Supply congruity

Supply congruity

Aligning supply management to organizational management.

A management report

Author: Joost de Vries Student number: 1283545 August 2007

Rijksuniversiteit Groningen

Technische Bedrijfswetenschappen

First university supervisor: Prof. dr. D.J.F. Kamann Second university supervisor: Dr. D.P. van Donk Owens Corning process coach:

Supply Congruity

Aligning supply management to organizational management.

A management report

Author: Joost de Vries

Student number: 1283545

Apeldoorn, August 2007

The Netherlands

Rijksuniversiteit Groningen

Technische Bedrijfswetenschappen

First university supervisor: Prof. dr. D.J.F. Kamann

Second university supervisor: Dr. D.P. van Donk

Owens Corning process coach:

Owens Corning operational coach:

De auteur is verantwoordelijk voor de inhoud van het afstudeerverslag; het

auteursrecht van het afstudeerverslag berust bij de auteur.

The author is responsible for the content of this thesis; copyright of this thesis

belongs to the author.

With this thesis I finalize my graduation project at Owens Corning Veil Apeldoorn. At this place I would like to thank my colleagues for their support and friendship.

Adjusted to confidentiality

Thanks to professor dr. D.J.F Kamann and dr. D.P. van Donk for their stimulating criticism.

Thanks to many others which have been, consciously or unconsciously of importance to me in this project.

Finally, I would like to thank Annejan Barelds and Roelien de Wolf. I do not have the words to express my gratefulness having you two involved in more than just this thesis. But that you have known already.

To the reader of this thesis: this edition is adjusted for confidentiality reasons.

Full versions are available at Owens Corning Veil Netherlands bv.

Apeldoorn.

Owens Corning Management summary

This thesis describes the research performed at Owens Corning Veil Netherlands BV (Apeldoorn). This production plant is part of the Specialties subdivision of the Owens Corning company. For many years the Apeldoorn production plant is fabricating top quality veil, and with great success. The success of Apeldoorn resulted in a production increase …Confidential… over the last five years. This production growth and the

achievements like winning the golden award, and the significant improvement of safety statistics, have made this production plant a proud part of the Owens Corning company.

At the same time, however, the Apeldoorn production plant encountered some losses, seemingly related to supply quality insufficiency. The research described in this thesis was originally initiated to investigate these losses and to formulate suggestions resulting in the reduction of these losses. The basic research question can thus be formulated as follows:

What possibilities does Owens Corning Veil Apeldoorn have to reduce production losses and increase overall profits?

To reduce losses regarding supply quality insufficiency, it seems obvious to re-establish input controls, to research product tolerances and to investigate supplier quality. In the Apeldoorn situation these research aspects revealed an underlying

problem. In each of the research areas the Specialties organizational structure turned out to be critical in formulating improvements to the current situation. The organizational structure of Specialties turned out to be fragmentized. This means that functional disciplines are concentrated in specific departments. To the supply management of Apeldoorn this fragmentation means that several of these departments are controlling individual links of the supply management chain.

The Specialties sub division of Owens Corning, supplies and creates dynamic and complex markets. Together with the other Specialties departments, Apeldoorn is thus part of a customer oriented value chain. But regardless of the output Apeldoorn supplies by Specialties on dynamic and complex markets, its production process can be defined as relatively straightforward. In terms of supplies of the production plant, being

straightforward has resulted in a product oriented cost-effective supply link; the Apeldoorn supply manager is basically only responsible for ordering and paying for incoming goods.

Other functional links in the supply management chain of Apeldoorn are under control of the other departments of Specialties; for example defining and selecting new materials is performed by the Science and Technology department. In contrast to Apeldoorn, these departments are not straightforwardly organized.

The influencers from the environment of these departments demand a high customer orientation and therefore a complex and dynamic organizational structure.

In order to reduce losses regarding supply management, the fragmentation of the overall business organization of Specialties becomes important to the Apeldoorn

production plant. Therefore to reduce production losses on a structural basis, the development of a suitable supply management is in order, which has some implications for the organizational structure of the Specialties department as a whole. This means that, even while the answer to problems regarding losses would normally be expected to lie within the technical and operational processes, in this case the scope of the research has to be broadened to include organizational aspects of Specialties as a whole.

