Operations and Quality Management: Quest Diagnostics Case Study Report

This report provides a comprehensive analysis of the operations and quality management strategies employed by Quest Diagnostics, a prominent diagnostic testing and services provider in the United States. The report begins with an introduction outlining the company's objectives and the scope of the analysis. It then delves into developing an operational strategy aligned with business goals, focusing on improving patient health through diagnostic innovation and excellent service delivery. A SWOT analysis is conducted to evaluate the capacity and quality assurance aspects of Quest Diagnostics' operations, highlighting strengths, weaknesses, opportunities, and threats. The report recommends a capacity management strategy, specifically matching capacity with demand, and critically evaluates its effectiveness in enhancing performance. Finally, a strategy for continuous evaluation of the company's quality system is proposed, emphasizing auditing and the implementation of a quality management model. The report concludes with a summary of findings and recommendations, supported by a list of references.

Running head: OPERATIONS AND QUALITY MANAGEMENT
Operations and quality management
Name of the Student:
Name of the University:
Author’s Note:

1
OPERATIONS AND QUALITY MANAGEMENT
Table of Contents
Introduction:....................................................................................................................................2
Discussion:.......................................................................................................................................2
Developing operating strategy contributing overall objective of business:.....................................2
SWOT analysis on capacity and quality assurance of quest Diagnostics:.......................................4
Recommending capacity management strategy and critically evaluating its effectiveness for
improving performance...................................................................................................................5
Recommending strategy for continuous evaluation of quality system of company:.......................7
Conclusion:......................................................................................................................................8
References list:...............................................................................................................................10

2
OPERATIONS AND QUALITY MANAGEMENT
Introduction:
Quest diagnostic is one of the prominent diagnostic testing, information and services
provider in United States. The report is prepared to discuss strategy of operation that would align
to overall objectives of business. Evaluation of capacity and quality assurance from the
perspective of operations is done by performing SWOT analysis. Quality system of Quest
diagnostic is evaluated by recommending a strategy. In the later section, capacity management
strategy is recommended to organization and performance is improved by evaluating the
effectiveness of same.
Discussion:
Developing operating strategy contributing overall objective of business:
In this section, alternative application of concepts of operations and quality management
for aiding the resolution of difficulties is evaluated. The objective of Quest diagnostic is to
improve health of patients through consummate diagnostic innovation and insights and providing
them with excellent services by easy access to health information. Diagnostic centre intends to
provide excellence in clinical testing and to provide customers and patient with unparalleled
services. Development of operation strategy incorporates specifying and refining business
strategy of company (Akalin et al., 2016). In current scenario, revenue services group of
organization has the responsibility of recording the billing of patients. National customer service
centres has inefficiency in their outbound and inbound calls and inefficiency of caller to assist
patients in better way. Waiting time of customers are extended to long time for just answering
the call by representatives and they are not able to answer the questions properly and solve the
queries of patients. Therefore, the problems is faced in providing health information and they are
not able to access it easily. For millions of patients every week, critical input to healthcare

3
OPERATIONS AND QUALITY MANAGEMENT
decisions are provided by Quest diagnostic. Viewing the current scenario of Quest Diagnostic
Company, the objective of company is to improve and retain their performance in terms of
reduction of cost and reducing customer waiting time over phone calls and providing them with
health information (Anand & Gray, 2017).
The operation strategy of quest diagnostic can be modelled on the capacity decision
problems in terms of number of employees given service time distribution, interval arrival time
distribution and other constraints such that only one percent of patient have to wait for some
specific time. The objective of operation strategy is to find solution at minimum cost and
reducing waiting time of patients over phone call. In order to address the waiting problems, some
of the strategies that can be taken by organization include shifting of operations to other
departments and acquiring additional resources in business. The ability of operation system to
achieve resource productivity targets and service quality is capacity management by matching
supply and demand (Krajewski et al., 2016).
Process operational strategy can be appointed by Quest diagnostic that helps in
organization the way services are delivered to customers or patients. Such requirements are met
within the cost constraints and managerial limitations. Long-term efficiency as well as
production and service capability of business, quality of services produced (Stevenson & Sum,
2015).
SWOT analysis on capacity and quality assurance of quest Diagnostics:
In this section, quality management and operations problems faced by Quest diagnostic is
explored and discussed.

