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Productivity Audit Research Paper

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Updated: Sep 19th, 2019

Introduction

A Productivity audit is a tool that companies and businesses use to analyze an organization’s effectiveness. A company achieves this by determining the status of its productivity. A productivity audit establishes the organization’s current productivity.

Recently, due to increased competition and the dynamic nature of customers’ needs, many companies are adopting the productivity audit as a tool. This helps to increase organization’s productivity, thus giving it a competitive advantage in the market.

Walgreens, the largest drug store chain in United States of America, has its head quarters in Deerfield, Illinois. The company has expanded its business into all fifty states in America and Puerto Rico. It has over eight thousand stores in the USA. Walgreens offers a wide range of products and services.

These include consumer goods, services, and pharmaceutical products. It supplies its products and services through Walgreens health services, Walgreens Health and Walgreens Wellness Divisions. It also has three mail order facilities in its portfolio. Walgreens has positioned most of its stores in prime locations except a few located in malls.

General impression of the audit

A productivity report should be comprehensive and fair to ensure that the organization does not underestimate or exaggerate its productivity status. The management should establish standards and policies for use during the audit to improve consistency and uniformity within the organization.

The Walgreens’ productivity audit report presented in this paper will focus on eight key areas. Policies are the fundamental guidelines that govern the operations of an organization. The audit will evaluate Walgreens policies and, how the policies are contributing to the productivity of the corporation.

Leadership of an organization is a critical component in determining the overall success of the organization. The audit will evaluate how Walgreens’ leadership has affected the productivity of the corporation.

Objectives should be measurable, time bound, attainable and communicated to all stakeholders of the organization. The productivity audit will evaluate the roles, which the objectives of corporation have played in the success of the business. The audit will also establish modifications to put the organization at a competitive advantage over similar corporations in the industry.

Inputs are the resources that an organization incorporates into the production process. They include raw material, capital, and labor. The productivity audit will establish how inputs into Walgreens operations contribute to its productivity. The audit also evaluates how the management can make these inputs more efficient to maximize the productivity of the corporation.

Technology helps an organization to keep up with the market trends. However, technology becomes obsolete unusually fast hence; an organization has to keep in investing in new technologies to compete appropriately in the competitive market.

Investment into technology enhances creation of new products and services, thereby meeting the changing demands of the market. The audit report will establish how technological changes have influenced Walgreens’ productivity and carry out a cost benefit analysis to determine revenue generated from technological investments.

According to Drummond, Ensor, and Ashford (2008, p.95), business managements should revise performance measures of the various inputs on regular basis to avoid redundant divisions in their organizations.

The productivity audit will determine the performance measures, which Walgreens uses to evaluate performance of its employees, technology and the working procedures. This will help the Walgreens to identify areas where the management needs to make more emphatic performance measures to increase productivity of the corporation.

Work procedures are the steps, which an organization follows during production of its products and services. An organization should improve work procedures on a regular basis to enhance the quality of its products and services. The organization should use a learning curve to reduce cost and improve the quality of its products and services.

The audit will evaluate the evolution of working procedures in Walgreens over the years. The results will help Walgreens to establish how the working procedures can increase the organization’s profitability through cost reduction and production of high quality products and services.

Finally, the productivity audit will analyze the productivity status of staff members in the organization. The organization’s staff provides a link between the technology, inputs, and working procedures. Employee’s performance and competency are critical factors in improving the output and quality of services and products, which an organization offers.

The Walgreens productivity audit will establish the competency of employees in the various divisions. The purpose of the audit is to identify training needs of Walgreens’ employees. This shall enable the management to increase the productivity of the employees.

Analysis

Walgreens has a policy that ensures that eight per cent of its supplier’s minority business enterprise and two percent of the suppliers serve diverse markets. This ensures that the organization’s products and services are available at the grassroots. Walgreens has policies that enhance its contribution to the development of the community.

Through its community-based programs for example, Walgreens plays a very crucial role in the development of the community. In addition, the organization has a policy that ensures that any prospective supplier of its products and services adheres to the company’s stipulated standards of performance. Walgreens has non-discriminatory policies of recruiting suppliers to its products and services.