In this investigation into the reduction of production losses regarding quality of supplies, management of supplies is decomposed in three layers. The first layer is related to organizational Policies. At this layer questions regarding organizational strategy are asked. The second layer is concerned with organizational design. The third layer is build upon processes.

At the level of processes actual losses can be defined in three aspects

• The fit between input material properties and veil properties is not controlled directly

• The fit between input material properties and production restrictions are unknown at the work spot

• The fit between materials and its suppliers and Apeldoorn is not evaluated or coordinated.

All of these operational aspects are related to the organization of the supply management of Apeldoorn. This organization is in turn directly linked to organizational policies. With the Policy Organization and Processes model (POP model) of prof. dr. D.J.F. Kamann of the University of Groningen (the Netherlands), in this thesis management of the raw materials supply of the Apeldoorn production plant is researched. To improve the current situation and thereby to reduce production losses related to supply quality insufficiency the installation of two supply teams is suggested.

One team reporting at the level of Apeldoorn and concerned with the input of the raw materials of Apeldoorn

One team reporting at the level of Specialties and concerned with the input of Specialties.

In this situation Apeldoorn becomes on the one hand a strategic supplier of Specialties while it gains control over its own inputs on the other. With this configuration the supply management at both Apeldoorn and Specialties becomes aligned with its organizational management.

This fit enables Apeldoorn to actively manage its inputs and thereby to reduce its losses. In daily practice the first steps of a supply management lead by Apeldoorn have resulted in initial Fitness for Use meetings. These meetings between people of several

departments of Specialties have resulted in cost saving initiatives regarding effectiveness of commodity utilization. Regarding the fit between supplies and its suppliers and

Apeldoorn, risk assessments and alternative sourcing programs already have been implemented and have been cost saving.

With this new approach an overall improvement of several percentages production efficiency, an increase of production efficacious of double digits and a huge reduction of supply risk can be expected. With these results, knowing that the new structure for the supply team still needs to be deployed, it becomes clear that Apeldoorn and, with it, Specialties is looking at a bright future.

Table of Contents

0.4. Conclusions and recommendations of the initial research ... 7

1. Owens Corning ... 8

1.1. Non-Woven Technologies ... 9

1.2. Owens Corning Veil Netherlands bv. ...10

1.3. Introduction of Apeldoorn Veil...12

1.4. Supply on Apeldoorn...15

1.5. Summary - Anticipation ...17

1.6. Methodology ...18

1.6.1. Definition of losses ...18

1.6.2. Relation between solution and the theory used ...19

2. Theory...21

2.1. Environment ...21

2.1.1. Complexity ...22

2.1.2. Dynamics ...23

2.2. Organization in its environment ...23

2.2.1. Aspects of organizational form ...25

2.3. Policies Organization Processes ...26

2.3.1. Typologies...29

2.4. Supply POP...31

2.5. Management cycle of supply ...32

2.5.1. Fit ...32

2.6. Summary - Anticipation ...34

3. Apeldoorn POP...35

3.1. Environmental complexity ...36

3.2. Organizational relations ...37

3.3. Supply chain relations...38

3.4. Environmental complexity – quantified...42

3.5. Current POP...45

3.6. Organizational POP ...46

3.7. Supply POP...47

3.8. Losses encountered ...49

4. Supply congruence...51

4.1. Complexity, an unavoidable outcome? ...56

4.2. Improvement 1: The control of the management chain of supply ...58

4.3. Improvement 2: The reduction of the complexity by decompostition of the raw material properties. ...60 4.4. Summary - Anticipation ...63 5. Supply management ...65 5.1. Policy...66 5.2. Organization ...66 5.3. Processes ...67 5.4. Summary – Conclusion ...68

6. Conclusions and recommendations...69

7. References literature ... a 8. Appendix ... i

Research introduction

This thesis is the result of research performed at Owens Corning Veil Apeldoorn. This research project was initialized by the management of this production plant in September 2006. At that time, Apeldoorn was already considered highly profitable: Owens Corning awarded its Golden Globe award, an internal production price of Owens Corning, to the plant.

