Pharmacy Training Programs

ADVANCED PHARMACY INVENTORY MANAGEMENT

Workbook

…Your Prescription for Success

REVISED: 08/2009 Course #250520

 CVS/pharmacy – Advanced Pharmacy Inventory Management – Workbook

Table of Contents

Introduction.................................................................................................................... 3
Overview .............................................................................................................................. 3
Training Method: Workbook ................................................................................................. 3
Estimated Time to Complete................................................................................................ 3
Icons ............................................................................................................................... 4
Section I: Reviewing Inventory Management Activities ............................................ 5
Warehouse Returns ............................................................................................................. 7
Non-Saleable Returns.......................................................................................................... 7
Non-Saleable Returns.......................................................................................................... 8
Performing Waiting Bin Maintenance................................................................................... 9
Waiting Bin Reports.......................................................................................................... 9
Section II: Inventory Challenges ............................................................................... 11
Impact of Inventory Challenges ...................................................................................... 11
Customers ...................................................................................................................... 11
Pharmacy Team ............................................................................................................. 11
CVS’ Financial Performance .......................................................................................... 11
Section III: Key Tools & Resources .......................................................................... 13
Your Tool Kit ...................................................................................................................... 13
Section IV: Inventory Scenarios................................................................................ 14
Activity Answer Key .................................................................................................... 18
Activity #1- Managing Inventory- Activities......................................................................... 18

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Introduction
Overview
This training should be completed after you have completed the Inventory Management
Course (202070).

Completing these activities will allow you to practice the skills you learned about in the
Inventory Management Course and also consider how to identify and address Inventory
Management issues.

As you complete the workbook, note any questions or concerns you may have, so you can
discuss with a Pharmacist, Lead Technician, Inventory Specialist, or your Trainer.

Training Method: Workbook

This course is being delivered in a self-paced workbook format. It is designed for you
to complete on your own at your own pace. It is recommended that you complete the
course while on the job so you may use references available. It will also serve as a
reference in the future. It is important for you to read each section and complete the
activities. Successful completion of this course will provide you with the knowledge
that will guide you in your position in our pharmacy.

Estimated Time to Complete

2 hours

Once you have finished reading the workbook and you are comfortable with the
material, you must contact your Trainer or Supervisor to call the IVR to log
completion of training.

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Icons
The following icons appear throughout the training guides to reinforce Customer Service,
Quality and Accuracy, Timeliness, and In Stock points. Refer to these icons when they
appear.

Customer Service:
! Any activity, service or behavior that makes the customer feel that
CVS cares about him/her. This includes a friendly greeting,
assistance with finding products, answering certain questions,
protecting customer confidentiality, and a thank you

Quality and Accuracy:

! Zero incidents in the entire dispensing process (from Drop-Off to
Pick-Up)
! Correct answers to questions
! Conveying realistic wait times
! Delivering the right product to the right patient at the right time

Timeliness:
! Service provided no later than the time promised and preferably
sooner
! Prioritizing prescriptions to meet the needs of all customers

In Stock:
! Our customers’ medications are ready when promised
! The customer is contacted if the requested prescription cannot be
completed as ordered
! The in stock position of the product is verified at Prescription Drop-Off
! Our inventory consists of the right quantity of the right products at
the right time

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Section I: Reviewing Inventory Management Activities

CVS’ goal is to manage the inventory process effectively to ensure that our pharmacies will
be able to provide our customers the items that they require.

The objective is to be in stock, but not overstocked.

! Too much inventory causes needless interest charges, which decreases store profitability
! Not enough inventory causes out-of-stocks resulting in dissatisfied customers and
potentially lost sales

The ability to manage our inventory has a direct impact on our ability to be a profitable
company.

In the Inventory Management class, you learned about the key activities that must be
performed to ensure you are able to balance your inventory with your customers’ needs.

In this first section, you’ll have a chance to practice each of these activities.

Activity 1- Managing Inventory- Activities

Do you remember the activities that were introduced in the Inventory Management course?

Put your knowledge to the test, by unscrambling each of the clue words on the following
page.

Once you are done, identify the hidden phrase.

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Answers to this activity may be found at the end of this guide

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Warehouse Returns
Since prescribing habits and customer needs change, saleable product exceeding Target
Inventory Levels (i.e., overstocked items) may be returned to the CVS Warehouse for re-
distribution.

