest pharmacy chain in the USA, it is faced with one major challenge of not supplying enough products to the customers. Further, even where the supply to the customers is timely, CVS Company (Consumer Value Stores) is characterized by the problem of lack of timely delivery of its products to the customers. For example, the company was forced to enter into a Non-Prosecution Agreement with one of its customer in Nevada, on October 2010 on condition that it would continuously provide timely delivery so the customer would not incur losses (Consumer Affairs 2014). CVS Company was started in 1963 by Stanley and Sidney Goldstein and Ralph Hoagland. By 1964, the company had 17 stores in the States. Initially, the company sold health and beauty products but in 1967 ventured into the pharmaceutical world with its first pharmacy in Rhode Island. Melville Corporation bought CVS in 1969 and by 1974, the company had made $100 million annual sales. 11 years later, the company reached a billion dollars in annual sales. In 1994 the company introduced PharmaCare, a health insurance cover for their employees. By 1997 CVS had more than 2500 stores all over the States. Having become one of the companies to complete the acquisition or Revco, the company was granted major drugstore locations in the Midwest and Southeast. Since then, the company has grown tremendously penetrating many of the States in the US. The firm pioneered the introduction of the loyalty card program, Extra Care Card for its customers. (CVS Caremark Company history 2012) CVS company move to stop selling tobacco products has led to another great loss in the company's sales as they stand to lose approximately 2 billion dollars every year amounting to a 3% loss. Quitting selling tobacco products is one of the reasons why CVS has been unable to provide its tobacco smoking customers with their usual products. The company argues that they are considering a healthy approach that benefits both them and their customers. But with this decision, many of the customers purchasing tobacco products are forced to find alternatives elsewhere or quit smoking altogether. (Paul 2014) In 2011, CVS had a shortage of several products from Johnson & Johnsons. Consumers were told of the shortages which included Motrin, Pepcid AC, Rolaids, Neutrogena skin care products, children’s Tylenol liquid and Tylenol drugs for adults. A department at Johnsons & Johnsons, the McNeil Consumer Healthcare, recalled millions of the J&J products following a quality control problem in its product lines. Some products were suspected of containing metal while others were reported of having a moldy smell within their bottles. (Natasha & Reed, 2011). Most of the consumer evaluation is positive with many recommending the company's products. One Sheila from Memphis recommended the pharmacy for helping her select the appropriate shampoo for her hair. Another was happy with the results he got when using Monoxildil, a hair growing drug. As much as the company got positive reviews, negative ones were also made. A man who used the same Monoxildil complained of terrible sexual side effects that led him to stop using the product. He is grateful the side effects were not permanent but warns others that even if some side effects were not written down on the box, they really do exist. Supply of some medical products manufactured by Pfizer Inc. had to be recalled. CVS pharmacies supply some of these products. Recalling them meant CVS had to take them off the market. Some of these products were the 30- count Effexor XR 150mg extended release capsules, the 90-count extended release 150mg extended release and the 90-count extended capsule release of 150 mg Greenstone LLC-branded VenlafaxineHC1. The recall took place following a complaint from one of the pharmacies stating that a bottle of Effexor XR from Pfizer contained a capsule of Tikosyn among the Effexor XR capsules. Use of Tikosyn mixed with Effexor XR may be fatal. (Institute for Safe Medication Practices, 2014). Several other products have been recalled or banned for use by the FDA thus leading to the lack of product supply to the customer. Body Streamlining the supply and distribution chain is one of the core competencies that any competitive organization should always seek to have (Silva 2013). Therefore, when the company is faced by such problems that depict its lack of competency is delivery of its products, there are higher chances that the competitors might take advantage of the situation and invade on the company’s market share (Consumer Affairs 2014). In this respect, what then should the company do to save the situation and improve its image to the customers? Since the problem of shortage in supplies or lack of timely delivery is a problem associated with the operational efficiency of the company, it is crucial that the company hires experts in supply chain management, who will enable the company, streamline its distribution and delivery processes. Further, the company should acquire an efficient supply chain management system, which will in turn help the company to schedule and implement its deliveries efficiently (Silva 2013). Looking at the similarities of CVS with other companies, one being the quitting of selling tobacco products to support a healthier nation. The move cost them billions of dollars but other companies followed this suit believing it was for the greater good for both the company and its consumers. Also, after the recession in 2007, most of the companies in the US suffered in sales of their products and services. CVS and Walgreen shared a similarity in making a comeback even after the brutal 2007 recession blow through cutting costs and consolidation. Differences between CVS and other companies will help identify CVS' competition and identify what they may be doing right. Walgreen is CVS' biggest competition with Walgreen having more retail pharmacies and sales. Walgreen has 