This is not to say, however, that there is no room for improvement. …Confidential…

The main research question can thus be formulated as follows:

What possibilities does Owens Corning Veil Apeldoorn have to reduce production losses and increase overall profits?

The obvious way to investigate this issue seems to be an analysis of the

production process: if a production plant encounters losses, then a reduction of losses would entail an optimization of the production process.

The production line of Owens Corning Veil Apeldoorn, then, comprises the production of a basic glass fiber veil and the addition of chemical raw materials to this basic veil in order to modify its mechanical, chemical and physical properties. This is introduced more fully in chapter 1. The quality of an end product is measured by these properties, suggesting that production losses resulting from finished goods quality insufficiency are related to the quality of the raw materials. Quality improvement by way of production process optimization at Owens Corning Veil Apeldoorn would thus entail the implementation of a quality check of the chemical raw materials: only by checking the quality of the chemical raw materials before utilization can the quality of the end product – the customized veil – be secured.

The main hypothesis for this investigation would then read as follows:

The implementation of a quality check, ensuring the quality of the raw materials utilized in the production process, will lead to an improvement of the quality of the glass fiber veil and thus to a reduction of production losses.

In order for this hypothesis to be true, however, some preliminary conditions have to be met. If a structural quality check of the chemical raw material needs to assist in the reduction of losses, the results of these checks should be interpreted correctly. To put it differently: people in charge of the Apeldoorn production process should have the

knowledge required to assess the suitability of any given quality grade for the production process.

As part of a larger organization, Owens Corning Veil Apeldoorn depends for its intelligence on other departments within the larger organization. But instead of being provided with intelligence regarding the relation between the raw materials and the quality of the customized veil, the production plant was only provided with production recipes. These recipes did not leave any room for a pre-production quality check as they simply didn’t specify which quality standards had to be met for the raw material to be suitable for the production scenario under discussion. In chapter 0 practical

consequences of this kind of supply and the accompanying lack of intelligence is

presented, based on a real life scenario that took place at the Apeldoorn production plant (for confidentiality reasons this is chapter is only fully available in the full versions).

This pre-research renders the initial hypothesis false: the implementation of a quality check would not lead to an improvement of the quality of the veil because of a lack of knowledge on the part of the production plant employees. The reduction of losses – the subject of the main research question – thus turns out to be not only a technical, but also an organizational issue: in order to be able to implement technical

improvements of the production process, first the organization and distribution of intelligence between the different departments needs to be addressed and modified. Once provided with the proper intelligence, process managers will be able to check the quality of their raw materials, and act upon their findings if the quality turns out to be insufficient: equipped with the knowledge regarding required quality parameters it becomes possible to proactively negotiate with different suppliers able to supply these raw materials according to the specifications required. This last issue borders on the question of supplier policy: equipped with adequate knowledge, the purchasing

department of the production plant can select those suppliers that are able to supply the raw material needed for a specific production process.

To summarize: an improvement of production processes requires an organizational restructuring, which in turn also entails a shift in supplier policy.

This relation between policy, organization and processes has been theoretically grounded in the POP-model, developed by Kamann (2001). POP stands for Policy, Organization and Processes.

The model deals with the relation between these aspects, and describes possible methods to optimize this relation. The appropriate method in any given situation depends on the environment within which a business organization operates. This is further

discussed in chapter 2. The hypothesis can thus be reformulated as follows:

An optimization of the relation between technical processes, organizational structure and business policy, as suggested by the POP-model, will provide Owens Corning Veil

Apeldoorn with possibilities to check the quality of raw materials and to satisfactorily mitigate any problems and risks that may occur as a result of the outcome of this quality check. This will result in the reduction of losses and thereby in a greater profit.