! Returnable items: Current CVS Warehouse items (including repacks, generics and
fast movers), non-controlled, full unopened bottles, Warehouse syringes, in-date
merchandise with an expiration date greater than 9 months
! Non-returnable items: Outside Vendor items, controls, partial bottles, chemicals,
refrigerator/perishables, recalls, broken bottles, and open syringes

CVS provides a No Sales Movement (Monthly Rx Warehouse No Activity / Potential

Overstock) Report on the 15th of each month to identify pharmacy products that have no
dispensings in the last 20 weeks. The items that appear on this report should be reviewed
and considered for Warehouse Returns.

Refer to the Pharmacy Returns/Transfers site on RxNet (under Inventory Management)

for detailed procedures.

Activity #2 – Warehouse Returns

As part of this training, you should complete a minimum of one return to the CVS Warehouse.
Leverage the following checklist to track your return activity.
" Steps
Obtain the No Sales Movement (Monthly Rx Warehouse No
Activity / Potential Overstock) Report
Identify and pull product for return
Access the Pharmacy Returns/Transfer site on RxNet to view
detailed returns procedures
Prepare items for return and complete required paperwork

Key Considerations:
How many items did you process for return?

What are some best practices that should be applied to this activity?

What is the value of performing this activity on a consistent basis?

Discuss any questions/concerns regarding this activity with another team member or your Trainer.

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Non-Saleable Returns
Non-saleable Warehouse and OV prescription items are returned monthly to Capital Returns,
Inc. (CRI). These items must be processed and shipped within the 2 x 2 Returns Window to
receive proper credit.

Refer to the Pharmacy Returns/Transfers site on RxNet (under Inventory Management)

for detailed procedures.

Activity #3 – Non-Saleable Returns

As part of this training, you should complete a minimum of one non-saleable return.
Leverage the following checklist to track your return activity.

" Steps/Notes
Identify the 5-month window for the 2 x 2 Return

Identify and pull product for return

Access the Pharmacy Returns/Transfer site on RxNet to view

detailed returns procedures

Prepare items for return and complete required paperwork

Key Considerations:
How many items did you process for return?

What are some best practices that should be applied to this activity?

What is the value of performing this activity on a consistent basis?

Discuss any questions/concerns regarding this activity with another team member or your Trainer.

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Performing Waiting Bin Maintenance

In addition to maintaining the inventory on the pharmacy shelves, it is important that you also
maintain your Waiting Bin.

The “Waiting Bin” is a financial account that measures the pending sale of prescriptions. It
includes only the amount that will be charged at the register (Cash price or copay $ amount
for Third Party prescriptions). This dollar amount is added to the Waiting Bin when the label is
printed.

Waiting Bin Loss occurs when, for any reason, we do not collect the amount that is stated on
the prescription label and/or we do not manage inventory for all prescriptions in the pharmacy

Waiting Bin Reports

To avoid Waiting Bin Loss, use the following 3 reports to help manage your Waiting Bin:

1. Waiting Bin Report

This report prints daily from the Pharmacy Computer System and identifies prescriptions
that have been filled but not yet picked up.

Refer to this report for Day 14 Returns to Stock.

NOTE: Prescriptions older than 28 days will not appear on the Waiting Bin Report.

2. Cash Loss Report

This report prints weekly and includes all prescriptions that do not have POS activity, have
not been canceled, and are older than 28 days. This report should be used as a tool to
locate prescriptions that are over 28 days old.

! Check the Waiting Bin for any prescriptions that are listed
! Check “Alternative” locations for these prescriptions
3. POS Discrepancy Report
This report prints daily and includes prescriptions that were rung up at a different price
than what was recorded in the Pharmacy Computer System.

For each discrepancy, determine if the report indicates that the transaction was
(M) Modified, (P) Post Voided, (L) Line Voided, or (R) Refunded at the Register.

NOTE: ALL “Price Modifies” are considered Waiting Bin LOSS.

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Activity #4 – Waiting Bin

As part of this training, you should complete each of the following Waiting Bin Maintenance
activities.

Leverage the reports noted on the previous page to identify target prescriptions. Record any
questions/concerns in the allocated space, so you may discuss with your Trainer.
" Date # of Activity/ Notes
scripts
Day 14 - Returns To Stock

Monthly Waiting Bin Review

Monthly Waiting Bin Inventory

Key Considerations:
What is the benefit of The Auto Order Ready Call Program (Day 1
ReadyFill, Day 3 and Day 7 reminder calls)? How do these automatic calls
impact your Waiting Bin? What best practices should be implemented to
ensure that the program is most effective?

How long did it take you to complete the Return to Stock procedures? What
is the value of performing this activity on a consistent basis?

