In 2024, a Walgreens store located in Brooklyn, New York, is intensifying its focus on automation as struggling drugstore chains strive to recover. The company is enhancing its utilization of micro-fulfillment centers, which employ robots to fill numerous prescriptions for patients managing conditions like diabetes and high blood pressure. This automation effort by Walgreens aims to streamline pharmacy operations by reducing routine tasks and cutting inventory waste. By automating prescription fills, the company intends to free up time for pharmacy staff to engage more directly with patients and provide additional clinical services such as vaccinations and testing.
Initially introduced in 2021, Walgreens briefly halted the expansion of its robot-powered centers in 2023 to gather feedback and enhance performance at existing sites. Following over a year of improvements, including new internal tools, the company is now prepared to extend the reach of this technology once again. Walgreens plans to have its 11 micro-fulfillment centers serving over 5,000 stores by the end of the year, a significant increase from the 4,800 stores served in February and 4,300 in October 2023. On average, the centers handled 40% of the prescription volume at supported pharmacies as of February, totaling around 16 million prescriptions filled each month across various locations.
This renewed automation initiative aligns with Walgreens’ transition to becoming a private company in a projected $10 billion deal with Sycamore Partners set to finalize by year-end. The move signals the end of a tumultuous period for Walgreens as a public entity, characterized by challenges such as the pandemic fallout, dwindling pharmacy reimbursement rates, reduced consumer spending, and fierce competition from rivals like CVS Health and Amazon. To bolster profits, both Walgreens and CVS have shifted focus from expansion to consolidation, closing numerous underperforming locations while adapting to changing consumer preferences for online shopping and home delivery.
The automation drive also responds to growing concerns among pharmacy staff, highlighted by nationwide walkouts in 2023 due to burnout and inadequate staffing levels, prompting chains to reassess their operational strategies. According to Walgreens, the investment in robotic pharmacy fills has yielded approximately $500 million in savings by optimizing inventory levels and increasing operational efficiency. Stores with micro-fulfillment centers have seen a 40% uptick in vaccine administrations compared to those without this technology.
Rick Gates, Walgreens’ chief pharmacy officer, emphasized that the micro-fulfillment centers enhance operational flexibility, reduce costs, elevate patient care, and expedite therapy delivery. By leveraging centralized support through these facilities, Walgreens gains a competitive edge over some independent pharmacies and competitors lacking similar infrastructure. While other retailers like Walmart, Albertsons, and Kroger have explored or implemented their own micro-fulfillment centers for dispensing groceries and prescriptions, Walgreens aims to leverage this technology to enhance operational excellence and customer service.
There are risks associated with a heavy reliance on advanced robotics in retail, as errors in their operation can lead to disruptions. However, these facilities are increasingly becoming a permanent feature in the retail industry due to the cost savings they provide, as well as their ability to streamline workflows, ease the burden on employees, and expedite the delivery of goods to customers.
Walgreens micro-fulfillment process involves the automated filling of prescriptions using robotics, conveyor belts, barcode scanners, and other tools. When a prescription is received at a Walgreens retail pharmacy, the system determines whether it should be filled at that location or directed to a nearby micro-fulfillment center. Maintenance medications and refills that do not require immediate pickup are typically sent to the micro-fulfillment center.
Within each facility, a highly automated system is utilized to fill prescriptions, with a team of pharmacists, pharmacy technicians, and other professionals providing support. Instead of manually filling prescriptions at store locations, the process involves pill bottles moving through an automated assembly line. Pharmacy technicians fill medication canisters for robot pods to dispense, while pharmacists verify the accuracy of these canisters. Robotic arms dispense specific medications into labeled prescription vials, with certain prescriptions filled at separate manual stations.
Various security and safety measures are in place throughout the process, including automated locking of robot pods to prevent errors. Proper training of workers is essential to ensure accuracy and patient safety.
Walgreens has made improvements to the micro-fulfillment process based on feedback from stores and patients. This includes establishing new roles at the sites and transitioning to smaller prescription vials to increase efficiency and reduce costs. The automated locations have helped reduce overall prescription fulfillment costs and increase prescription volume significantly.
Walgreens aims to continue enhancing its internal tools and processes to track work across all centers and provide real-time data on patient prescriptions.
The micro-fulfillment process allows for specific tracking of prescriptions, enabling workers to pinpoint their location when patients inquire. While the company has made progress, there is still more to do with micro-fulfillment centers. One potential improvement Gates mentioned is the direct shipment of prescriptions to patients’ homes, rather than relying solely on retail stores. He emphasized that this is just the beginning and further enhancements may be necessary. Reports suggest that certain facilities may require additional improvements, as some customers have experienced issues such as partial fills or delays in receiving their medication.
At retail store pharmacies, the adoption of automated facilities has led to significant changes. For instance, Brian Gange from Arizona noted a significant reduction in the daily prescription queue since switching to micro-fulfillment, freeing up time for more personalized customer interactions. Gange highlighted the importance of being able to engage with customers directly, providing services like answering questions, giving advice, conducting health tests, and administering vaccines. This personalized attention can have a profound impact on patients, as Gange recalled a situation where a quick blood pressure check led to potentially life-saving action. He emphasized the importance of having the time and tools, such as micro-fulfillment and centralized services, to provide such care efficiently. Ultimately, these advancements allow pharmacies to offer better care and support to their patients.
