Monday, December 18, 2017
The Lemonade Stand
Imagine you're 10 years old again and it's summer.
Mom and dad open up a lemonade stand and hire you to sell lemonade on the sidewalk out in front of your house. They give you a table from the garage, a couple of chairs, and a pitcher and big spoon from the kitchen. You can make ice in the family freezer and buy lemons, cups, and sugar from the local Goofmart Grocery.
You have everything you need. Mom gives you some butcher paper so you can make a sign that says "Cold Lemonade only $1." Mom and dad instruct your younger brother to help you out. You divide up the jobs and things are working well.
It's hot outside because over the past 100 years the climate has seen a half degree increase in temperature. So people are lining up for a cool refreshing cup of lemonade. You're up to selling 100 cups of lemonade a day now! That's $100 a day in gross revenue. It looks like summer will continue to be hot, so Mom and dad get you another helper... your younger sister.
Between you and your two assistants there's just enough help to keep up with demand... for awhile. Your brother keeps running to the kitchen for more cups and ice, your sister is humming away slicing lemons and mixing just the right blend to make it tasty and satisfying. You're doing the best you can. You're now up to 200 cups a day of lemonade!
Then mom and dad come out to the lemonade stand during the busiest part of your afternoon to have a conference about the situation. That seems to be the best time for them, not you. Thirsty patrons standing in line will have to wait. Mom and dad tell you that your younger sister is being let go; transferred to another department in the household chores. You and your brother are expected to continue the 200 cups a day despite the increase in workload for each of you. In fact, mom and dad say they expect you to increase the profit!
"But we're selling 200 cups of lemonade a day now!" we scream.
"We're no longer considering that as the reason for you to have three people. Your help will be based on profit now."
All this time, though, mom and dad never actually told you what the cost of any of the items are that went into production of your lemonade. You don't know what the cups cost, or the water or ice, or sugar. In fact, the only thing you actually know is that mom and dad have fixed the price of the lemonade at $1 a cup and that THEY purchase all the supplies that go into the production line. Even if you knew the price of the supplies and knew where you could get them cheaper, mom and dad handle it all anyway. But since you don't know what ANY of it costs, how can you possibly do anything about increasing sales?
"Just sell more lemonade," mom and dad say. "If you get profit up then we'll let you have your sister back to help."
As ridiculous as this all sounds, this is EXACTLY what is going on with Goofmart Pharmacy all around the nation. Seriously. I'm not kidding. Our pharmacies have had tech hours cut everywhere, even the crazy busy rural stores. We're told that it doesn't matter what your script count is, the tech hours will only be based on your store's profit.
And here's the true irony... at the store level WE have no control over the costs or sales price! They have eliminated our ability to alter the sales price and they prevent us from ordering from lower priced discounters trying to enter the marketplace. We truly have no control over the profit yet we're told to increase it... by increasing sales. The only way we can increase sales is to process more scripts. But with our tech hours now, we can't keep up with the physical number of scripts we fill now.
And THIS is why I'm the Crazy RxMan.