How long did it take you to complete the Monthly Waiting Bin Inventory?
What is the value of performing this activity on a consistent basis?

Discuss any questions/concerns regarding this activity with another team member or your Trainer.

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Section II: Inventory Challenges

Our pharmacies face many different types of inventory challenges. Some of these include:

! Out of Stocks
! Costly Outside Vendor purchase of Warehouse items
! Improperly managed inventory
Impact of Inventory Challenges
When a pharmacy faces inventory challenges, it impacts:

Customers
When you cannot fill a prescription for the full quantity due to improper inventory, the
impact to your customer is:
! Inconvenience
! Potential confusion
! Increased risk of non-compliance (patient does not complete course of therapy)
Improper inventory negatively impacts our customers and may result in lost sales.

Pharmacy Team
Inventory issues impact your Pharmacy Team in the following ways:
! Increased customer complaints
! Additional work
! Increased stress level
! Inefficient work environment
Inventory issues negatively impact the Pharmacy Staff’s morale, which decreases their
ability to effectively provide good service to customers.

CVS’ Financial Performance

Inventory is one of the largest costs that CVS incurs.

Issues affecting inventory impact CVS’ financial performance in the following ways:
! Cost to CVS for inventory levels over budget
! Cost of borrowing money to purchase inventory
(6% - the percent changes each year depending on inflation)

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Consider the impact of each store having $6,000 of extra inventory.

Number of Extra $$ Interest

Stores Inventory Expense$$
Your Store 1 $6,000 $360
The Company 6,222 $37,332,000 $2,239,920

Additionally, you must consider the impact of ordering Warehoused items from the OV on the
store profit margin.

Profit Margin is the difference between the cost of an item and the selling price.

When we purchase a Warehoused item from the OV, the cost is approximately 4% higher
than if we purchased it from the Warehouse.

Consider the impact of ordering Warehoused items through the OV.

Single-Store Impact Chain-wide Impact (6,222 stores)

OV Purchase / week $3,000 $18,666,000
OV Purchase / year $156,000 $970,632,000
Loss of 4% Gross $6,240 $38,825,280
margin/year

A 25% reduction in Warehoused OV purchases would result in:

Your Store Impact Chain-wide Impact (6,222 stores)

OV Purchase / week $2,250 $13,999,500
OV Purchase / year $117,000 $727,974,000
Savings of 4% Gross $4,680 $29,118,960
margin/year

! Reduction in Warehoused OV purchases for your store for one year = $39,000
! Reduction in Warehoused OV purchases for the entire chain for
one year = $242.6 million

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Section III: Key Tools & Resources

Your Tool Kit

It is important that you understand the tools that you have to help you not only maintain your
inventory, but also to diagnosis and address Inventory issues.

Your basic inventory tool kit includes:

- The Inventory Management On-Line Reference Guide includes detailed
information about all aspects of inventory management (including activity
calendars)
- The Pharmacy Returns and Transfers site provides detailed information
pertaining to Returns, Recalls, and Transfers
- The Waiting Bin site provides detailed information pertaining to Waiting Bin
Maintenance
- The RF Unit provides detailed inventory information on each item via the Item
Verify screen
- The various reports provide critical information to help diagnosis, and more
importantly avoid, Inventory issues:
! AIMRx Warehouse Order Report
! AIMRx Out of Stock Report
! AIMRX Suggested OV Report
! Waiting Bin Report
! Cash Loss Report
! POS Discrepancy Report

You have the information available to maintain and fix inventory issues- just leverage your
tool kit!

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Section IV: Inventory Scenarios

Consider the following Inventory Management Scenarios. What tools would you use to
diagnosis the root cause of the issue? What steps would you take to resolve the issue?

Scenario 1:
Michael has noticed an increase in out of stocks over the past month. What are some steps
he can take to improve the in-stock position in the pharmacy?

Scenario 2:
The staff at store 1234 is struggling to maintain accurate BOH information. What are the best
practices that should be implemented to ensure that the BOH information is accurate?

Scenario 3:
Carmen is trying to determine why the TIL is so high for Albuterol Inhalers. What should she
look at to get more information?

Scenario 4:
Josie wants to know why AIMRx did not order a given item. What do you recommend that
she look at to get more information?

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Scenario 1:
Michael has noticed an increase in out of stocks over the past month. What are some steps
he can take to improve the in-stock position in the pharmacy?