This research thus focuses on the technical processes as well as on the

organizational and policy-related aspects of managing and securing the quality of raw materials. Chapter 0 of this thesis starts with a description of the initial research

performed to identify and to define the losses regarding supply quality insufficiency. This chapter provides background to further research. Within this preliminary chapter the motivation for researching organizational structure in order to reduce losses will be presented. Chapter 1 of this thesis then will develop a general overview of Owens Corning as a whole and the position of the Apeldoorn veil production plant within this global organization. After this organizational overview, general consequences of this organizational structure will be outlined. It will be made clear that the lack of intelligence provided by other departments of Owens Corning can be held responsible for a large portion of the losses encountered. The second chapter will be used to introduce the POP-model and related theories. The utilization of the POP-model is in order as we are specifically dealing with the relation between its constituents. The third chapter will then provide a more thorough description of Owens Corning Veil Apeldoorn in terms of the theoretical background provided in chapter 2. Chapter 4 will discuss the ideal form of Owens Corning Veil Apeldoorn as suggested by the POP-model and accompanying theories from chapter 2. The thesis will end with chapter 5 providing suggestions to arrive at the ideal organizational form as developed in chapter 4.

0. Initial research

…Confidential…

To the author of this thesis this real live case was the practical introduction in the research to be performed:

What possibilities does Owens Corning Veil Apeldoorn have to reduce production losses and increase overall profits?

0.1. Approach

At Apeldoorn normally the Six Sigma approach is used to work in a structural way towards improvement. This approach consists of five phases: Define, Measure, Analyse, Improve and Control. The investigation into the reduction of losses, as stated in the initial research assignment, started with the first phase. In the formulation of Doedens (2002) this phase is described as “the definition of the purpose and scope of the research and the description of the background of process and user.”

The purpose of this investigation was to reduce the losses resulting from the raw material’s insufficient quality.

The initial focus was solely of a production technical order. In other words: in the initial assignment, losses were expected to be the costs of raw materials that were out of specification, causing failures. From this perspective an initial sub question was formulated:

What are the tolerances of the input materials and what are the tolerances of the production process?

In the scope of the research this question bore the assumption that there was a clear definition of raw materials (on property level). In terms of the supply management cycle, it was assumed that losses could be defined as the raw materials which are found - in the Control stage - beyond their specification as defined in the Specification stage (figure 1).

0.2. Initial research

To gain insight in the production process, initial measurements were performed. In this stage it became clear that Apeldoorn utilizes …Confidential… different types of input material in its veil production process. Moreover, it also became clear that Apeldoorn did not have a transparent control process concerning the input material …Confidential…

Although the results of this research cannot be taken to represent all products consisting …Confidential…, they do indicate that Apeldoorn is …Confidential… meaning that the first sub question would be hard to answer.

…Confidential… …Confidential… Weight production 2006 SCM KG used (prescribed). KG used

(actual) Weight error Prod group I …Confidential…

Prod group II …Confidential…

Prod group Iii

Prod group IV …Confidential…

Prod group V …Confidential…

Figure 2, Material consistence in good veil seems to be …Confidential….

In response to these results interviews were held to gain insight in the control process of the input materials. In these interviews the central focus was on the search for an answer to the first sub question: What are the tolerances of the input material – in this case …Confidential… - and what are the tolerances of the production process?

0.3. Interviews

Ten employees in total were interviewed at Apeldoorn

(4 S&T, 5 production, 1 maintenance).1 The main observation deriving from the interviews was that in spite of the fact that …Confidential… is currently defined as a complex input material – because of its wide utilisation among the total product portfolio and its processing method – …Confidential….

1 _{All interviews are available at the purchasing department of Apeldoorn. The interviewees ware}

asked

1) …Confidential… 2) …Confidential… 3) …Confidential…

In search for a list that would contain most properties characteristic to

…Confidential… – which forms the basis on which the most relevant tolerances could be determined – it became clear that the employee of production disagreed with nearly all processing details.2

For instance, for some engineers it is possible to transport …Confidential… with viscosity of over …Confidential… whereas for others a viscosity of …Confidential… would mean that problems with transportation through the pipe system would be unavoidable.

