Quality Control

CVS uses QC charts and six sigma practices as quality control methods. The Pareto Diagrams are used to ensure continuous improvement as they highlight the most important problems. Once identified the major issues can then be addressed and corrected helping to improve the process in place. One way CVS can improve its Six Sigma is by focusing on service. The level of customer satisfaction can be improved by monitoring customer feedback periodically through surveys and various methods of observation, such as check sheets and histograms.

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Assignment 4

Service Process Design

1.The three elements in CVS's Service Product Bundle are as follows:

1• Tangible/Explicit Service - CVS customers see fast, accurate and polite interaction with knowledgeable pharmacists and a friendly front office staff.

2• Intangible/Implicit Service - The intangible services offered at CVS rest upon the customers overall shopping experience. CVS prides itself in providing a safe, comfortable and pleasant experience to all its shoppers by keeping the store appearance clean, answering customer questions/concerns and doing all of this with a smile. CVS creates an environment where the customer feels welcome and secure.

3• Facilitating Goods/Physical Goods - CVS provides quality products to assist their customers whether it's a convenient snack, greeting card, band aids or heart medication. CVS has a superb and updated inventory designated to satisfy their target customer needs.

CVS falls into the Customer Routed cell on the Service Matrix as it offers several varieties of customer products/services from general store items to photo facilities and a world renowned Pharmacy operation. Inventory is designed to attract and satisfy customer demand.

CVS stores because of its retail setup have high customer contact. Customers come in contact with employees as they enter the store. Customer contact certainly occurs during the checkout phase and during the process of refilling or ordering prescription drugs. In addition there is also contact in the case of any inquiries a customer might have and when in needing help in locating a product. Often the pharmacy employees comes in contact with customers when they have questions on an over-the-counter medication.

CVS Photo utilizes self-service. In the CVS retail stores, there is a photo kiosk where customers can insert their camera’s memory stick and order the services they would like such as greeting cards, photo albums, mugs, and posters.

The company uses technology to increase their profits and reach a broader clientele. CVS has a strong online presence through their website. One could not only view and shop for items being sold at the store but could also utilize the ordering and reordering of prescription drugs from their website. They also make available to their customers automated prescription ordering by phone. With a computer software, they are able to keep medical records and history of their customers and their health insurance information.

CVS stores run a focused operations. The three services, general merchandise, prescription drugs, and photo counter, operate separately and run efficiently.

CVS has programs to support their employees in a few ways, in addition to the benefits they receive for working for the company, they are also inspired to work hard by the award programs given out to employees. The Paragon Awards are given out annually to a top associate who strives for excellence throughout the company making an extraordinary effort to help the company as well as their clients. At the corporate level they have something know as the Chairman's Award, this is given out to a member of the corporate office who has also made significant contributions to the company and its clients, the awards are given out each year during the fall.

All CVS/Pharmacy brand products and all beauty products are 100% satisfaction guaranteed or your money back. CVS Pharmacy has a hassle-free return policy if for any reason the customer is dissatisfied with their purchase. Products can be returned damaged, opened or defective along with the receipt or invoice and the full purchase price will be refunded no questions asked. CVS Pharmacy also offers rainchecks when an item is out of stock. Once the merchandise arrives it’s sold to the customer for the sales price. CVS rainchecks do not expire and they can be used at any CVS location.