! Execute all inventory management baseline practices and AIMRx Activities

properly and consistently
! Maintain your BOH accuracy
! Review AIMRx Warehouse Order Reports for accuracy – make changes to BOH’s
and BOO’s as necessary
! Review the AIMRX Suggested OV Report, correct BOH’s, review suggested order
quantities and place orders daily with the outside vendor
! Review the partial queue to determine if any items in addition to the items on the
Suggested Order Report need to be ordered from the OV
! Exercise good judgment when making positive and negative adjustments to your
AIMRx orders
! Check to make sure that all regularly carried items have a shelf label in place (so
that AIMRx activities may be performed on the item as appropriate)
! Ensure that both Warehouse and Outside Vendor items (including items in the
refrigerator and safe) are scanned during the weekly OOS scan process
! Make sure that correct NDCs are used during the dispensing process
! Perform Store Initiated Cycle Counts on items with unusually high or low inventory
quantities to verify BOH accuracy on the Day Before Order (Poll) Day so that
discrepancies can be connected prior to the order generated by AIMRx

Scenario 2:
The staff at store 1234 is struggling to maintain accurate BOH information. What are the best
practices that should be implemented to ensure that the BOH information is accurate?

! Select the correct NDC when filling prescriptions

! Complete Cycle Counts every day, first thing in the morning prior to putting away
any deliveries
! Process items for return as they are pulled from the shelf (e.g., Damages, Product
Withdrawals, etc.) to properly update the BOH in a timely manner
! Cycle Count OV items being returned to update the Balance On Hand (BOH)

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Scenario 3:
Carmen is trying to determine why the TIL is so high for Albuterol Inhalers. What steps
should she take to get more information?

! Review the number of units dispensed in the last 5 weeks on the RF Unit to
determine if the TIL makes sense given the item’s fill rate. Remember, dispensing
for non-preferred drugs roll to the preferred drug (you can view dispensing history for
non-preferred drugs in the Pharmacy Computer System)
! Look at the AIMRx Warehouse Order Detail report to see if TIL is increased this
week due to:
o Store specific Seasonal lifts
o Central lifts
o Deferred Demand

Scenario 4:
Josie wants to know why AIMRx did not order a given item. What do you recommend that
she look at to get more information?

! Always start by checking the Total BOH on the RF Unit. If the BOH is not correct,
perform a Cycle Count to correct it. If it is Poll day, the system will reforecast the order
quantity for the item and order up to TIL based on the new BOH
! Check to see if the item is a non-preferred drug linked to a preferred drug. Scan the
shelf label and the system will display the linked item information. Remember that all
dispensing and BOH information is rolled into the preferred item
! Check the Delivery Source field on the RF Unit to determine how the item is being
replenished (i.e., CVS Warehouse or OV). Dispensing of a non-preferred NDC will be
replenished under the preferred NDC
! Check to see if the item was dispensed that day
o AIMRx CVS Warehouse orders are generated between 2am and 3am on Poll
Day. AIMRx will not automatically increase order quantities for items dispensed
after that time
o The AIMRx Suggested Order is generated at 4pm Monday- Friday & 3pm on
Sunday. Any item that is dispensed after that time will not appear on the
suggested order

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Summary
As a key member of the Pharmacy Team, you must understand the fundamentals of
inventory and also be able to address Inventory issues that may arise.

In this training, you learned about the tools that you should leverage to help diagnosis and
address inventory issues.

Completion of Training
Congratulations! You have completed the instruction portion of the Advanced Pharmacy
Inventory course. In order to receive credit for completing this module, you must contact your
Trainer or Supervisor.

Please provide the following information when speaking with or leaving a message for your
Trainer:

! Full Name
! Store Number
! Employee ID Number
! Name of this Module: Advanced Pharmacy Inventory Management (course code
250520)
! Contact Phone Number:
Once you have had a chance to review the content and address any questions/concerns that
you may have, your Trainer will call in completion of this module (course code 250520) into
the IVR system and your transcript will be updated accordingly.

Trainer Information:
Name: ____________________
Extension: ____________________

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Activity Answer Key

Activity #1- Managing Inventory- Activities

1. New Items Bulletin
2. Discontinued Items Bulletin
3. Overstock Returns
4. Recalls
5. Transfers
6. Waiting Bin Maintenance
7. Return To Stock
8. Waiting Bin Inventory
9. Mandatory Elements [you may want to delete this since it’s also the hidden phrase]
10. CVS Warehouse
11. Outside Vendor
12. Drop Shipments
13. Cycle Counts
14. Out Of Stock Scans

Hidden Phrase: Mandatory Elements

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