4
OPERATIONS AND QUALITY MANAGEMENT
Strength- One of strength of capacity of Quest diagnostic is transparency in pricing and
lowest priced charged from patient for diagnostic test as compared to in house testing charge by
hospitals. Quest has electronic medical record portal that would enable them access information
and results about information of patient. Thus would make them efficient in ordering and enable
them to take better decision. A one shop stop for diagnostic test is offered by company at lower
prices compared to in house testing. Due to number of acquisitions by company, top line growth
was experienced by company and the power of evolving growth strategy is experienced by
company through its strong financial performance. Growth of organization has been driven by
emphasizing on growth efforts by looking into new businesses, markets, value added plays such
as leveraging the capacity of information technology and new services (Bromiley & Rau, 2013).
Weakness- Limited market share is enjoyed by quest diagnostic due to intense
competition prevailing in diagnostic business. Organization experiences escalating cost of
operations due to requirement of large number of employees. Due to continuous focus on
enhancing productivity, organisation does not pay attention on solving queries of customers and
providing them with prompt response. One weakness that is prevailing in this organization that
they are losing their key customers due to increased waiting time and inability of representatives
to answer and respond to customers (Hurlbert & Gupta, 2015).
Opportunity- Quest diagnostics is expanding horizontally into new therapeutic areas and
they are expanding globally through strategic acquisitions. There are dozens of acquisition across
United States that lead to considerable growth of business. Such acquisitions have helped in
providing opportunities for growth expansion and profitability as it enabled them to purchasing
their own equipment, providing service to customers through their own call centres. Such
acquisitions have assisted in enjoying top line growth and further opportunities for expansion.

5
OPERATIONS AND QUALITY MANAGEMENT
Threat- Quest diagnostic faces threat from labs that are owned by government. Such
laboratories offers cheaper diagnostic testing compared to that offered by quest. Moreover,
ongoing changes in framework of healthcare policy of different countries also poses threat to
operations of company. Another main threatening factor of Quest is high turnover in patient
service centres. High turnover is also witnessed in logistics. Turnover incurred huge cost for
organization in terms of on boarding, recruiting, time to full productivity and training.
Profitability position of organization is hampered due to annual loss resulting from departing
employees (Slack et al., 2015).
Recommending capacity management strategy and critically evaluating its effectiveness for
improving performance.
The capacity decision within an organization is crucial that assist them in proving major
insight in determination of operating cost and limit of output. An organization faces long term
consequences due to basic decisions involved in capacity. Three inputs are required to be
considered while considering capacity planning within the organization. Ascertaining a medium
between capabilities of organization and long-term supply and long term demand predicted
demand is provided by important concept of capacity planning (Sebastiano et al., 2017). Any
actual changes in capacity is required to be changed by capacity planning. Decision of capacity
planning is long-term in nature and strategic. Such planning can be described as matching
organizational capabilities with predicted demand of patient in future. Short-term and long-term
are the types of capital planning. Quest diagnostic requires short-term capacity planning that
takes into consideration over time budgets, size of workforce and inventories. Some of activities
concerning capacity planning involves forecasting needs of long range future capacity, assessing
existing facilities capacity, analysing and identifying capacity for future needs and selecting

6
OPERATIONS AND QUALITY MANAGEMENT
alternative of capacity that aligns with achieving firms’ strategic mission. Organization is
required to take into considerations technical, economic and financial factors for evaluating the
alternative sources of capacity (Sabella et al., 2014).
Capacity management strategies:
(Source: Jacobs & Chase, 2013)
Quest diagnostic is need to employ capacity management requirement planning that is a
technique that helps in determination of personnel and labour capacities and equipment
requirement for meeting the objectives of services and production in according to material
requirement planning and master production schedule. There are two types of capacity
management strategies comprising of level capacity plan and matching capacity with demand
plan. Quest is recommended to employ matching capacity with demand plan. Under this plan,
the capacity of production is matched with demand of patient in each period such as weekly,
quarterly and monthly demand. For matching the demand of patients in the given scenario, the
flow of materials, employees and personnel and capacity of machines are changed from quarter
to quarter or on monthly basis to match with the demand of patients (Oakland, 2014). This would

7
OPERATIONS AND QUALITY MANAGEMENT
help in reducing the cost of operations and back ordering cost, however there are frequent
changes in workforce.
Employment of different capacity management strategy would assist operation managers
in maintain current level of services for achieving the goals of organization. They are capable of
estimating the operational expenses and developing financial projections required for fulfilling
the capacity of services of organization. Operation mangers of quest diagnostic can be assisted in
reducing the waiting time of customers over phone calls by enabling representatives to allocate
customer in the given time period. Operation managers bring changes to organization in ways
that help them to stay competitive (Tang et al., 2016). Capacity planning involves estimation of
demand involves estimation of demand while determining capacity facilities and they enable
them to change the capacity of organization to respond accordingly to change in demand
(Mosadeghrad & Afshari, 2016). This enable the operation managers to solve the ongoing issues
faced by business and matching the scenario of demand and supply. All the aspects of operation
management of organization are covered under capacity planning.
Recommending strategy for continuous evaluation of quality system of company:
One of the important principle of total quality management is making continuous
improvement. Quality system of company is considered as efficient if the project implementation
is done coordinated directly by well-proportioned team and executives of company. One of the
strategy that can be used for evaluation of quality system of an organization is auditing as it
helps in providing consistency, formality and independency. Quantitative indicators for
evaluating the effectiveness of the quality system are required to be incorporated. For
continuously evaluating the quality system, Quest is required to implement efficient model of
quality management system and this particular model evaluates the quality system of

