Quartz glass

Agile manufacturing in practice,

Application of the assessment model for agility at Philips Quartz & Special Glass

Author J.W. van der Broek

Abstract

The market of Philips Quartz & Special Glass has Increasing expectations of its vendors in terms of flexibility, speed, responsiveness and competency. Competition became severe due to new entrants and the current economic downturn caused overcapacity and (price) rivalry. To compensate for loss of market share, caused by Chinese entrants, the company wants to intensify acquisition of new customers. A consequence is an increased complexity in the customer and product portfolio. After a decade of cost cutting and lean operations philosophy, the management now wants to shift gears to a more agile approach of the market.

Therefore the main research question is:

How can the concept of Agility contribute to a better result of Philips Quartz & Special Glass?

To conduct this research a case study at Philips Quartz & Special Glass is chosen as the most appropriate research approach. The conceptual model of agile manufacturing presented by Shariffi & Zhang is applied to PQ & SG. The surveys, Tools one and two, will be the main input to investigate the present level of agility at the organization as well as the needed level of agility to serve it’s chosen markets. Tool number one is titled - assessing the level of need to agility. This tool assesses the degree of turbulence of the business environment for the company! (Sharifi, Zhang, 2001).Tool number two is titled- determining the agility level of a firm. This tool assesses the ability of the company in responding appropriately to changes (Anticipated/Unpredicted/Unprecedented) in the business environment! 19 Managers and/or middle managers filled out the questionnaires. The respondents were chosen in such a way that the voice of each relevant department is sufficiently present. The respondents were chosen out of the departments General Management, Marketing and Sales, Innovation To Market and Logistics and Planning. Statistical analysis was conducted on the survey data with the help of the software of Minitab.

Application of the assessment tool number two at PQ&SG gives an average score of 4,80 (out of 10, where 10 = high level) for its abilities. It can be considered as the level of agility PQ&SG currently has. The ability of being agile of PQ & SG is on the low side of the scale.

To be competitive, PQ & SG may find themselves in a Houdini-like twist. How can they respond quickly and nimbly to the changing environment without getting caught in knots? In today’s knowledge age, the ability to transform information into insight in response to market

movements is core to sustainability. PQ & SG must think of ways to make their processes more flexible. The biggest rewards PQ & SG can expect if they become more agile are:

 Being able to respond to uncertain needs and individual requirements of customers.  Being able to outperform less agile competitors, this will be a sustainable competitive

advantage.

 Fulfill the ambition to become market leader in the automotive segment, which is the most demanding segment PQ & SG currently serves.

 Faster growth compared to organic growth.

 Increasing margins compared to today’s low margins.

The researcher recommends the following to the management team of PQ & SG:

 Apply the adjusted proposed model to achieve agility during the upcoming strategic sessions.

 Develop a “road towards agility” program.

 Identify the most lagging agility competencies and address these in projects under the “road towards agility” program.

 Guarantee continuous management attention by installing a management team steering committee and frequent review circles.

 Consult experts who have a proven track record in implementing agility programs.  Be persistent, this journey will be forever!

Keywords:

Erkenning:

Afstuderen is topsport! Ambitie is de basis er van. De weg naar het doel vraagt veel meer. Concentratie, nadenken, strategie, inspanning, training en ook coaching en inspiratie. Op de weg naar het doel heb ik mooie en moeilijke momenten gekend, zelf het gooien van de

handdoek in de ring is soms een gedachte geweest. Gelijk iedere andere topsporter had ik mijn studie en uiteindelijk mijn afstudeerscriptie nooit alleen tot een goed einde kunnen brengen. Als ik terugdenk hebben vele mensen aan de basis van deze prestatie gestaan. Mijn

medestudenten en docenten zijn van belang geweest om de studie plezierig te genieten. Ook mijn collega’s bij Philips ben ik dankbaar voor de inzet die zij gegeven hebben tijdens mijn afstudeeronderzoek. Ook ben ik Philips dankbaar voor de geboden gelegenheid.

Mijn begeleider Otto Lappohn is voor mij een interessante gesprekspartner geweest die mij op een plezierige manier aan het denken gezet heeft, waarvoor dank! Ik kijk met plezier terug op de vaak lange en diepgaande gesprekken over het geval Philips Quartz en Special glass.

Één van de grote hobbels die ik genomen heb naar het einddoel toe, een beklimming gelijk aan die van de alpe d’huez, is het wegwerken van de deficiëntie wiskunde. Dit zou nooit gelukt zijn zonder de praktische lessen en tomeloze enthousiasme van mijn vriend Dennis Langjouw.

Aan de basis van mijn ambitie en inspiratie staan mijn ouders Jan en Grietje. De weg die zij afgelegd hebben en hun levensvisie is voor mij een dagelijkse bron van inspiratie en energie. Lieve ouders, bedankt voor jullie onuitputtelijke steun en liefde!

Table of contents

1. INTRODUCTION 7

2.1 Lean manufacturing verses agile manufacturing 8

2.2 Agile manufacturing 12

2.2.1 the conceptual model of agile manufacturing 14

2.2.2 the assessment model for agility 17

3. PROBLEM STATEMENT 20

4. INTRODUCTION TO THE CASE OF PHILIPS QUARTZ AND SPECIAL GLASS 21

4.1 Structural dimensions of the organization 21

4.2 Contextual dimensions 22

4.2.1. Size 22

4.2.2.Organisation culture 22

4.2.3. Environment 23

4.2.3.1 Customers (bargaining power of buyers) 24

4.2.3.2 Industry competitors and the threat of new entrants 25

4.2.3.3 Bargaining power of suppliers 26

4.2.3.4 Substitute technologies 27

4.2.3.5 Intensity of rivalry 27

4.2.4 Goals and strategy 28

4.2.5 Technology 29

5. THE RESEARCH METHODOLOGY 31

5.1 The assessment model for agility 31

6. RESULTS OF THE CASE STUDY AT PHILIPS QUARTZ & SPECIAL GLASS 33

6.1 Tool number one - assessing the level of need to agility 34

6.1.1 Marketplace 34 6.1.2 Competition 35 6.1.3 Customer requirements 35 6.1.4 Technology 36 6.1.5 Social factors 37 6.1.6 Suppliers 37 6.1.7 product/process complexity 38

