Value Chain Walgreens

The Value Chain (VC)

“The term value chain refers to the idea that a company is a chain of activities that transforms inputs into outputs that customer’s value. The transformation process involves both primary activities and support activities that add value to the product” (Hill, Jones & Schilling, 2013, p. 89) . This value mainly created by company's primary and support activities. Primary activities include; supply chain management, production of the product and its distribution, marketing and sales, customer services. Support activities include; procurement, technological development and firm infrastructure. "Walgreens delivers significant value to pharmacy benefit plans by providing patients with convenience, choice, customer service

and low-cost prescriptions, as well as a broad array of health and wellness services that offer appropriate cost-effective and time-efficient alternatives to physician or emergency care" (sec.gov).
Research and Development (VC)
“Research and development (R&D) refers to the design of products and production processes” (Hill & Jones, 2012, p.

91). Walgreens' main focus is on drug retail industry, and according to its 10K report company doesn't engage in any material research and development activities. "Walgreens goal is to provide the most convenient Omni-channel access to consumer goods and services, and pharmacy, health and wellness services through its 8,116 community based drugstores, as well as through its specialty pharmacy, home infusion and respiratory services, worksite health and wellness centers and retail clinic businesses" (investor.walgreensbootsalliance.com). "As of August 2013, approximately 75% of the United States population lived within five miles of a Walgreens and an average of 6.2 million shoppers visited its stores daily in fiscal 2013"(investor.walgreensbootsalliance.com). To make it successful company constantly focuses on how to supply cheaper drugs to customers, they rely on feedback from customer services, gathering information about how to supply drugs at expense of customer's minimum efforts, how to develop better marketing strategies and how to imply technological tool for good of company and its customers. However, Walgreens spends a lot to develop new technologies and remain mammoth in drug retail

industry.
"Walgreens offers competitive unit prices as it has gained a deep understanding of the pharmacy reimbursement landscape, given its experience bringing other pharmacies into its family of stores through acquisition, working with other PBMs and until recently owning its own PBM" (sec.gov). Walgreens unit prices gives it competitive advantage as in drug retail industry specific unit pricing is proprietary among pharmacy chains. "It is worth noting that Express Scripts itself has told some customers that its “50K” network will not experience any significant savings by excluding Walgreens" (sec.gov).
Walgreens recently asked a large PBM to compare total pharmacy costs of network with and without Walgreens, results showed that networks with Walgreens can lower overall prescription costs through a combination of; competitive unit prices, higher than average rates of dispensing generic drugs and promoting 90-day at retail supply of prescriptions where appropriate.
Walgreens reduces costs through use of generics. "Walgreens drives a greater penetration of cost-saving generic drugs – nearly 74 percent penetration for Express Scripts clients in 2010" (sec.gov). "This is 140 basis points better than the average of Express Scripts’ retail network that does not include Walgreens(based on Express Scripts data)" (sec.gov). Thus, this generic performance saves $2 per script and total of $180 million each year to Express scripts and its clients.
Walgreens reduces costs through use of 90-day at retail prescriptions. "Walgreens promotes 90-day at retail prescriptions for chronic medications, which offer 6 percent to 8 percent savings compared with three 30-day scripts" (sec.gov).
Walgreens helps reduce costs by providing broader health services.

"Walgreens helps sponsors and patients control overall medical costs by providing a full array of health services on top of traditional pharmacy dispensing" (sec.gov). One of the health services Walgreens offers is improving adherence to prescriptions. Walgreens offer the nation's largest in-store immunizations program of any drug chain. "Walgreens manages more than 700 Take Care retail clinics and worksite health centers that provide easy, affordable access to healthcare services for network plan members as an alternative to costlier primary care physicians and emergency room care"

(sec.gov).
In 2011, Walgreens have signed collaboration agreement with Johns Hopkins Medicine to promote and start population-based research and jointly review and develop protocols to improve outcomes of patients with chronic diseases. Besides that, "JHM and Walgreens will together explore the development of new models for improving care for individuals. This will include the creation of new educational and training programs for Walgreens 70,000 health care service providers" (news.walgreens.com). “By collaborating with Johns Hopkins Medicine, we will access some of the best expertise in health care to develop research, protocols and training programs designed to improve patient outcomes through our nationwide network of accessible community pharmacists, nurse practitioners, physicians and other clinicians," says Kermit Crawford, Walgreens president of Pharmacy, health and wellness”(news.walgreens.com).
Walgreens has added value by implementing competitive cost prices, acquisitions, higher than average rates of dispensing generic drug, promoting 90-day at retail supply of prescriptions where appropriate and by providing health services like wellness centers.
Strength:
• Competitive low cost prices
• Reduce cost through use of generic drugs, 90-day retail prescription and by providing broader health services
Weakness: Bargaining power of buyers and suppliers
Walgreens is a mainly drug retail industry and it does not produce any drugs. Therefore, they have to rely on pharmacy companies that manufactures drugs. Due to competition and other economic factors, Walgreens might face strong bargaining power from suppliers and buyers as well.
Human Resource Management:
"The human resources function can help an enterprise to create more value in several ways. This function ensures that the company has the right mix of skilled people to perform its value creation activities effectively" (Hill & Jones, 2009, p. 84). Kathleen Wilson-Thompson is serving Walgreens as senior vice president and chief human resources officer since last 4 years. "Wilson-Thompson is responsible for all Hr- related strategy at Walgreens. During her tenure, the increasingly multinational company has rolled out a leadership academy, a program to integrate Walgreens culture throughout its rapidly expanding business, and a corporate university to encourage and serve employee learning"(Tucker, 2014). Walgreens have started a Walgreens University that offers more than 200 courses through classrooms, e-learning and self paced activities to employees at all levels and career stages. Walgreens took this initiative in order to develop a talent pool that can foster and diversify the powerful cross section of thoughts and ideas.
Wilson-Thompson states that " Walgreens have worked to become a better, more strategic partner to business by increasing efficiency and effectiveness to be more responsive. Walgreens have standardized a processes and policies to ensure consistency across the company and it has undergone organizational changes that are bringing a new level of clarity to the roles and responsibilities within the HR organization." "Walgreens have recently implemented my HR, a website that provides employees with answers to all of their HR-related questions, including those related to benefits, HR policies, talent management, and guidance for new hires and people managers"(Tucker, 2014). Walgreens efforts are continuing to develop shared services model that ensures all employees receive HR assistance in an efficient and effective way. Walgreens' tagline is "at the corner of happy and healthy", to support it Walgreens have implemented number of innovative practices and services for employees, for example; onsite fitness and health centers, that helps its employees to remain healthy and receive free health testing and immunizations throughout its pharmacies and clinics.
Walgreens has added value by creating e learning and implementing my HR website amongst employees. That gives it necessary feedback of employees and proper training is being delivered through this network. Walgreens have also implemented innovative practices and services like onsite fitness centers to keep its employees remain healthy and fit.
Strengths:
• Walgreens University provides better and convenient employee training through e learning and my HR website
• On site fitness and health centers to keep employees healthy
Weakness: Research data doesn't show any weaknesses related to Walgreens human resources management department.