Based on the interviews the most important aspects of both the …Confidential… process properties and the processing properties are summarized figure 3.

…Confidential…

Figure 3, List of most critical properties of …Confidential…

The results presented in figure 3 are answers of all interviewees put together. Although most of the respondents mentioned nearly all of these properties, there was (again) basically no agreement or common statement regarding the tolerances of these properties.

The analysis of these results leads to the conclusion that it is impossible to perform measurements of the effectiveness of the utilization of raw material in the current situation. With regard to this conclusion, it is important to bear in mind that in this case losses are already defined as waste – being the result of quality insufficiency – and as losses – being the result of its reasonable ineffectiveness utilization.

This conclusion came to play a key role in the research into the reduction of the losses regarding the insufficient quality of raw materials. Basically there were two options:

1. This research could define tolerances for all of these properties, and subsequently, a analysis could be performed to identify losses

2. The scope of the research should be redefined in order to find out why Apeldoorn was not having common definitions about their raw materials. By doing so the objective of the Analysis-phase – which is to hypothesize causes and to confirm or reject these hypotheses after data analysis - as well as the research question would be better served.

In order to improve the current situation, the research as described in the thesis was performed. That research goes beyond the initial scope by investigating the

management process of raw materials. It is from this perspective that the supply department as well as Apeldoorn its mother department Specialties gets involved.

0.4. Conclusions and recommendations of the initial research

In response to the overall research results as they will be described in the thesis, at Apeldoorn supply meetings have been (and will be) organized in order to improve the current situation. These meetings have resulted in sheets providing critical tolerances the …Confidential… has to comply with and will be assessed on. With these clear tolerances, the purchase department will be able to provide the supplier with operational data which will lead to better cooperation with the supplier so that in case of quality issues the impact of these issues can be reduced.

Another result of the main research is that the relations will be …Confidential… in terms of risks that the supplie(r)s carry with them.

Apeldoorn is more dependent on certain supplies and its suppliers for the

continuity of their production processes than others, therefore the relation between some suppliers and Apeldoorn are more risky than others. Assessing these specific relations and analyzing the possible risks, Apeldoorn might be able to mitigate the risks by listing alternative supplie(r)s or by securing risks in business contracts.

In accordance with the original focus in this case, at production initial steps are taken to control quality of supplies. In March 2007, a software module has been implemented which measures and stores the actual dosing of raw materials in order to benchmark quality over time. More of these control functions are to be installed, which will, just like the rudder blade case, reveal and solve bottlenecks, finally improving the effectiveness and robustness and reducing the losses.

The following chapters will describe the research that eventually led to these improvements by further analyzing the problems at work in, for example, this specific case, as well as describing the steps needed to arrive at these improvements.

1. Owens Corning

The Apeldoorn production plant is part of the holding Owens Corning. This New York stock exchange quoted holding is active on the markets for insulation, fibers, acoustics, asphalt, siding, and other composite materials.

The Owens Corning Holding is present in over thirty countries around the world, employing about 19.000 people. To control this organization the total business is divided to five business units, each modulated to a specific value chain. Figure 4 provides a schematic overview of the holding.

Figure 4. Owens Corning Holding as divided into business units

OC Business Units

ISB

ESB

Vice President & General Manager HOMExperts President, Composite Solution Business Basement Finishing System Home Repair & Improvements Glass Reinforcements Mat Fabrics NWT Fabwel Residential Commercia l / Industrial Foam Acoustics OEM Roofing Asphalt Cultured Stone Siding Norandex/ Reynolds Distribution

SSB

HE

CSB

1.1. Non-Woven Technologies

Within the business unit Composite Solution Businesses (CSB) the sub business unit Non-Woven Technologies (NWT) is located. This sub business unit, having an annual turnover of over 1 billon US Dollar, is modulated around the supply chain of non woven textiles and veils.