6.1.8 Business environment factors causing high degree of turbulence 38

6.2 Tool number two - determining the agility level of PQ & SG 39

6.2.1 Flexibility 39

6.2.2 Responsiveness 40

6.2.4 Competency 40

6.2.5 General agility capabilities 41

6.3 Summary of the assessment process 42

6.4 feedback of the respondents on the tools 42

7 ASSESSMENT OF THE ASSESSMENT MODEL FOR AGILITY 43

7.1 Relevance 43

7.2 Soundness 44

7.3 Efficiency 45

7.4 Room For improvement 45

8. CONCLUSIONS AND RECOMMENDATIONS 48

8.1 Conclusions: 48

8.2 recommendations 51

8.3 reflection and limitations 52

8.4 further research 53

REFERENCES 54

1. INTRODUCTION

The market of Philips Quartz & Special Glass has Increasing expectations of its vendors in terms of flexibility, speed, responsiveness and competency. Competition became severe due to new entrants and the current economic downturn caused overcapacity and (price) rivalry. To compensate for loss of market share in the low-end part of its portfolio, caused by Chinese entrants, the company wants to intensify acquisition of new customers. A consequence is an increased complexity in the customer and product portfolio. The management of the company has difficulties with executing the intended strategy and feels that they need to improve. The management understands that the structural dimensions of the company are based on a past and changed market situation and do not fit today’s contextual dimensions. Despite of this, change is very difficult to create. After a decade of cost cutting and lean operations philosophy, the management now wants to shift gears to a more agile approach of the market. The

background of this is their assumption that this is the best way to outperform competition and create a sustainable competitive advantage. The management asked the researcher to study the phenomena of agility in perspective of the company and its business environment.

Therefore the main research question is:

How can the concept of Agility contribute to a better result of Philips Quartz & Special Glass?

2. THEORETICAL SETTING

So far the operational strategy at Philips Quartz & Special glass focused on lean manufacturing. Recently the concept of agile manufacturing has rising interest of the

company’s management team as stated in the introduction of this paper. Therefore this chapter starts with comparing these two operations strategies. After the differences are mapped, a closer look at agile manufacturing will be taken.

2.1 Lean manufacturing verses agile manufacturing

Hormozoi (2001) indicated that there are three major paradigm shifts in the industrial world. The three phases are as follows;

1. Craft production where each item is done on a job-by-job basis, where products tended to be more unique than previously crafted or manufactured items in response to

customer request. This is time consuming and expensive.

2. Mass Production is associated with Henry Ford, whereby basic cars were produced at breakneck speeds and variety was non-existent in the early days; “any colour as long as it is black”. Henry Ford created the first moving assembly line in 1913 (Duguay et al., 1997). Duguay et al. (1997) indicate that high safety/buffer stocks), MRP/ MRPI

software to manage inventory, high production was the trade off for high defects and direct labour was strictly under the supervision of managers were the main

characteristics of mass production. Using Mass Production, Henry Fort managed to reduce the cost of the Ford Model T (1908-1927) from $800 to under $300.

3. Lean production builds on the concept of mass production by eliminating waste and thereby reduces costs and defects further.

According to Groover (2001), Brown (1996) and McIvor (1999), the book that fuelled interest in the Lean Manufacturing model was “The Machine that Changed the World” written by

are simply wasted and should be targeted for elimination. In Ohno’s view there are seven types of waste (muda) and these are:

 Overproduction (unnecessary work) resulting in excess inventory

 Delays in waiting for product – eliminate this non-value add time by balancing the workload.

 Transportation - workplace layout should be planned so that there is not any unnecessary handling.

 Processing – faulty work methods and procedures should be modified so that flow times are faster.

 Inventory – adopt Just In Time (JIT) technique so that only raw materials are received, as they are needed. This means not having buffer stock or buying in bulk/stockpiling. Lower inventories also mean less plant space (Piciacchia & Bergsten 2002)

 Movement – human ergonomics should be minimal as this adds to the processing time.  Rejects – fail safe procedures and quality system should be implemented to ensure

defect prevention, detection and correction.

The first step in Lean is identifying these wastes using flow diagrams, maps (Carpinetti et al., 2000) or value stream mapping (McIvor, 2001; Womack and Jones, 1996) of all activities and delays or repetition. This establishes the “As Is” condition and facilitates identifying future improvement targets for the “should be” condition in the future. There are many other tools and techniques apart from JIT and Value Stream Mapping that can be used to facilitate the implementation of lean and these are 5 s (Sort, Set in Order, Shine, Standardize and Sustain in relation waste), visual management (pictorial procedures, colour coded tagging, visual control boards, etc.), cellular manufacturing, kanban (pull) systems, preventative maintenance, Kaizen (continuous improvement) activities (Bicheno, 1998; Rother and Shook, 1998), Overall Equipment Effectiveness (tracking downtime/ efficiency), Single Minute Exchange of Die (SMED to reduce the set up times on machines) and Total Productive Maintenance (TPM / proactive maintenance)(Dwyer, 2003).

time, valueless activity and valueless variance. While this Triad of Waste concept ties in well with Lean Principles, he does not associate the two similar concepts directly in his article.

The move away from Mass Production was a necessity in the US as growth rate in industrial productivity dropped significantly in the late sixties/early seventies and at the end of the 1970’s foreign competitors had considerably increased their market shares in many key industrial areas (Duguay et al., 1997).

Agile manufacture was proposed as key to surviving volatile markets that have become “the norm as life cycles shorten and global and economic and competitive forces create additional uncertainty” according to Christopher (2000), and market force pressures are detailed by Grover (2001). Agile manufacturing’s origins lie in Flexible Manufacturing Systems (FMS) so that automation would facilitate rapid change (i.e. reduced set up times) and be able to respond to volume and variety changes in response to customer request, rather than basing production on forecasted demand Christopher (2000). Christopher defines agility as “the ability of an organization to respond rapidly to changes in demand both in terms of volume and variety. The organization must be “market sensitive” and exploit any opportunities recognised from scanning the environment. Virtual supply chains whereby information technology such as Electronic Data Interchange (EDI) and the Internet are used to share data between supplier and buyers facilitate agile manufacture. Process integration is essential whereby the buyers and supplier work in collaboration with each other to have joint product development, common systems and shared information. Trust is essential in the “extended enterprise”

These are all links in the supply chain as partners form a network (Christopher 2000). These networks must interact with customers and virtual corporations mean that there are not significant capital resources so that the corporation can be formed and changed very rapidly in response to the next market opportunity (Kidd, accessed 09/03/05).

