Walgreens Looks to Automation as a Pathway to Recovery

In the ever-evolving landscape of retail pharmacy, struggling drugstore chains are grappling with mounting challenges. Among them, Walgreens is making a daring move to regain its footing by ramping up automation at its micro-fulfillment centers. This strategic expansion aims to streamline operations and enhance patient care in an industry grappling with fierce competition and changing consumer preferences.

The Drive for Automation

Walgreens is expanding the reach of its micro-fulfillment centers, which utilize robotic technology to efficiently fill prescriptions for patients managing chronic health conditions such as diabetes and high blood pressure. By automating routine processes, Walgreens is not only aiming to reduce medication inventory waste but also to free up pharmacy staff from mundane tasks. Instead, employees can focus on delivering clinical services like vaccinations and patient consultations.

Originally launching these centers in 2021, Walgreens slowed their expansion in 2023 to optimize performance based on feedback from existing sites. After enhancing their systems and logistics, Walgreens is poised to extend its automation efforts to over 5,000 retail stores by the end of this year, scaling from 4,300 in October 2023. According to the company, these centers currently handle approximately 40% of the prescription volume at supported pharmacies, which translates to an impressive 16 million prescriptions every month.

Surging Ahead Amidst Change

This renewed push for automation coincides with Walgreens’ plan to go private in a roughly $10 billion deal with Sycamore Partners, which is expected to close by year-end. This shift marks a turbulent chapter for Walgreens, particularly as it navigates decreasing pharmacy reimbursement rates, reduced consumer spending, and stiff competition from CVS Health and Amazon.

In response to these challenges, Walgreens has joined several competitors in closing underperforming locations while investing heavily in technology. Employees across the pharmacy sector have raised concerns about burnout and chronic understaffing, propelling giants like Walgreens to reassess their operational models.

Patient-Centric Innovations

Kayla Heffington, Walgreens’ vice president of pharmacy operating models, reported that the automation process has already saved the company around $500 million by improving efficiency and cutting excess inventory. In fact, stores using automated systems have seen a 40% increase in vaccine administration when compared to those that do not.

Rick Gates, Walgreens’ chief pharmacy officer, emphasized the advantages of their automated centers, stating, “Right now, they’re the backbone to really help us offset some of the workload in our stores. It gives us a lot more flexibility to bring down costs and increase care.”

Navigation Through Micro-Fulfillment

Inside a Walgreens micro-fulfillment center, the process of filling prescriptions is streamlined via advanced technology. When a pharmacy receives a prescription, the system makes a decision on whether to fill it on-site or route it to a nearby center based on factors such as medication type and urgency.

Each facility utilizes a high level of automation through robotics and conveyor systems. Pharmacy technicians manage medication canisters to ensure accuracy while robotic arms take over the dispensing process. Essential safety measures ensure that even automated workflows prioritize patient safety, with checks against incorrect dispensations.

In line with their ongoing commitment to improve, Walgreens is also transitioning to smaller prescription vials. This change will allow the centers to process more prescriptions per delivery, thereby reducing shipping costs and boosting overall efficiency.

Staff Experiences Improved Workflow

For retail pharmacy staff like Brian Gange in Arizona, the shift to automation has been a significant relief. Gange noted, “We don’t have to spend as much time on just those repetitive fulfillment tasks. It really takes a huge weight off our shoulders.”

This newfound efficiency allows pharmacists to engage more face-to-face with patients, providing critical health checks and personalized advice that can directly impact patient outcomes. Gange recalled a patient he assisted with a quick blood pressure check, ultimately directing them to seek urgent care—a simple interaction that could have profound effects on someone’s health.

Conclusion: Looking to the Future

As Walgreens continues to invest in automation, their micro-fulfillment centers illustrate a transformative approach to pharmacy operations. By bridging the gap between patient needs and advanced technology, Walgreens aims to position itself as a competitive presence in an increasingly digital retail landscape.

While challenges remain—such as ensuring accuracy during fulfillment and maintaining customer satisfaction—Walgreens is poised to navigate through them by focusing on patient care and operational excellence.

For more insight into how pharmacies are evolving in the age of automation, consider reading about pharmacy benefits, the challenges faced by the healthcare industry, and the strategies stores are employing to combat retail competition.