The control of NWT is, like the holding, organized in several subdivisions, two of which are of importance for this thesis. Figure 5 shows a schematic representation of NWT and its relevant subdivisions Science & Technology and Specialties.

Figure 5. NWT and its relevant subdivisions

The Specialties subdivision is active on special niches in the market of veil. In these niches, customers with a strong commitment to product innovation are located. For this purpose Specialties’ core business revolves around the integral process of developing and producing new products, with and for the customer.

The customer orientation of Specialties results in a relatively high need for

innovations and product modifications. In …Confidential… of the product innovations and modifications the need for the improvement originates from the customer.3 In these cases the market of Specialties is pulling the need for new products. In the other

…Confidential… of the innovations and modifications, Specialties pushes its new ideas to the market of veil. In these cases Specialties contacts its customers to co-develop the final result.

For the scientific and chemo-technical aspects of the development of (new sorts of) veil, Specialties turns to Science & Technology (S&T), which is also a subdivision of NWT. In order to effectively provide this technical knowledge to Specialties, S&T employs its Product Developers (PD’s) at the facilities of Specialties. Such a decentralized cell of S&T therefore has a double responsibility.

On the one hand, its managing NWT-subdivision is S&T. On the other hand, such a cell shares a commitment to – and a responsibility for – the results of the different Specialties-departments. This is what is called dotted line control, as the decentralized cell also implicitly answers to Specialties. The innovation and customer orientation characteristic for the Specialties business can be maintained with the help of this dotted line responsibility.

1.2. Owens Corning Veil Netherlands bv.

With the description of Specialties the business environment of Owens Corning Veil Apeldoorn BV (Apeldoorn) is introduced. Apeldoorn, a production plant for non-woven veil, is part of the Specialties subdivision of NWT.

Figure 6. Apeldoorn is a department of Specialties

The Specialties department of NWT consists of several other production plants besides Apeldoorn, such as a sales department and many other departments. In much the same way as the decentralized cells of S&T are characterized by a dotted line control, the departments of Specialties are linked by dotted lines to one another, in order to organize business efficiency and openness for innovations.

At the production site of Apeldoorn, located in the city of Apeldoorn (The Netherlands), people of …Confidential… departments of Specialties are employed. This deployment of the departments of Sales – consisting of …Confidential… Product

Engineers (PS) –, S&T and a production plant in the city of Apeldoorn enables Specialties to have efficient product development cycles. To Apeldoorn this deployment implies short lines to specific chemical know-how provided by S&T, and short lines to Product

Engineers of the Sales department, who are key figures between the customer demands and the product properties.

Specific to the department of Specialties is the department of the Customer Service Team (CST). Since the relations between the customers of veil and the departments of Specialties are focused on innovation and therefore on product and product information, this team is oriented at the service aspects and the quality of the relation pertaining to the supply relations of Apeldoorn. To that end, the CST is normally the first point of contact for the customer.

In this thesis the dotted lines responsibilities between the departments of Specialties are of high importance. The position of Apeldoorn in this business

organization, which is mostly oriented at the supply of veil, turns out to be of paramount importance in chapter 4 of this thesis.

Because of the relevance of the position of Apeldoorn in the Specialties

organizational structure in figure 7, the relevant organizational structure is visualized in figure 7. ... ... ... Sales Europe Apeldoorn Veil Customer Service Team ... Science and Technologies

The next paragraph will focus more on the production plant in Apeldoorn, in order to draw the attention to some relevant details. Once these details are discussed, we can proceed to exploring the supply chain of veil more fully.

1.3. Introduction of Apeldoorn Veil

As already stated, Owens Corning Veil Netherlands BV is a production plant producing veil for special niche markets.

The history of plant starts in 1960.4 By that moment the production site in The Netherlands was owned by Van Gelder & Zonen. Van Gelder & Zonen was one of the major paper producers in The Netherlands. To generate more value they were looking for other ways to deploy their knowledge. This process has lead to initial contact between Van Gelder & Zonen and Owens Corning. In the period after 1960 the contact intensified. Finally, in 1981, the production site at Apeldoorn was taken over by Owens Corning. From 1981 onwards, the production site in Apeldoorn has become a department of Owens Corning, retaining a name of its own: Owens Corning Veil Netherlands BV (Apeldoorn).