8100 retail pharmacies while CVS has 7450. Although Walgreen has more retail pharmacies than CVS, CVS has an advantage in the numerous mini clinics it opened fro patient care. Now people can visit a doctor at their nearest CVS pharmacy instead of going to the emergency room which is more expensive. In 2012, Walgreen's total sales was 72 billion dollars while CVS was leading at 123.1 billion dollars. While CVS has concentrated on making its services enjoyed by people living in the US only, Walgreen has sort to expand its territory into a global setting starting with penetrating into the European countries. The biggest problem the company has are the pending lawsuits that are taking longer than usual. The company will tend to lose many of its Medicare beneficiaries due to the ban they were given from recruiting any more beneficiaries until they sort out their issues with their system failure which made most of their beneficiaries get charged a lot of money for their medical products. They made a 2.4% loss from the Medicare saga but are confident of making a comeback over time. They plan to make amends and reintroduce a better and satisfying Medicare. The company expected to solve its problems within the year before 2014 in order to take part in the enrollment that took place in 2014 but the lawsuit problems and solving the ban issue took longer than expected and disrupted their goal. Now they expect to find a solution by year end so as to proceed to sanctioning itself. Despite of losing a huge sum of money over this, CVS still stood to make profits. They made $1.12 billion the previous year that allowed them to form a cushion against the lawsuits and ban. This is mostly due to their generic drug sales that helped sales to skyrocket. The company will also need to hire more staff and give them much better pays due to the complaints their employees make of working overtime for little pay and having more job responsibilities than required. A healthy working environment enhances employee motivation generating better customer services. The company will stand to make more sales. Therefore, CVS needs to create a healthy and happy working environment. Some complaints were made that the company had hired incompetent staff that barely speak English. This is very dangerous as the staff may misjudge a prescription leading to severe damage to the customer. Hiring competent staff members will help avoid this situation. Part time employees should also benefit from the discounts put in place for full time employees to purchase products from the pharmacy. However, the discounts could be lesser than those of the full time employees. They lost millions of dollars worth of prescription painkillers which led them to join forces with the DEA and other enforcement institutions in order to curb the misuse of drugs. With the help of the DEA they are looking into their records for any loopholes that would point out to the irregularities that led to the loss of the drugs. Working with law enforcers to help curb drug loss and abuse, CVS is helping shape the community into a better one. Conclusion In conclusion, the supply chain management system of CVS Company is not efficient, causing delays in delivery of products to the customers, as well as lack of product supply to the customers. They lost their prescription painkillers in Northern California that resulted in losing millions of dollars. This is just an example to emphasis on the supply chain management. Thus, to tackle this challenge and improve on the company’s image to the customers, the CVS Company needs to hire experts in the field of supply chain management so they can help it streamline its processes. In addition, the company should acquire a supply chain management system, which will enable the company become efficient in scheduling and fulfilling customer orders. In this respect, the management should prepare to avail the necessary resources to realize these recommendations. As the company quit the selling of tobacco products, it lost a lot of customers and billions of dollars. However, this is considered a smart move as their health focus could lead to an increase in patients in their minute clinics. (Paul 2014). The firm will have to be wary with their choices in which areas they are to approve from those they will disapprove. As they already considered moving towards a healthy approach, they will have to apply a well rounded health approach on all of their products altogether including sugary products sold at their pharmacies. The introduction of a program that helps people quit smoking was also introduced by CVS. The loss of billions from the stopping of selling tobacco products is supposed to be returned by this program. The same tobacco consuming consumers would engage in the program in order to quit smoking. In order to curb the problem of lack of tobacco products, CVS will need to promote their healthy products thus offering their customers with a clear picture of where their company is heading. In effect, the customers will follow in this vision. Work Cited Consumer Affairs. (2014). Consumer Complaints & Reviews: Top 699 Complaints and Reviews about CVS Pharmacy. Retrieved February 28, 2014 from http://www.consumeraffairs.com/rx/cvs_rx.html CVS Caremark Company history, (2012). Retrieved from http://info.cvscaremark.com/about-us/our-purpose/company-history Paul. J. H. Schoemaker (2014). CVS’s Decision to Forgo $2 Billion Seems Crazy, But Just Might Work. Retrieved from http://www.inc.com/author/paul-j-h-schoemaker Natasha Singer & Reed Abelson (2011). Can Johnson & Johnson Get its Act Together? Retrieved from http://www.nytimes.com/2011/01/16/business/16johnson-and johnson.html?pagewanted=all&_r=0 Institute for Safe Medication Practices (2014). Retrieved from http://www.ismp.org/tools/fdasafetyalerts.asp Silva, Titus. (2013). Essential Management Skills for Pharmacy and Business Managers. CRC Press. Read More