Albertsons Pharmacy CT Flow-Down Business Lever Current Performance Increase Generic Utilization Improve Prescription Accuracy Estimate 3 sigma Increase Working Capital Increase Use of Preferred Formulary Drugs Reduce Labor Cost Reduce Prescription Filling Cost Improve Customer Satisfaction Reduce Claims Processing Cost Reduce Pharmacist and Technician Turnover Increase Pharmacist Recruitment Success Maximize Technology Utilization

Increase Generic Utilization Unavailability Type of Prescription Dispense as Written Substitution Allowed Store Inventory New Distribution Strategy False Dispense as Written Physician Contacted Warehouse Inventory Pharmacist Ordering Sales Process Business “Y”/Drill Down Cluster Projects Method Metric Generic Utilization Store Inventory Lean/DMAIC % Out of stock Warehouse Inventory Lean/DMAIC % Out of stock New Distribution Lean/DMAIC % Out of stock Pharmacist Ordering Lean/DMAIC % Out of stock DAW DMAIC % Physician contacted % Successful conversion Sales Process DMAIC % Successful conversion False DAW DMAIC % False DAW Current frequency of store inventory delivery is a minimum of once a week and maximum of every 2 weeks. Therefore, if stock becomes depleted the generic will be filled with a brand drug. Also, when new generic drugs are introduced and do not coincide with the delivery schedule special shipments are required. Pharmacist ordering can override the system generated ordering quantity and they may not stock enough of the generic to fulfill the demand. Improvements here can be leveraged to other stores. When prescriptions are written DAW the physician may or may not contacted. However, when contacted the likelihood of conversion to generic increases. When prescriptions are written as substitution allowed the conversion to generic may be impacted by whom is involved in the sales process: pharmacist vs. technician. In addition, there may be times when the prescription is treated as DAW and simply filled.

Decrease Prescription Fulfillment Inaccuracies Incorrect Name Incorrect Physician Incorrect Drug/Strength Incorrect Quantity Incorrect Directions Dispensing The workflow for filling a prescription is: Receive Script (Input) - Data Entry – Filling – Pharmacist Inspection – Dispense (Out Window) It has been estimated that 40% of the errors occur at the Inspection-Dispense stage. The reporting of errors is a self-reported system. In addition, if a pharmacist/technician is responsible for greater than 5 errors they are terminated. Consequently, the reporting of errors is likely to be under-reported and the reliability of the measurement system may be compromised. The impact of the new ARX system on workflow and propensity for errors should be considered. Business “Y”/Drill Down Cluster Projects Method Metric Prescription Fulfillment Inaccuracy DMAIC % Inaccuracies

Increase Working Capital Store Inventory Accounts Receivable Frequency of Delivery New Drug Introduction Pharmacist Ordering Currently frequency of store delivery is a minimum of once a week and maximum of every 2 weeks (warehouse at 46 inventory turns annually). Hence, may be carrying excess inventory to compensate for the batch processing. When new brand or generic drugs are introduced the same of amount of similar brand/generic drug is ordered and stocked regardless of demand. Pharmacist may be ordering more than needed: they have the ability to alter the amount ordered. There is currently no automated system of managing trends of drug utilization. Accounts receivable: uncertain about whether this issue is being handled from Boise. Business “Y”/Drill Down Cluster Projects Method Metric Working Capital Frequency of Delivery Lean Inventory turns New Drug Introduction Lean Inventory turns Pharmacist Ordering Lean/DMAIC Inventory turns

Deviation From Labor Model Reduce Labor Expenses Deviation From Labor Model Inappropriate Use of Float Pool Resources Business “Y”/Drill Down Cluster Projects Method Metric Labor Expenses Labor Model Deviation DMAIC (GB) % and hours deviation Float Pool Resources DMAIC (GB) Overtime hours They have an activity based staffing model that the stores are suppose to follow. However, there is suspicion that the model is not being followed and that excess staffing is occurring. The undistributed float pool entails shifting pharmacists from a store with excess resources to a store with a shortage. It is suspected that this is not occurring and therefore, the store with the shortage incurs overtime and the store with the excess incurs unnecessary expense.