As a result of a considerable business success, the Apeldoorn plant decided to enlarge its production capacity significantly. This enlargement took place in 2000 and resulted in a current production of …Confidential… millions square meters of veil.5 About …Confidential… different types of veil are being produced in Apeldoorn. The current live cycle of a type of veil is approximately …Confidential….

4 _{…Confidential…}

The production process of Apeldoorn is a …Confidential….6 glass fibers …Confidential… through a drier resulting in a basic veil (…Confidential… -veil). This …Confidential… -veil is then transported to the next stage of the production process …Confidential…. Figure 8 provides a schematic overview of this process.

…Confidential…

Figure 8. The production process

Veil produced by Apeldoorn can be specified according to parameters such as size, thickness, strength, porosity and other chemical and process properties. Every different type of veil is a unique combination of these parameters. This combination of parameters constitutes the so-called customer demands.

To produce veil meeting these demands Apeldoorn is fabricating its veil according to a recipe. A recipe of veil basically consists of two main parts. As is the case with the

production process, the first part of the recipe concerns the production of …Confidential… veil. This basic type of veil consists for over …Confidential… % of its production of glass fibers and one specific type of binder. This low variety is important to this thesis.

The second part of the recipe concerns the …Confidential…. From that stage on the variation among the different types of veil is created.

The recipes are initially, as described in the previous paragraph, created by the PD’s. Based on customer needs or based on own innovations a selection of raw materials and process settings are tested in the laboratory of S&T. If the testing stage results in a recipe, Apeldoorn gets involved in the initial online tests. From these tests on the

production line recipes can be improved and eventually taken into production.

At Apeldoorn the fabricated veil is cut to order and supplied to the customer. In the process of specifying, selecting, etcetera, contact with the customer is maintained by the PE’s of the Sales department. This contact results in the control loop as visualized in figure 6.7 As can be seen, the Sales department is the last step before the veil is actually supplied to the customer. Small adjustments based on customer needs are translated back to the recipe by the PE’s from Sales. If complex product innovations are needed the total product innovation process starts over again and the PD’s from S&T are involved.

6 _{…Confidential….}

Sales Apeldoorn

S&T

Customer Specify Select Produce Supply Control Supplier

Figure 9. Supply control loop is managed by different departments of Specialties

To produce approximately …Confidential… different types of veil, the Apeldoorn plant uses …Confidential… different ingredients.8 _{All these ingredients are both selected}

and checked by the product developers of S&T and PE’s of Sales. This process of

selecting and checking raw materials is exclusively based on the examination of the final product: when the fabricated veil performs as it should, no modifications are made.

8_{…Confidential….}

1.4. Supply on Apeldoorn

As already mentioned, the Specialties department of NWT is highly customer orientated. To be able to flexibly and effectively act upon customer needs, Specialties organized its departments in local production facilities. In these facilities, dotted line responsibilities and with it the cooperation between the departments resulting in an effective customer orientation at local level, should be secured. Specialties is supplying Products, Service and Information to its customers. In figure 10 this supply is visualized. The department of S&T is represented as a supporting facility like described in the above.

As stated in paragraph 1.1 this current situation proves crucial in chapter 4. Sales Apeldoorn CST S&T ... Veil Customer Product Information Product Service

At the input side of Apeldoorn the supply can be visualized as done in figure 11. Raw materials are selected and prescribed according to the recipes provided by S&T and Sales. Together with production orders, recipes are the information and service input of Apeldoorn. With this information Apeldoorn is to order the supplies needed and to produce the veil.

Apeldoorn Veil Supplier

Raw materials

Recipes Production orders

1.5. Summary - Anticipation

The main research question pertaining to this thesis is:

What possibilities does Owens Corning Veil Apeldoorn have to reduce production losses and increase overall profits?