These policies have enabled Walgreens to become the market leader in the pharmaceutical and health products and services’ industry. However, for over the years, the company has not been having a clear policy of prescription of sale of over the counter medicine. As a result, the corporation once faced a lawsuit in which the state accused the corporation for altering doctor’s prescription and selling drugs to patients without a doctor’s written approval.

Since the inception of Walgreens in the year 1901 by its founder Charles R. Walgreen, the corporation’s leadership has steered the corporation into financial prosperity. The leadership has in fact ensured that customers access quality products at affordable prices for over the years.

The corporation’s leadership has been hereditary since its inception. The current management of the organization has maintained the corporate culture and leadership perspective established by its founder. The Management has been majorly concerned with expansion of the corporation by encouraging diversity and supporting minority businesses and women.

The management of Walgreens is actively involved in the control of production of the corporation’s goods and services. This ensures that their costs are relatively low. The expansion strategy by the management has ensured timely availability of the organization’s products and services to their consumers.

Walgreens’ Leadership has had a positive impact on the organization since it has ensured that the corporation maintains leadership in the market. The leadership has established a corporate culture that ensures environmental conservation. The organization also empowers the disabled and minority groups in the community by offering them employment opportunities.

Walgreens’ objectives include fostering growth of the corporation through supply diversity. Walgreen also gives back to the community through its corporate social responsibility program. The corporation recognizes talent by training the disabled and incorporating them among its staff.

Through this way, the corporation empowers the minority and disabled in the society. Walgreens’ objectives have helped foster good public image in the community, its supplies, products, and services. Good corporate social responsibility is critical in increasing a company’s productivity.

hrough empowerment of minority businesses, women and the disabled, Walgreens contributes directly to the development of the community. Walgreen does not stipulate its productivity objective in its mission statement, which perhaps affects the achievement of its goals.

The merchandizing division of the corporation manages productivity of all the inputs of the corporation. The division manages the beauty, personal care product lines, and consumables. It also controls the health and wellness operations. Effective merchandizing plans ensure that the corporation supplies quality products and services to the market at affordable prices.

The corporation’s ability to supply quality and affordable products and services has enhanced its realization of diverse market objective. Diverse markets have lead to increase in the organization’s revenue over the years.

The ease with which consumers can access the organization’s product has lead to an upward trend in the organization’s revenues for over the years. However, to uphold the standards, the corporation undertakes rigorous process of training of all its suppliers and staff to ensure that the organization does not compromise any of its standards at any level.

Performance standards and measures in Walgreens aim at ensuring that customers receive quality and safe products and services. The corporation’s auditing department ensures accountability and efficiency in the accounting and finance department. It indeed reinforces management standards in this department.

The pharmaceutical department, beauty, and health care product lines, have safety regulations or standards that the production units have to adhere to avoid legal suits for production of substandard products. The standards also stipulate product recall procedures.

Recall policies ensure that the organization recalls substandard products that find their way into the market as fast as possible to mitigate the harmful effects they could have on consumers. There exist clear rules and procedures in the Customer service department, which stipulate rerun of goods into the store after purchase, and shipping procedures for the mail order service.

Through employee-customer relation’s policies, the performance standards have ensured that the organization maintains customer satisfaction. There are in fact set standards to guide the staff when interacting with their clients. The standards also ensure that the corporation does not get involved in legal battle with the state due to supply of substandard products, which may be hazardous for consumption by customers.

The innovation department is in charge of ensuring that the corporation uses the latest technology in production, marketing, and distribution of its products and services. Walgreens has adopted innovative expansion strategies that have facilitated the company’s penetration into the class of drivers of the market for over the years.

The company also ensures that production of its beauty health, wellness, and pharmaceutical products uses the latest technology in the market. The company uses on line shop for distribution of its products and services globally, which it then delivers to its customers through shipment.

Technology has helped Walgreens to keep up with market trends especially by offering the most advanced products to its customers. Technology has also helped the organization to maintain its market leadership in the industry.

Because of the size of the organization, Walgreens establishes and monitors its work procedures at the departmental level. The corporation has business units, with their respective heads, and professional, functional units, which manage the overall activities of the corporation.

However, the organization has established general work procedures for each department to ensure consistency in all its supply chains and business units. To ensure that the Walgreens’ management follows the stipulated regulations before the recruitment of staff and suppliers into the corporation, the potential candidates go through rigorous training programs.

