Cardinal Health 2009 Annual Report Download - page 8

Additionally, the work being done in our Presource® kitting
business has improved our response time to customers and the
pro tability of this business, which resulted in positive earnings
growth in the fourth quarter for the  rst time in three quarters.
The progress we made in  scal 2009 reinforces our belief
that the company’s core businesses are strong, and the
investments we are making in  scal 2010 will create a more
positive and sustainable longer-term growth trajectory.
Focus on disciplines driving long-term shareholder return
As we look forward,  rst and foremost, we will continue to
focus on the customer. We are committed to improving the
customer experience, and we are tracking our progress closely.
We have an extremely robust and ongoing customer feedback
initiative that crosses all customer categories, and we actively
use the rich data from this program as a management tool.
We saw a statistically signi cant increase in our customer loyalty
index this past year, with broad-based improvements across our
businesses. This work will continue.
With the agreement to continue serving CVS Caremark’s
nationwide network of retail pharmacies through mid-2013,
we now have a high degree of stability in our chain customer
base, particularly with our two largest accounts. We are uniquely
positioned to serve this important channel with our innovative
supply chain solutions and deep understanding of the logistics and
inventory demands that face large, multi-location retail customers.
We have also made a commitment to rebuilding our retail
independent customer base, which is showing early signs of
success, with growth in this class of trade in the fourth quarter
of  scal 2009 and record-breaking attendance at our annual
Retail Business Conference for independent pharmacies. We
launched several exciting new programs to help our customers
more e ectively market their stores, improve the pro tability of
their front-of-store operations and provide value-added services
through specialized care centers. We will continue to drive our
e orts to deliver meaningful solutions that help independent
pharmacists run their businesses more cost-e ectively, and
capture a greater share of wallet for Cardinal Health. We are
also repositioning our Medicine Shoppe International franchise
by o ering franchisees a new model to improve their success,
better align this business with our existing operations and put
this well-known national brand on the path for growth.
It will also be easier to do business with Cardinal Health through
our commitment to investing in our information technology
infrastructure that simpli es interactions with customers. Our
medical business transformation is a prime example. We are
now in the strategic design phase of the project and have
established two customer advisory groups to directly integrate
the ‘voice of the customer’ in this important work. The end
result will be simpli ed systems and processes to improve the
end-to-end customer experience from ordering to service.
And we are working closely with our supplier partners. By rede ning
these important relationships we are able to work together
much more collaboratively and better serve our customers.
We are focusing on margin improvement. We are more
thoroughly segmenting our customers to optimize our portfolio
of products and services. For example, in our Medical segment,
by transitioning from a product management approach to a more
holistic category management approach, we can o er a speci c
formulary — or portfolio of products — that better satis es our
customers’ needs. It also allows for a better balance of customer
choice and the aggregation of volume to deliver the most cost-
e ective solution to our customers. Based on the success we’ve
seen with a couple of pilot categories, we plan to roll out a
number of additional category initiatives in the coming year.
We have also made signi cant enhancements to our generics
programs. We have expanded relationships with our generic
manufacturing partners to provide key bene ts for our customers,
as well as incremental value to both Cardinal Health and our
generic partners. We are committed to higher service levels,
greater transparency on customer incentives and generic cost of
goods, and a more consistent product supply with fewer market
disruptions or product switches should manufacturer supply
shortages occur. We’re con dent that this move — combined
with the other aspects of our SOURCESM generics program — will
provide our customers with a generics o er that is second-to-none.
We are taking additional steps to focus on enhancing our
margins, including improving our internal pricing processes
and instituting programs to increase customer contract
compliance. These and other programs will be critical
to growing our bottom line for the long term.