Grover (2001) has the following key elements in Agile industries outlined in his book;  Hinge upon customisation, upgrading of products,

 Reconfiguration to provide modest changes in design without time-consuming redesign efforts,

 Skilled workforce,

 Design modularity so that the product consists of several standard subassemblies/modules so that they can be assembled into the finished item with minimum effort

 Frequent model changes even if the market appears secure (innovative aspect)

 Extended products e.g. intelligent products such as a “VCR to display instructions on the TV screen to guide the viewer through the procedure” or a free phone help line number for enquiries



Hormozoi compares and contrasts the characteristics of these three production models and the relatively new phase of Agile in Table 1.0

Industry Objectives Craft Production Mass Production Lean Production Agile Production Emphasis on elimination of waste

Medium Low High High

Degree of

production levelling

Low Medium/high High Flexible

Degree of organisational communication

High Low High High

Sensitivity to customer demands

High Low Medium High

Need for skilled employees

High Low Medium High

Degree of cooperation

between companies

Medium Low Low High

Piece Cost of small runs relative to large runs

Same High Medium Same

Lead times for existing products

Varies Short Short Short

Degree of product marketing required

Low High High Low

2.2 Agile manufacturing

Wherever one looks in the business world, one sees change. Change of itself is not the problem. The world is always changing, always has done and always will (Sharifi et all. 2001) Businesses have always had to adapt to a changing world. Often the changes that have taken place in the past have often been incremental. When a radical change has taken place, the pace has been slow, and has not been quickly followed by another significant change. Furthermore, while there has always been uncertainty in business, this has rarely been significant or sustained for long periods. According to Kidd (2000) this really is the problem. Change is no longer just incremental. Radical "nonlinear change" which brings about a different order is becoming more frequent. The pace of change is also significantly more rapid. Major and sustained uncertainty is also commonplace. This is the central problem which agility addresses.

Agile Manufacturing is a relatively new term; one, which was first, introduced with the publication of the Iacocca Institute report 21st Century Manufacturing Enterprise Strategy. A literature research on agility teaches us that there are many definitions on this subject. Most of the definitions are rather fuzzy, but others are sharper. The fuzzy definitions include strategy driven manufacturing, concurrent engineering, virtual enterprises, just-in-time manufacturing, flexible manufacturing, time compression, mass customisation, and several hundreds of other well-known approaches. Kidd (2000) gave a sharper definition.” An agile enterprise is a fast

moving, adaptable and robust business. It is capable of rapid adaptation in response to unexpected and unpredicted changes and events, market opportunities, and customer requirements. Such a business is founded on processes and structures that facilitate speed, adaptation and robustness and that deliver a coordinated enterprise that is capable of achieving competitive performance in a highly dynamic and unpredictable business environment that is unsuited to current enterprise practices".

Another definition on Agility is given by Yusuf et al (1999): “Agility is the successful exploration

of competitive bases (speed, flexibility, innovation proactivity, quality and profitability) through the integration of reconfigurable resources and best practices in a knowledge-rich environment to provide customer-driven products and services in a fast changing market environment”.

develop agile properties. Organisations will then use this agility for competitive advantage, by being able to rapidly respond to changes occurring in the market environment and through the ability to use and exploit a fundamental resource -knowledge.

According to Kidd (2000) one fundamental idea in the exploitation of this resource is the idea of using technologies to lever the skills and knowledge of people. Organisations need to bring people together, in dynamic teams formed around clearly identified market opportunities, so that it becomes possible to lever one another's knowledge. Through these processes organisations should seek to achieve the transformation of knowledge and ideas into new products and services, as well as improvements to existing products and services.

The concept of Agile Manufacturing is also built around the synthesis of a number of enterprises that each have some core skills or competencies which they bring to a joint venturing operation, which is based on using each partners facilities and resources. For this reason, these joint venture enterprises are called virtual corporations, because they do not own significant capital resources of their own. This, it is believed, will help them to be agile, as they can be formed and changed very rapidly. Central to the ability to form these joint ventures is the deployment of advanced information technologies and the development of highly nimble organisational structures to support highly skilled, knowledgeable and empowered people.

Agile Manufacturing enterprises are expected to be capable of rapidly responding to changes in customer demand. They should be able to take advantage of the windows of opportunities that, from time to time, appear in the market place. With Agile Manufacturing, organisations should also develop new ways of interacting with their customers and suppliers. Their

customers will not only be able to gain access to products and services, but will also be able to easily assess and exploit the organisations competencies, so enabling them to use these competencies to achieve the things that they are seeking.

Research on agile manufacturing at the University of Liverpool has led to the following conclusions ((Sharifi and Zhang, 2001):

 A methodology to assist manufacturing companies to enhance agility is needed.  Studying and establishing relationships between the concept of agile

The work of Sharifi and Zhang has resulted in the introduction of a methodology for this purpose, the conceptual model of agile manufacturing.

2.2.1 the conceptual model of agile manufacturing

The concept of agility comprises two main factors (Dove, 1996; Kidd, 1995):

(1) Responding to changes (anticipated or unexpected) in proper ways and due time. (2) Exploiting changes and taking advantage of changes as opportunities.

This necessitates a basic ability for any organisation that is sensing, perceiving and anticipating changes in the business environment. The question is how a manufacturing enterprise could identify the necessary tools and techniques and acquire the relevant capabilities and abilities in order to become agile. To this end Sharifi and Zhang developed a conceptual model of agility and used it as a basis for the formation of a methodology to help manufacturing enterprises make strategic decisions in their pursuit of agile manufacturing. The conceptual model of agility, which is depicted in Figure 1, has three constituting elements. These are:

(1) ``Agility drivers'', which are the changes/pressures from the business environment that necessitate a company to search for new ways of running its business in order to maintain its competitive advantage;

(2) ``Agility capabilities'', which are the essential capabilities that the company needs in order to positively respond to and take advantage of the changes; and

Fig. 1. A conceptual model of agility (Sharifi, Zhang, 2001)

Based on this model, an organisation experiences a variety of changes/pressures in its

business environment, which drives the enterprise to identify ``agility capabilities'' that need to be acquired or enhanced in order to take advantage of the changes. This in turn forces the organisation to search for ways and tools to obtain/enhance the required capabilities. With reference to the above-mentioned conceptual model of agility Sharifi and Zhang developed a methodology to help manufacturing companies formulate strategic policies in their pursuit of agile manufacturing. The methodology consists of three major stages, the determination of a company's agility needs and its current agility level, the determination of agility capabilities required in order for the company to become agile, and the identification of agility providers or business practices and tools which could bring about the recognised capabilities for the company. The graphical form of this methodology is shown in Figure 2. The methodology comprises the following parts;

 Agility drivers.

 Strategy formulation and identification of strategic capabilities required for the company to become agile, and those missing in the organisation.

 Identification of agility providers or agility practices.  Implementation.

 Performance measurement and feedback.

Fig. 2.The proposed methodology to achieve agility (Sharifi, Zhang, 2001)

Uncertainties, changes, and pressures, i.e. the so-called agility drivers, urge a company to search for appropriate ways to maintain its competitive advantage. As changes and pressures faced by companies may be different, the degree of agility required by individual companies will be different (Yusuf et all, 1999). This degree is defined as the ``agility need level'', which is a function of various factors such as turbulence of the business environment, the environment that the company competes in, and the characteristics of the company itself. Once the agility need level is determined for a company, the next step is to assess the current agility level of the company, i.e. how agile the company is now. The difference between the level of agility required and that the company already has can then be analysed to provide a basis for further decision-making. The next stage following the analysis of agility needs is to determine the required agility capabilities in order to become agile. This would require the detection,

impact individual changes will bring to the company. The agility capabilities required may then be determined from the changes. The final stage in the methodology involves identifying agility providers that could bring about the required capabilities, implementing the identified providers, determining the level of agility achieved, and formulating corrective measures to further

improve the performance.