The training also ensures that the corporate culture of the organization ingrains into each one of the stakeholders of the corporation. The work procedures enhance uniformity and consistency in all functions of the corporation.

Consistency enhances provision for quality customer care and products thus, increasing the customer base of the corporation (Guy, 1992, p.38). By ensuring that all the suppliers adhere to the stipulated work procedures, the corporation has made it easy to manage the activities of Walgreens’ wide supply chain.

Walgreens recruits most of its staff from disabled persons. The initiative aims at empowering the less fortunate in society. Recruiting such groups of people equips them with skills that enable them to become self-sufficient and self-reliance.

After recruitment, the staff goes through rigorous training programs, which ensure that each employee is competent enough, and is well conversant with the organization’s working procedures. The corporation’s staff trains on regular basis to acquaint them with the new technologies in the market. Consequently, this improves their efficiency, thus increasing the productivity of the corporation.

or instance, Walgreen has training programs for pharmacists to enable them assist patients with chronic diseases. Walgreens recruits staff from around the country to enable it to handle its ever-increasing workload due to the expansion strategies it undertakes.

Recommendations

Walgreen should institute a policy for sale of prescription drugs to customers. Although the business units have complied with the policy, the Walgreens should take the initiative to formulate a policy on the sale of prescription drugs to its supply chain and customers.

This will ensure that all suppliers of the company’s products and services adhere to this stipulation and therefore avoiding legal consequences of noncompliance such as legal suits and negative public image of the corporation.

The organization should institute a program that monitors activities of suppliers to ensure that they adhere to this policy. They should also create awareness among the suppliers for the consequences of noncompliance to this policy.

Walgreens should institute standards that ensure that the organization tests all its products to ensure that they meet the required standards before releasing them into the market. Walgreens has had a couple of product recalls, and although the substandard products have never caused a serious harm to consumers, recall of products brings negative publicity to an organization. This consequently affects the demand and hence the market of the company’s products.

Management of Walgreens should implement a program that identifies productivity variance in its wide supply chain and business units. The program will ensure that there is uniformity in productivity objectives and strategies adopted in the various units to meet organizational goals.

The programs should work in collaboration with a system for reporting any discrepancies in the productivity objectives. When an organization, has measures, which detect discrepancies in productivity objectives, it can avoid costs for correcting future problems in a project.

Management of Walgreens should take the initiative to adopt productivity audits as a strategy in order to evaluate its work procedures and therefore avoid production of substandard products. The management should encourage collaboration between the production team and supply chains.

The collaboration between supply chains and production teams will ensure minimum or nonexistent sale of defective goods to its consumers. Walgreens should train its suppliers to check the products for defects before sale. This will ensure that the products undergo two check levels before sale.

Double-checking of products reduces the chances/probability of selling substandard or defective products to customers. This will improve the customer’s confidence to the products of the corporation.

Walgreen is a large corporation with over eight thousand stores in the United States. The management of the corporation should adopt corporate structure that is flexible to allow timely and effective communication of the productivity audit objectives to all the stakeholders.

Ensuring that all suppliers and business units are aware of the productivity objectives will minimize objective variances. Walgreens should formulate a productivity plan and make sure that all the supply chains understand their role in accomplishing the objectives of the productivity plan.

The productivity plan will enable the top management to monitor and evaluate the performance of the various units.

Value Facet Analysis

Organization’s stakeholders are critical in helping the corporation to achieve its productivity objectives. Value driven management focuses on values of the organization’s stakeholders. The actions of the stakeholders determine the actions of the organizations (Prokopenko, 1987, p.76).

Value facet analysis includes analysis of the organization’s external culture, organizational culture, employees, suppliers, third party, competitors, and the stockholders’ values. Walgreens needs to adopt product measures that will ensure that products, which get to customers, are free of defects that can be hazardous on consumption thus bringing negative public image to the corporation.

Walgreens also needs to formulate a policy that will govern the sale of prescription drugs across its supply chain and its business units. To implement these recommendations, Walgreens needs to carry out a value facet analysis to determine how to make its productivity objectives match with the values of its stakeholders.

The recommendations’ implementation should be immediate to avoid lawsuit that could arise from defective products in the future.

External Cultures of the organization evolves on the basis that there exist values that are common to organizations in the same industry. The move towards globalization has made it necessary to formulate regulations that govern operations of companies in the world.

