How Walgreens is preparing for the future of fulfillment

NRF Supply Chain 360: Chief Supply Chain Officer Roxanne Flanagan on innovative delivery strategies

The NRF Supply Chain 360 conference and expo was held in Cleveland, June 20-21, 2022. It explored the modes and methods needed to build a stronger, more sustainable supply chain and ensure resiliency in challenging times. Learn more about the conference here.

Retailers will continue to face a number of fulfillment challenges in the next few years, including recovery from a global pandemic, continuing supply chain disruptions, labor constraints and inflation.

But Walgreens has a plan: The pharmacy chain with more than 9,000 locations is embracing innovation and investing in all the fulfillment options at its disposal — including drones, micro-fulfillment and partnerships with same-day and next-day delivery companies.

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“Even though we are 120 years old, we’re not going to be complacent,” the company’s chief supply chain officer Roxanne Flanagan said during a fireside chat at NRF Supply Chain 360. “We are very innovative, always trying new things and always thinking about the future.”

Walgreens had already transitioned to an omnichannel business model before the pandemic, including curbside pickup and same-day delivery. But zeroing in on the next fulfillment models is still up in the air, according to Flanagan.

“There are so many more variables,” she said. “The labor force is struggling. Consumers are spending money, but with gas prices where they are, what are they going to stop spending money on? … I don’t think any of us know exactly where the consumer is going to end, but it’s more complicated than just coming out of a pandemic. There’s just a tremendous amount of uncertainty and volatility in the world today. From a Walgreens standpoint, we’re just trying to figure out the big bets we should place.”

Those big bets include partnerships with delivery apps including Postmates, Door Dash and Instacart. “We have a culture of partnership versus thinking we have to do everything ourselves,” Flanagan said.

Another partnership is with Google’s Wing for on-demand drone delivery — first in Christiansburg, Va., and more recently in the Dallas-Fort Worth market, where Walgreens will deliver health and wellness products to as many as 100,000 consumers. “I don’t know what the future is going to hold for Walgreens or for any retailer, as far as drones go. Everyone is dabbling, everyone is curious and wants to see where we can take it, and we’re no different,” Flanagan said. “I think we’re all trying to experiment. We want to be innovative and test all the new options that are out there.”

2022 Event recap

Did you miss NRF Supply Chain 360 this year? Catch up on show highlights at the 2022 event recap.

Walgreens does have a couple of advantages: 80 percent of the U.S. population is located within five miles of a Walgreens location. And with 9,000 stores, it allows the retailer to dilute the volume, “so the burden on these stores is not that overwhelming,” Flanagan said.

To further ease the strain on stores and, in particular, their pharmacies, Walgreens has shifted many of its prescription fulfillment operations to four off-site micro-fulfillment centers. “Built with flexibility in mind,” Flanagan said, these micro-fulfillment centers use robotics and automation to fill prescriptions and ship them back to the originating store — all invisible to the consumer and freeing up pharmacists and technicians to focus on more customer-centric health care services.

Flanagan estimates that 60 percent of the retailer’s prescriptions are filled through automation. The goal, she said, is to increase the number of micro-fulfillment centers to 22 and add more retail products in the future. “We were always about convenience with our drive-thru years ago,” she said. “Now we want to be about convenience with the consumer of the future.”

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