2.2.2 the assessment model for agility

Based on the definition and descriptions of agility, according to Sharifi and Zhang, agility is a direct function of changes in the business environment. This means that the more the

circumstances for doing business are changing, the more agile the organisation needs to be in order to respond to the changes positively. Therefore, the extent to which the factors

introduced as agility drivers are perceived as changing and turbulent will be the indicator of the turbulence of business environment the company competes in, and hence would represents the level of agility the company needs in order to stay in business, maintain competitive advantage, and make further progresses. Sharifi and Zhang developed an assessment model to study the circumstances in which a company strives for success, and to provide a

preliminary mindset for the company to move towards agility. The model is formulated based on the conceptual model of agility. It includes two practical tools, one of which is used to

assess the company's business environment to determine the degree of its turbulence, and the other is used to determine the current level of agility of the company. Figure 3 represents the agility assessment model.

Fig 3.Assessment model for agility (Sharifi, Zhang, 2001)

Measuring the abilities that a company has to respond to the changes in its business

environment must be associated with the degree of turbulence and changes in the business environment. Responsiveness, competency, flexibility, and quickness are the main

components of the agility capabilities considered in the conceptual model. Sharifi and Zhang designed another series of questions considering the above incoming dimensions, which formed the structure of tool number two. The result provides an image of the company's ability in responding to the changes in the business environment and hence the company's agility. The outcome of this tool will again be an average score, which contains some facts about the level of the company's agility. As depicted in Figure 3, output of the assessment tools could be analysed and two possible outcomes could be expected. First is a gap analysis in which a speculative interpretation can be made to specify the point where the company is located on a continuum that can start from ``No need for agility at all'', to ``High level of agility needed very urgently''. The other is a direct result of the second tool, which will show the weak points of the company considering the situation in the business environment, and the ability of the company in responding to them appropriately. Figure 4 represents the foundation of the assessment tools. The level of agility needed for an organisation is considered to be equivalent to the degree of turbulence of the business environment of the organisation. The business

assessment questionnaire. The questions address the degree of turbulence of each sub-factor for the organisation. The questionnaires are not included in this paper but can be shared on request.

3. Problem statement

The objective of this research is to answer the main research question: “how can the concept of Agility contribute to a better result of Philips Quartz & Special Glass?” Therefore the following sub questions are derived from the main research question:

1. What level of agility is desired by Philips Quartz & Special Glass to serve the target markets?

2. How can PQ & SG’s current agility level be valued?

3. Which competencies within PQSG are lagging the most, regarding to agile manufacturing?

The conceptual model of agility (Sharifi, Zhang, 2001) presented in the theoretical setting of chapter 2 will be applied to the case of Philips Quartz & Special Glass. In chapter 5 the methodology of applying the conceptual model to the case will be dealt with in more detail.

4. Introduction to the case of Philips Quartz and Special Glass

Organisations can be described along contextual and structural dimensions. Structural dimensions describe internal characteristics of an organisation. Contextual dimensions are characteristics of the organisational setting that influence and shape the structural dimensions (Daft, 2004). To understand and evaluate organisations, one must examine both structural and contextual dimensions. Therefore, these contextual and structural dimensions will be used to introduce the organisation design of PQ&SG.

4.1 Structural dimensions of the organization

Structural dimensions provide labels to describe the internal characteristics of an organisation.. The structural dimensions are: Formalization, Specialization, Hierarchy of Authority,

Centralization, Professionalism and personnel ratios (Daft, 2004)

The structural dimensions of PQ&SG can be described as follows.

The amount of written documentation in the organisation is high, therefore there’s a high degree of formalization. This documentation includes procedures, job descriptions, regulations and policy manuals. These documents describe behavior and activities. The managers of the organisation spend quite some time on filling out all kind of reporting sheets which are requested by its headquarter in Eindhoven.

The degree to which organisational tasks are divided into separate jobs differs per department. In line departments like production and logistics the degree of specialisation is high, each employee performs a narrow range of tasks. On the contrary in the departments Marketing & Sales and R&D specialisation is low. These employees have broad jobs and perform a wide range of tasks in their jobs, even cross functional. One could say that production and logistics are organized in a functional way and M&S and R&D are more organized in a horizontal organic way.

removal of management layers and small sub departments. Therefore the span of control of most managers widened and the organization became more flat.

PQ & SG is a centralized organisation. Despite the organization introduced horizontal cross functional segment teams, all significant decisions are made by the management team members. Therefore the phenomenon of “piling up the issues” is common in the organisation. As a consequence decision-making is a rather slow process, which needs a lot of debate and reporting. This is a typical structure within the Philips organisation.

The level of formal education in the organisation is relative high compared to comparable companies in the industry. Employees are encouraged to educate en develop themselves continuously. Education budgets for external education and trainings are high.

The personnel ratio changed significantly is the last 12 months. Currently there are about 120 blue collars employed and 60 office employees. Last year there were still 95 office employees or white collars. Departments like Marketing & sales and R&D became quite small compared to the past.

4.2 Contextual dimensions

4.2.1. Size

Philips quartz & Special glass (PQSG) in Winschoten is part of the Philips business group Lighting Components and is manufacturer of high-grade glass components. The company was founded in 1972. It’s main function is to supply Philips Lighting B.V. with glass components. It has a global market share of 15 per cent and around 40 mln. Euro turnover. The plant has circa 180 permanent employees, about one-third of which are directly involved with the production process.

4.2.2.Organisation culture

and Quinn, 1999). Therefore the culture at current state is not facilitating change, but is actually hindering change while preserving the status quo and stability.

The regional culture of the plant is probably even stronger than the organisational culture. The culture of the region is known as a farmer’s culture with communistic roots. By around 1900 the Oldambt had developed into one of the most advanced arable farming areas in Europe. This created a gulf between the rich farmers and poor farm laborers, who saw more and more jobs being lost to mechanization. As a consequence East Groningen became a hotbed of

communism. Especially the blue collars have these roots as background. This communist’s background and the view towards authority are still strongly present in the plant. One of the issues is that this historic influence on values and beliefs of operators and other employees with this cultural background is hardly recognized and taken into account at management level. Although this subject is worth a scientific paper itself it’s outside the scope of this paper. For those who would like to understand more on this I refer to the book “de graanrepubliek” (Westerman, 1999)

Photo: House of a rich farmer in the area of the PQ & SG plant

4.2.3. Environment

The quartz and special glass industry can be described in one word, transition. In this

development of innovation and technology are also a part of the transition. In addition, custom quartz and glass production has become prevalent in the specialties market.