The article “What Amazon Fears Most,” talks about two New Jersey men, Marc Lore and Vinit Bharara, and their up and coming internet business Diapers.com. The two men have been lifelong friends and share endless creativity and ideas. Lore and Bharara built up their business by reading about the number one online retailer, Amazon.com. They studied Amazon religiously as well as reading as much as they could on the founder, Jeff Bezos. The men discuss Bezos on the long car ride to their 1,250,000 square foot warehouse and often refer to him as “Sensei Bezos.” By studying Amazon and Bezos, they have now put their company in a position to compete with the online giant. From what started out as a garage operation has turned into one of the fastest growing, most popular companies in the market today. The company success stems from loyal customers who consistently place orders. The company is most popular for selling diapers, which are relatively low margin and offer little return on profit, however, it’s the other little products they offer that generate the revenue. People go on to buy diapers and end up adding a couple other things to their cart as well. Customer loyalty also stems from the fact that any order over $49 gets free two day shipping, which Amazon makes customers pay for. The two men are also very seasoned mathematicians using joint probability and economic order quantity formulas to make decisions on inventory making them more efficient. The biggest reason for the company’s success is a result of focus on specialization and categories. Also, the fact that the company uses robots to move product bundles within the warehouses keep costs low. In addition, they have easy to use websites which allows for customers to quickly navigate the page and pay within minutes. This is good because people don’t have to search around for what they want. It is obvious these two men have the determination and the know how to compete with Amazon, which is what has Amazon so worried. Amazon even constantly checks diapers.com to see their prices and will change the prices on their own website to match them. When asked about this, Lore and Bharara find it kind of comedic and they also had to say, “And if Amazon wanted a diaper war, an all-out price and delivery-time smackdown? "I would like that," said Bharara. "I would definitely take that challenge." In my opinion these two men have all the tools within themselves to have Amazon on edge.

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Assignment #3

1. CVS as a retailer and pharmacy does not manufacturers its tangible products but acquires them from different venues. Some which use assembly-line flow, such as a bottle water company, and other might use the batch flow, such as a pharmaceutical company. Since a majority of the items CVS sells are not customized and sold at a high volume, the assembly line product flow fits best.
2. CVS uses MTO (make-to-stock) process to fulfill customer needs. The company focuses on inventory management to ensure specific products are ordered and replenished to meet the demand of the customer and improve its service level.
3. Due to the fact that CVS stocks and sells several general items throughout its stores, most products are manufactured using continuous and assembly line product flows and are make-to-stock. This allows CVS to provide faster service to their customers from available stock at lower costs. CVS falls into the Continuous and Assembly Line/Make-to-Stock cell on Table 4.3 the Process Characteristics Matrix (pg 71).
4. Some of the factors influencing the process selection of CVS are the market conditions and cost. More specifically, their target market and economic status of the surrounding areas, and the most cost-efficient process to carry out operations. CVS obviously wants to stock products that customers in the surrounding areas are going to want to purchase. To a certain extent all CVS’s will stock a majority of the same products, however, it is the job of each individual store manager to select and manage the product-process strategy. He bases these choices on incoming customer assumptions as well as using information technology to assess inventory and how much of the items are being sold. From this data, he must decide which process selection is best. CVS’s process selection decision must also take into account the volume and standardization of the products. Most CVS stores stock very little, if any, low volume, highly customized products because they tend to be more unique and appeal to a minority of customers. This is where they have to consider competition, because there is most likely another store people will consider for customized items before thinking of CVS. Instead CVS stocks high volume, standardized products that are easily made and readily available. From this, we can understand why CVS uses the assembly line method for their operation. The assembly line method requires more initial capital but uses relatively inexpensive, low-skilled workers. The last consideration is technology, and it’s really not likely that a new process or product market is going to come along that would make their method obsolete. All of these factors come into play when CVS is deciding on what process is most efficient. In conclusion, the assembly line process is best for CVS because they keep their costs lower and can appeal to a wider variety of customers.
5. Since CVS is a chain of pharmacies, in their stores they sell very general types of products from over-the-counter medicines to stationary items such as notebooks and pens. Since there are such a wide variety of these general items in the store, they do not employ any of the mass customization processes that many larger vendors would use. The products sold at CVS usually come from third party vendors who would produce the items in a large quantity and high volume rather than small batches or a lot size of one. Therefore, since CVS does not manufacture any products, the mass customization methods do not apply to their operation or the industry as well.
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