These values help regulatory bodies to formulate universal regulations for organizations in the common industry. Although the regulations may vary in their wording, in different countries, they promote the same values.

Walgreens needs to evaluate the external culture before formulating a policy on sale of prescription drugs in its supply chain. This will help the corporation to formulate a policy that many world cultures accept thus leaving no loopholes that may cause legal suits in future.

The organization’s culture defines the way of doing things and the acceptable values within that organization. Walgreens has a culture that contributes to the community through its corporate social responsibility programs. Through this culture, it empowers the disabled and minority groups in the community.

To develop standards for evaluating its products before sale, Walgreens needs to engrain a culture, which will encourage testing and evaluation of its products. It also needs to engrain a culture that will promote adherence to the policy on sale of prescription drugs among its supply chain.

Employee’s values should align with the organization’s productivity objectives. When employee’s values match the organization objectives, this will make it easy for the organization to meet its objectives.

Walgreens should use the productivity audit on staff to determine their values. It should then determine how those values could align with the organization’s productivity objectives to improve the quality of its products to avoid product recalls in future.

Supplier’s values should be in unison with the organizational values and objectives. Walgreens’ merchandizing department should carry out an analysis on the suppliers of the organization’s product.

This will help Walgreen to re-evaluate its suppliers’ list and only outsource products from suppliers with values similar to its values. The suppliers should help Walgreens to uphold its product standards to avoid product recalls in future.

Customer’s values are critical factors when deciding on product factors and overall product success. The organization should promote customer values through the provision of quality products that will meet their wants. Walgreens should evaluate its customer’s values.

The re-evaluation will help Walgreens to formulate new standards and policies governing its production and merchandizing operations. The customer’s values will also help in the implementation of the policy on sale of prescription in its supply chain.

Third party include the government, regulatory bodies and consumers watch groups. Third party values should match the organization’s values to avoid lawsuits and negative publicity on the company.

Walgreens should ensure that it adheres to the government’s regulations on the sale of over the counter prescription drugs. The corporation should also ensure that it meets the product standards stipulated by regulatory bodies through use of standard procedures in its production and merchandizing units.

An organization should evaluate its competitors to determine how it will gain competitive advantage through the establishment of productivity objectives that will surpass those of its competitors. Walgreens should implement work procedures that will improve the standards of its products thus avoid product recalls in future.

The owners of an organization play a crucial role in influencing the operations of the organization. The owner’s values determine the organization’s productivity objectives. When the organization’s operations are running smoothly, there is promotion of the owner’s values.

Walgreens should incorporate its owner’s values through adoption of new standards that will enhance product quality to avoid product recalls in the future. Walgreen should formulate policies that will ensure that the sale of prescription drugs adheres to the stipulated standards.

Conclusion

Walgreen is the largest retail distributor of health care, consumables, and pharmaceutical products in the United States of America. The organization has a culture that helps the less fortunate in the society by empowering them with the skills and opportunities necessary to become self-sufficient.

A productivity audit on Walgreens shows that the organization has several strengths such as a wide supply chain that has helped it to penetrate over fifty states (markets), in the United States of America.

The organization has however some weaknesses such as product recalls due to sale of substandard goods and lawsuits arising from the sale of drugs without a prescription from a qualified physician. Walgreens can turn these weaknesses into strengths and opportunities through adoption of a culture that ensures product quality and adherence to government’s regulations on the sale of over the counter medicine.

The corporation should implement these policies after the evaluation of value facets to enable Walgreens to align its objectives with those of its stakeholders. Value facets analysis looks at the external cultures of an organization.

Such cultures include the organization’s culture, employee’s values, supplier values, customer values, third party values, competitor’s values, and owner’s values. The value facets analysis in this case provided the operative period within which the recommendations are implementable. The implementations of the productivity audit recommendations will increase Walgreens’ productivity.

References

Drummond, G., Ensor, J., & Ashford, R. (2008). Strategic marketing: Planning and Control. Oxford: Elsevier Ltd.

Guy, M. E. (1992). Ethical decision making in everyday work situations. West Port, CT: Green Word Publishing

Prokopenko, J. (1987). Productivity management: a practical handbook. Geneva: International Labor Organization.

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