Porters five forces analysis (Porter, 1985) will be used as framework for describing the environment of PQ&SG .

4.2.3.1 Customers (bargaining power of buyers)

PQ&SG exports to more than 200 customers worldwide. These customers are active in several market segments like automotive lighting, General lighting, UV water purification, projection lamps, Semiconductor equipment, Optical Fiber production, Thermocouple production, Entertainment lighting, Street lighting and many more small niches. Compared to the late nineties this customer portfolio is much more complex. Today the company has to manage about 5000 products to many customers. Ten years ago this was less than 500 for a few customers. The turnover of the company is about €35 million per year. Less than 100 products generate 80% of this turnover. The specialty products out of the tail of the product portfolio generate most of the margin. Out of all customers, seventeen are determined as key accounts. 8 of these key accounts are accountable for 80% of PQ&SG’s turnover. Therefore the power balance is on these customers site, especially those who have access to alternative sources. About 25 customers are accounts, which get a lighter service profile as key accounts. All other customers are relative small ones, which are mostly served by agents or distributors, assigned by PQ&SG. Besides these customers there are about 30 target customers, which the

company wants to add to, it’s portfolio, because these potential customers are either high margin customers or add a large load to the factory.

One trend, which can be found in this industry, is the transfer of lamp production sites to Asia. More and more customers are located in Asia. Almost all customers are under pressure because of the economic downturn of today. Therefore the main focus in the market is on cost cutting. The customers are actively looking for lower cost suppliers of Quartz glass, for shorter lead-times to avoid stocks and for total cost of ownership programs. None of the customers is able to give the factory a reliable forecast and besides this the percentage of overdue

The competitive environment has changed from one focused on the optimization of manufacturing performance around quality and cost objectives to one with multifaceted performance requirements where customers now demand products and services that are increasingly specific to their needs and wants. Recently a customer value survey was conducted by PQ&SG. The main outcomes of this research were:

 Internal Philips customers feel the quality of our products is good but the price is (to) high,

 External customers feel the quality of our products is reasonable and the price is fair.  Strong points compared to competition are: Understanding Customers needs, order

fulfillment and lead-times.

 Areas for improvement compared to competition are: product development, complaint handling, electronic information, value for money, delivery reliability and innovation time to market.

 Lagging areas are quickness, flexibility and responsiveness. These remarks were mainly maid by new, Asia based, customers.

4.2.3.2 Industry competitors and the threat of new entrants

Ten years ago the quartz and Special glass market was highly concentrated. There were a few large producers, which were all vertically integrated. The main market, lighting applications, was also highly concentrated. Philips, Osram and General Electric all produced quartz and special glass for their own use. These companies had over eighty percent market share in the lighting industry with their lamps. Today the lighting market is much more scattered. On average over 50% of the market is divided by Asian companies and they compete severely with the current industry leaders, bringing low cost lamps with acceptable quality to the market. The established lamp producers like Philips Lighting try to stop them by starting a lot of patent infringement processes but this will only slow down their market penetration.

In the early nineties some quartz glass factories were established in China, because the Chinese possess a lot of acceptable quality raw material mines (quartz sand). At the time halogen lamps became popular the Chinese decided to step into the glass production market, financially supported by the government. Now, almost 20 years later, two large Chinese quartz glass producers dominate the large volume quartz glass market for lighting applications

1200 tons of this material at a Chinese vendor. This is just as much as the 2009 output of the factory of PQ&SG.

Looking at the “old” quartz glass vendors, one can conclude that a shake out is in progress today. One producer in the US has already closed. Another US market leader set up a factory in China and tries to close its home base factories. Two European quartz glass producers are in a bad financial situation and the expectation is that they will not survive the next two years. The Philips Quartz & Special glass factory is for sale and no longer considered being strategic for Philips Lighting. The industries expectation is that in three years from now, only two

Chinese and two western quartz producers will dominate the global market. One can only guess which companies this will be. Looking at the customer satisfaction survey outcome of PQ & SG, improvement areas are clear, probably the most agile manufacturer will win this battle.

4.2.3.3 Bargaining power of suppliers

To produce quartz glass for PQ&SG’s markets, high purity quartz sand is needed. The US based Unimin Corporation has a monopoly on the supply of quartz sand for these applications. Unimins mines are located in the Spruce Pine area of North Carolina. Unimin has > 90% market share at present and continues to increase prices to their customers every year, driven by their own increasing costs of manufacturing. The main lock-in of Unimin is that many quartz glass customers released quartz glass based on Unimin sand and specified this in their product documentation. This is also the case at most of the customers PQ&SG serves. Price on raw quartz sand has increased every year. This price increase is often negotiated into long-term agreements. Without alternate sources of raw materials, Unimin has no incentive to lower prices and is left to their own discretion to “name their price”. Industry sources indicate that these price increases have been in the order of 5% to 10% per year, depending on volume and length of contract.

larger quantities in 2011. Therefore the monopolist position of Unimin corp. will maintain for at least two more years.

China possesses quartz sand mines, which they use for lighting quartz glass. This market largely does not demand the use of high purity raw material. This enables the Chinese quartz glass producers to produce fit for use products at 30% of the cost price compared to western quartz glass producers. Therefore all lamp producers who can work with this fit for use product, now source in China.

4.2.3.4 Substitute technologies

The main upcoming technology is LED (Light emitting diode). The LED technology is seen as the future technology to replace today’s lamps. The LED development is present on almost all product roadmaps of PQ&SG’s lighting customers. To produce an LED no quartz glass is needed, therefore this is a big threat for PQ & SG.

In some segments the LED development is still in the R&D stage, in others the market penetration is already quite high. One of the strategic businesses segments for PQ&SG is automotive head lighting and turn lamps. The penetration grade in turn lamps is already double digit till 20% in the USA. LED in head lighting is still embryonic and only available as option in high-end passenger cars like Lexus and Audi A8. Penetration in head lighting is expected to start within five years, but this will only happen as performance goes up and costs come down. For halogen and Xenon headlamps a saturation phase of more than 30 years is expected. Another area where LED penetration rapidly is taking place is general consumer lighting as replacement of incandescent and halogen lighting. Currently PQ&SG hardly notices any loss of market share due to LED technology.

4.2.3.5 Intensity of rivalry

product life cycle, luckily the lighting industry is very slow and a long saturation phase can be expected. One can easily understand that this environment causes a huge competitive rivalry and shake out!