8
OPERATIONS AND QUALITY MANAGEMENT
organization in different aspects. Such aspects includes evaluating the quality culture of
organization, evaluating the quality management system efficiency, evaluating the process
criteria efficiency, evaluating management principles for continuous success. Moreover, this
model incorporated using auditing as a tool for evaluating the quality system effectiveness. One
of the most important factors for evaluating the quality system in accordance with this model is
evaluation of quality expenses and process criteria (Heizer, 2016). Organization prepares insight
of efficiency of quality system by analysing the data. Furthermore, relative quality indicator is
calculated that gives the indication of level of implementation of the goal of quality that has been
set by organizations. Statistical relationships have been observed between relative expenses and
relative efficiency criteria that depicts independency in variation. While evaluating the quality
system of organization, it is required by employees of organization to understand the quality
management principle. For the administrative employees of organization, a system quality
management training is required to be developed. Continuous improvement in organization can
be developed by requiring support and long-term view of management (Busing & Palocsay,
2016).
Conclusion:
From above discussion and analysis of scenario faced by Quest diagnostic, it is
ascertained that company is losing their key customer and increased cost in incurred for
maintaining operations. It has been ascertained from the analysis that Quest has opportunities to
grow in the long-run provided they are able to manage operations in an efficient and seamless
way. The capacity management strategies of organization are implemented in terms of matching
demand of patients with the existing capacity of company. Nonetheless, in the present situation,
investment cannot be made as the cost of operations is already rising due to numerable personnel

9
OPERATIONS AND QUALITY MANAGEMENT
involved in operation. Therefore, employment of capacity strategy matching the demand would
be suitable for reducing the waiting time of patients over phone calls. Employment of such
strategy would also assist organization in electronic medical record portal.

10
OPERATIONS AND QUALITY MANAGEMENT
References list:
Akalin, G. I., Huang, Z., & Willems, J. R. (2016). Is Supply Chain Management Replacing
Operations Management in the Business Core Curriculum?. Operations and Supply Chain
Management: An International Journal, 9(2), 119-130.
Anand, G., & Gray, J. V. (2017). Strategy and organization research in operations management.
Journal of Operations Management.
Bromiley, P., & Rau, D. (2016). Operations management and the resource based view: Another
view. Journal of Operations Management, 41, 95-106.
Busing, M. E., & Palocsay, S. W. (2016). Operations management in the design and execution of
MBA programs. Journal of Education for Business, 91(2), 75-82
Heizer, J. (2016). Operations Management, 11/e. Pearson Education India.
Hurlbert, M., & Gupta, J. (2015). The split ladder of participation: A diagnostic, strategic, and
evaluation tool to assess when participation is necessary. Environmental Science &
Policy, 50, 100-113.
Jacobs, R., & Chase, R. (2013). Operations and supply chain management. McGraw-Hill Higher
Education.
Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (2013). Operations management: processes
and supply chains (Vol. 1). New York, NY: Pearson.
Mahadevan, B. (2015). Operations management: Theory and practice. Pearson Education India.

11
OPERATIONS AND QUALITY MANAGEMENT
Mosadeghrad, A. M., & Afshari, M. (2016). The impact of quality management on reducing
canceled elective operations: a participatory action research. Journal of Health in the
Field, 3(4).
Oakland, J. S. (2014). Total quality management and operational excellence: text with cases.
Routledge.
Sabella, A., Kashou, R., & Omran, O. (2014). Quality management practices and their
relationship to organizational performance. International Journal of Operations &
Production Management, 34(12), 1487-1505.
Sallis, E. (2014). Total quality management in education. Routledge.
Sebastiano, A., Belvedere, V., Grando, A., & Giangreco, A. (2017). The effect of capacity
management strategies on employees' well-being: A quantitative investigation into the
long-term healthcare industry. European Management Journal, 35(4), 563-573.
Slack, N., Brandon-Jones, A., & Johnston, R. (2013). Operations management. Pearson
Stevenson, W. J., & Sum, C. C. (2015). Operations management. New York: McGraw-Hill
Education.
Tang, L., Rizzoni, G., & Lukas, M. (2016, November). Comparison of dynamic programming-
based energy management strategies including battery life optimization. In Electrical
Systems for Aircraft, Railway, Ship Propulsion and Road Vehicles & International
Transportation Electrification Conference (ESARS-ITEC), International Conference
on (pp. 1-6). IEEE.