4.2.4 Goals and strategy

The translation of strategic plans into action is seen as critical to successful strategy

implementation, and is currently a main issue that PQ & SG is dealing with. Last year PQ & SG initiated a strategic change program with the objective to realign the business line Special Glass and Quartz with its environment. PQ & SG is striving for improvements in quality, reliability and innovation, aiming at maintaining the lead in technical advancement. On the other hand, PQ & SG needs to offer fair prices to customers, which means that cost reduction is the other focal point of the change program. These two focus points are translated into two Ships (Strategic Headway Improvement Project), which are explained hereafter.

- Ship: Zero-Defect is initiated to reduce the cost of non-quality and to meet clients quality

demand. To do so, control, process and product quality should be improved rigorously by means of carrying out (backlog) maintenance, improving equipment and work instructions (Philips, 2008).

- Ship: 20 % cost reductions. The aim of this ship is to drastically reduce costs by means of

improvement of operation efficiency. To reach significant cost reductions PQ & SG decides to outsource the finishing department to Poland. Furthermore, a reduction in indirect personnel should bring about further cost reductions (Philips, 2008).

Abovementioned Ships are top down initiatives and both focused on changing systems and structures. Besides the two Ships mentioned above, PQ & SG is implementing another Ship with a different focus, which is discussed below.

implementation i.e. planned and emergent (Bamford and Forrester, 2003; Beer and Nohria, 2000; Burnes, 2004; Dunphy and Stace, 1988, 1991).

The strategy of PQ & SG consists of a combination of different modes of strategy formulation. Deliberate elements are at the outset of the strategy formulation process, since the use of rational models and analysis, a proclaimed schedule, and the creation of plans that is made in advance of major decisions. However, analytical elements can be discerned as well. PQ & SG gives attention on development of its personnel by means of Ship 1+1=3. This ship is focusing on the development of organisational capabilities. To conclude, the strategy formation process at PQ & SG resembles an umbrella strategy as mentioned by Mintzberg and Waters (1985) in the sense that the strategy has a firm deliberate outline and analytical elements to optimalise and adjust the strategy to occurring contingencies.

One can clearly recognize the paradoxes in PQ & SG’s strategy. These are reflecting the constant debate the organization is in: Serving Philips Lighting with low cost and controlled quality or serving external customers, sometimes based in non-lighting segments, with high service and innovative products? The need for a more agile approach, based on the customer satisfaction survey, is not addressed in these strategic programs.

4.2.5 Technology

The products of PQ & SG are utilized in head- and signal lights for automobiles, halogen lamps, solaria, road lighting, disinfection installations, and many other applications. In total, the plant produces around twenty different types of glass. The glass types that are produced by PQ & SG can be divided into two categories.

5. THE RESEARCH METHODOLOGY

This methodology presents an outlook of how this thesis gathered relevant information that gave rise to analysis and recommendations on agile manufacturing within PLW. A quantitative research is conducted in which different methods are used. Below, a further elaboration on the research methodology is given.

To conduct this research a case study at Philips Quartz & Special Glass is chosen as the most appropriate research approach. This research approach fits best with the researchers interest and insights as well with the available resources regarding time and funding.

5.1 The assessment model for agility

The conceptual model of agile manufacturing presented by Shariffi & Zhang is applied to PQ & SG. The surveys, Tools one and two, will be the main input to investigate the present level of agility at the organization as well as the needed level of agility to serve it’s chosen markets.

Tool number one is titled - assessing the level of need to agility. This tool assesses the degree of turbulence of the business environment for the company! This survey contains 79 questions covering the agility drivers presented in Fig. 2.The proposed methodology to achieve agility (Sharifi, Zhang, 2001)

Tool number two is titled- determining the agility level of a firm. This tool assesses the ability of the company in responding appropriately to changes (Anticipated/Unpredicted/Unprecedented) in the business environment! This survey contains 69 questions covering the agility capabilities presented in Fig. 2.

The statistical method, which will be used to visually represent the research data, is called box

plots. A box and whisker plot is a way of summarizing a set of data measured on an interval

scale. It is often used in exploratory data analysis. It is a type of graph, which is used to show the shape of the distribution, its central value, and variability. The picture produced consists of the most extreme values in the data set (maximum and minimum values), the lower and upper quartiles, and the median.

A box plot is especially helpful for indicating whether a distribution is skewed and whether there are any unusual observations (outliers) in the data set.

Box and whisker plots are also very useful when large numbers of observations are involved and when two or more data sets are being compared.

 The box represents the middle 50% of the data.

 The difference of the ends of the whiskers is the range (if there are no outliers)  Outliers are marked by an *.

 Box plots are useful for comparing two or more samples  Compare center (median line)

6. RESULTS OF THE CASE STUDY AT PHILIPS QUARTZ & SPECIAL GLASS

In this chapter the findings of the assessment model of Agility applied at PQ&SG are presented.

Tool number one is titled - assessing the level of need to agility. This tool assesses the degree of turbulence of the business environment for the company! The overall statistical average of this tool was 6,1. This implies that the respondents value the need for PQ&SG to become more agile is more to the high side of the scale.

Tool number two is titled- determining the agility level of a firm. This tool assesses the ability of the company in responding appropriately to changes (Anticipated/Unpredicted/Unprecedented) in the business environment! The overall statistical average of this tool was 4,8. This implies that the respondents value the ability of PQ&SG to be agile is more to the low side of the scale.

The overall outcome of the assessment model of agility at PQ&SG shows that the company values their ability to be agile as being low compared to the need for agility driven by its business environment.

6.1 Tool number one - assessing the level of need to agility

In this section the statistical results of the agility drivers analysis are presented. To recall, these agility drivers are: marketplace, competition, customer requirements, technology, social factors, suppliers and products/process complexity. The respondents are representing the departments Marketing & Sales, Production, Innovation To Market, Planning and General Management.

6.1.1 Marketplace

The assessment of the agility driver “marketplace” shows that the average perception of the

turbulence caused by this sub factor is rather equal. Within the departments a larger StDev can be found. Some respondents judge the turbulence caused by marketplace as being low; others judge it as being moderate or even high.

The highest turbulence in the marketplace is caused by the need to respond to uncertain needs and individual requirements (average 7). This clarifies the relative high average score of the planning department as they are influenced by unforeseen changes the most in their operations planning. Also all sub-questions on buyer power are scored as being high. The buyers needs of PQ&SG are market driven, they define the prices, quality requirements and reliability of the products they source.

Furthermore price conscious customers who easily shift to better deals cause turbulence as well (average 6). The marketing and sales department mostly notes this.

Market place drivers that cause low turbulence (=<3) are: low fashion orientation, long product life cycle and unpredicted life cycle changes.

Da ta General management planning ITM Productie M&S 10 8 6 4 2 0

Agility driver: marketplace assessment per dept.

6.1.2 Competition

The assessment of the agility driver “competition” shows that the average perception of the turbulence caused by this sub factor differs per department. Specifically the M&S department considers the impact of competition on the business turbulence as high to very high. Some of the respondent in the other

departments consider this influence as moderate or in some cases as low. Within the departments a large StDev can be found.

The battle for market share in global markets is highly intense and has fierce competition. According to the respondents competitors are relatively strong and responsive comparing to PQ & SG. Furthermore gaining and maintaining competitive advantage over competitors is very challenging and difficult for the organization. Therefore it is understandable that the marketing and sales department notices this the most.

6.1.3 Customer requirements

The assessment of the agility driver “customer requirements” shows that the average perception of the turbulence caused by this sub factor is rather equal. Within the departments a larger StDev can be found. Some respondents judge the turbulence caused by customer requirements as being low; others judge it as being moderate or even high.

This outcome clearly visualizes that the line functions production and planning consider the influence of this agility driver on turbulence as being higher than the judgment of the other departments. Both department main improvement programs are initiated by increasing responsiveness and product quality requirements, especially automotive customers become more demanding every year. This customer group covers more than half of PQ & SG’s turnover. Da ta General Management Planning ITM Productie M&S 9 8 7 6 5 4 3 2 1 0

Agility driver: Competition assessment per dept.

Graph 3. The agility driver; competition, assessed per department

Da ta General management Planning ITM Productie M&S 10 8 6 4 2 0

Agility driver: Customer requirements assessment per dept.

6.1.4 Technology

The assessment of the agility driver “technology” shows that the average perception of the turbulence caused by this sub factor differs significantly per department. Within the departments also a large StDev can be found. Some respondents judge the turbulence caused by technology as being low; others judge it as being moderate or even high.

This outcome clearly visualizes that the ITM (innovation to market or R&D) department considers the influence of this agility driver on turbulence as being lower than the judgment of the other departments. Clearly the technology of the company influences production and planning more that it influences the other departments. Overall this box plot shows large deviations in perception on the influence of technology on the turbulence of PQ&SG’s business.

To the opinion of the researcher, the validity of this outcome is low, because only three questions we asked on this subject. This clarifies the large StDev and the outliers. Therefore conclusions on the influence of technology as a driver for agile manufacturing should be drawn with utmost care.

Da ta General management Planning ITM Productie M&S 9 8 7 6 5 4 3 2

Agility driver: Technology assessment per dept.

6.1.5 Social factors

The assessment of the agility driver “social factors” shows that the average perception of the turbulence caused by this sub factor slightly differs per

department. Within the departments a larger StDev can be found. Some respondents judge the

turbulence caused by social factors as being low; others judge it as being moderate or even high.

The average score on this agility driver is the lowest of all agility drivers. Apparently social factors do not drive the need for agility regarding PQ & SG as much compared to other agility drivers.

6.1.6 Suppliers

The assessment of the agility driver “suppliers” shows that the average perception of the turbulence caused by this sub factor is rather equal. Within the

departments a larger StDev can be found. Some respondents judge the turbulence caused by suppliers as being low; others judge it as being moderate or even high. The StDev within the

production department is relatively low. Interesting is that the production department is the only department working with supplied materials on a daily basis.

Although it is outside the scope of this paper it would be interesting to know what causes the larger StDev within the other departments, knowing that these departments do not work with supplied materials regularly.

Da ta General management Planning ITM Productie M&S 9 8 7 6 5 4 3 2 1 0

Agility driver: Social factors assessment per dept.

Graph 6. The agility driver; technology, assessed per department

Da ta General management Planning ITM Productie M&S 10 8 6 4 2 0

Agility driver: Suppliers assessment per dept.

6.1.7 product/process complexity

This assessment shows that the average perception of the turbulence caused by this sub factor is rather equal. Within the departments a larger StDev can be found. Some respondents judge the turbulence caused by product/process complexity as being low; others judge it as being moderate or even high. The within department StDev is the highest in the planning department. A possible explanation for this

phenomenon can be found in the fact that the respondents of the planning department operate in different production departments of the company.

6.1.8 Business environment factors causing high degree of turbulence

Tool 1 indicated some factors pertaining to the company's business environment which are very turbulent, so that they can cause a threat, or on the other hand be taken as opportunities. Table I represents some of the factors with a degree of turbulence of 7 (out of 10, 10 = highly turbulent) or above. These items should receive more attention when PQ&SG's strategy is studied and defined. Some factors are given a turbulence level of 6, which can be considered to be less important, but still need to be looked after. There have been some factors indicated as being not related to the company's business or not applicable to the company's

circumstances. Other factors are recognised as not important or turbulent by the company. In below table the most important agility driving factors for PQ & SG are presented. (PLW (Philips lighting Winschoten) = PQ & SG)

Table 1. The factors with degree of turbulence 7 and more.

Factors of tool 1 Degree of

turbulence (Avg)

StDev

PLW has to respond to unccertain needs and individual requirements 7 1,7 The buyer power is high and the defined needs are market driven 7 2,3 The buyer power is high and the market defines the prices for suppliers 7 1,8 The buyer power is high and the market defines the needed quality and reliability of the products 7 2,5 The battle for marketshare in global markets is highly intense and has fierce competition 7 1,7 Competitors are relatively strong and responsive comparing to PLW 7 1,7 Gaining and maintaining competitive advantage over competitors is very challenging and difficult to PLW 8 1,1 Quality of our products is very critical to our customers 9 1,1 The rate of changes in the customers expectations for quality has been high in the past 5 years. 7 1,8 Quality mens customers satisfaction to PLW and it's customers 7 1,9 We had to adjust our systems in the past 5 years to meet changing customer expectations in quality 6 1,8 Fast/on scedule delivery time is very critical to our customers 8 1,0 PLW is highly dependent on the suppliers w.r.t. product quality, manufacturing processes and delivery time 7 2,2 PLW's producttechnology is highly complex 7 1,1 PLW's procestechnology is highly complex 8 1,1

Da ta General management Planning ITM Productie M&S 10 8 6 4 2 0

Agility driver:Products/process complexity assessment per dept.

6.2 Tool number two - determining the agility level of PQ & SG

In total, 66 factors are considered in this assessment. These factors can be clustered in the agility capabilities: flexibility, responsiveness, quickness and competency. Some of the questions represent all these capabilities. Application of the assessment tool in PQ&SG gives an average score of 4,80 (out of 10, where 10 = high level) for its abilities. This score is supposed to be interpreted as the average degree of the ability of PQ&SG in dealing with the turbulent business environment and coping with changes. In other words, it can be considered as the level of agility PQ&SG currently has. However, this score or level does not imply that the required level of need for agility, if it is equal to or less than the current level of agility, is

already provided. In more accurate terms, the mean level specified for the current level of agility indicates the average of PQ&SG's capabilities in different areas related to the turbulence of the business environment and changes. However, this level has a considerable association with the position PQ&SG lives in, and can relatively indicate the level to which PQ&SG can respond appropriately to changes.

Equal to the analysis of tool no. one, the data of the 19 surveys are analysed on average, StDev and mean. For a better understanding of the total average and standard deviation, the agility capabilities are analysed per capability, and department.

6.2.1 Flexibility

The assessment of the agility capability “flexibility” shows that the average perception of the flexibility capability is not unambiguous. Within the

departments a large StDev can be found. Some respondents judge the flexibility capability as being low; others judge it as being moderate. Some extreme outliers are to be seen in judging this agility capability. The ITM department judges the ability of PQ&SG to be flexible most positive. The biggest gap in perception can be found between the Marketing & Sales department and General Management.

Da ta General management Planning ITM Productie M&S 8 7 6 5 4 3 2

Agility capability; Flexibility assessment per dept.

6.2.2 Responsiveness

The assessment of the agility capability

“responsiveness” shows that the average perception of the capability responsiveness is rather equal. Within the departments a moderate StDev can be found. All respondents judge the responsiveness capability as being moderate. The biggest gap in perception can be found between General Management and the planning department.

6.2.3 Quickness

The assessment of the agility capability “quickness” shows large department-to-department deviations. Within the departments a moderate StDev can be found. Some respondents judge the quickness capability as being low; others judge it as being moderate. The ITM and production department judge the ability of PQ&SG to be quick most positive. The Marketing & Sales department and General

Management perceive the ability of the company to be quick lower.

6.2.4 Competency

All departments perceive the agility capability

“competency” rather equal. Within the departments a moderate StDev can be found. All respondents judge the competency capability as being moderate. The biggest gap in perception can be found between the ITM department and General Management.

Da ta General management Planning ITM Productie M&S 9 8 7 6 5 4 3 2 1 0

Agility capability; Responsiveness assessment per dept.

Graph 11. The agility capability; responsiveness, assessed per department Da ta General management Planning ITM Productie M&S 8 7 6 5 4 3 2 1 0

Agility capability; Quickness assessment per dept.

Graph 12. The agility capability;quickness, assessed per department Da ta General management Planning ITM Productie M&S 9 8 7 6 5 4 3 2 1 0

Agility capability; Competency assessment per dept.

6.2.5 General agility capabilities

The assessments of the remaining questions, which represent all agility capabilities, demonstrate that the average perception of these capabilities is not unambiguous. Within the departments a moderate StDev can be found. Some extreme outliers are to be seen in judging these agility capabilities. The ITM department judges the agility capabilities of PQ&SG most positive. All departments consider PQ&SG’s agility capabilities as moderate (level 4 – 7); the average level tends to be closer to the low end of the moderate level.

Analysing the factors in the tool number two of the assessment model (for assessing the current abilities of PQ&SG) shows that one factor has been scored for 7 (out of 10, where 10 = high ability), 63 factors are given level 4- 6 and in 3 factors PQ&SG lacks sufficient or

considerable strength. Table 2 shows the factors with a level of 7., Table 3 shows the factors

on which the company is lacking.

Table 2. The ability factors on which PQ&SG has a level of 7.

The weakest ability factors of PQ & SG are to be found in the table below

Table 3. The ability factors on which PQ&SG has a level of 3.

Factors of tool 2 Degree of the

company's disability to agility(Avg)

StDev

Relative strength and responsiveness of PLW in comparison with its competitors regarding cost effectiveness

3 1,6

Ability of PLW in challenging and outperforming new entries

to market 3 0,8

Factors of the tool 2 Degree of the

company's ability (Avg)

StDev

PLW has a fouvourable location for its possessing technology

considering the highest available level 7 1,5

Da ta General management Planning ITM Productie M&S 9 8 7 6 5 4 3 2 1 0

Agility Capability; All capabilities (general) assessment per dept.

According to the respondents the companies biggest issue is the entrance of new competitors with a rather equal portfolio and much lower prices. PQ & SG has no ability to respond to this in a sufficient way.

6.3 Summary of the assessment process

The following summary can be made as the result of the assessment process: A moderate level of agility with tendency to high is needed by PQ&SG in the current circumstances. The strategy for PQ&SG with regard to agility, according to Sharifi and Zhang, can be: a better consideration of the growing turbulence in the business environment; taking on-time steps in becoming agile in order to sustain and maintain the competitive advantage. Further more the analysis showes that:

 There are areas, which can potentially be threatening or be considered as opportunities. These areas must be taken into consideration when defining and designing PQ&SG's strategy. These areas are indicated in Table 1, 2 and 3.  The large number of moderate turbulent factors and areas in which PQ&SG lacks

sufficient abilities should be considered in formulating corporate strategies.

 In al instances the StDev per factor is high, indicating multiple views on agility from department to department and within departments.

6.4 feedback of the respondents on the tools

All respondents have been asked to their opinion on the tools. In general the respondents believe that the tools:

 were interesting to work with,  functioned as an eye-opener,  were too time consuming,

 contain imprecise or fussy questions, caused by difficult language,  contain some similar questions,

7 ASSESSMENT OF THE ASSESSMENT MODEL FOR AGILITY

In this chapter the quality of the assessment model for agility will be assessed. Someone who claims the development of a usable method or model must indicate in which situations, for which purposes, by whom and in which way the method or model can be used. If this is not the case, the model cannot be refuted (de Leeuw, 2003). In the papers Sharifi and Zhang

published on this model these preconditions are partly given. The applicable situation and the purpose are clearly stated. To my opinion the way in which the model can be used and by whom leaves room for improvement.

According to de Leeuw the quality of a model depends on its usefulness. Models are useful is they are relevant, sound and efficient.

7.1 Relevance

A model is relevant if it applies to a concrete problem of the customer. Relevance encloses: in time availability, comprehensibility for those who have to work with it and after all connection with the management problem. Comprehensibility is a difficult requirement, because it demands linguistic competency of the users.

In the case of PQ&SG the connection with a problem the management has is obvious.

Therefore the timing of this research and the availability of the model fit with the situation of the company. As stated:" comprehensibility is difficult". This requirement is by far the most

problematic. The observations I did on comprehensibility are:

a) Despite my introductory letter, most respondents find the subject of agility and the differences between tool one and two difficult

b) Almost all respondents consulted me more than two times to ask for clarification of a particular question

c) All respondents needed more than one hour to fill out the surveys. Upfront I indicated an effort of 40 minutes based on my own experience. Apparently the literature research I performed gave me a head start in working with the surveys. Also my general knowledge, which I have as marketing and sales manager of PQ&SG, probably influenced the difficulty I had with the surveys positively