This chapter introduces Owens Corning Veil Apeldoorn to the reader. This introduction is needed in order to proceed to the formulation of an answer to the research question. In this chapter, the Apeldoorn production plant as it is located under the control of the customer orientated Specialties department of Owens Corning is described. Under dotted line responsibility together with other departments and teams of Specialties, Apeldoorn is fabricating veil that is to be supplied to customers of Specialties. Specialties departments other than Apeldoorn specify, select and control that management. This means that the knowledge required to optimize production processes in order to reduce losses, is not available to the plant itself. As already stated in the Research Introduction and described in chapter 0, the …Confidential… case functions as an example of this deficiency and its consequences.9

With regard to the research question stated above, this chapter hints at the direction in which the remainder of this thesis should be going: the possibilities to reduce production losses are located, not in technical optimizations, but in organizational

modifications.

In chapter 3, the current business situation will be analyzed in greater detail than is done so far. Such a detailed analysis is needed to be able to pinpoint the organizational deficiencies that have to be remedied: by contrasting the current situation (chapter 3) with the ideal situation (chapter 4), one will be able to formulate the possibilities for the reduction of losses which by now can be equaled with the possibilities to improve some organizational deficiencies, i.e. with the transition from the current towards the ideal situation (chapter 5). In the next chapter, these analytical steps are being prepared by introducing the theoretical models needed (chapter 2).

9 _{The …Confidential… case as discussed in chapter 0 and can be considered proof for the necessity}

to discuss the organizational structure, as this case shows that the Apeldoorn plant lacks the knowledge to translate the …Confidential…. This knowledge should be somehow communicated to the plant by S&T and Sales, requiring an organizational modification. From this point onwards, I will assume that the reader is aware of the …Confidential… case and its implications for the organization.

1.6. Methodology

1.6.1. Definition of losses

Now that the Apeldoorn production plant is introduced and one real life scenario is described, this paragraph aims at being a concise articulation of the methods pertaining to the remainder of this research project. The main research question is already

formulated as follows:

What possibilities does Owens Corning Veil Apeldoorn have to reduce production losses and increase overall profits?

This question already makes clear that the type of research performed is aimed at providing practical solutions to practical problems. In terms of De Leeuw’s typology of research prototypes, this research is problem-solving in nature (De Leeuw, 1996).

The objective of the research as described in this thesis is to reduce – or to advice how Apeldoorn could reduce – losses regarding supply quality insufficiency. In order to meet this objective two sub questions were be asked.

1. How are these losses to be defined?

In paragraph 3.8 I distinguish three different ways to define these losses: 1. Losses obtained on material waste

2. Losses related to the organization 3. Losses related to the policies

The analysis of the …Confidential… case plays a key role in the formulation of this answer, as it provides a practical scenario that can be observed and analyzed. Observation showed, firstly, that losses resulting from problems with raw materials sometimes occur (chapter 0).

Secondly, further analysis – as well as interviews with production employees – showed that the people working at the Apeldoorn production plant are not equipped with the knowledge to effectively deal with such an occurrence (chapter 0, paragraph 3.4, appendix I). This has to do with the way certain knowledge is distributed throughout the organization. The result is that it takes more time for Apeldoorn to remedy a problem with the raw material, the production process, or a combination thereof. This further increases the amount of production losses.

And thirdly, this situation might lead to a situation in which the production plant is unable to deliver its commodities to the customer, as is shown in the analysis of the relevance of the raw materials to the product portfolio (paragraph 3.3, 3,4, appendix I). This would have a huge impact on corporate policy, as Apeldoorn is part of a customer-oriented supply chain.

To sum it up: the data leading up to the answer to the first question is collected with the methods of observation, analysis and interviews.

2. What causes these losses?

The answer to this question is already implicit in the answer to the first question. Losses as far as they are defined as material waste occur as a result of a misfit between material properties, production process restrictions and properties of veil. This is the outcome of the observations in chapter 0 and an interview, the contents of which are described in paragraph 4.1.

Losses defined as related to the organization are caused by an insufficient distribution of knowledge on several or all fit properties. This answer was obtained by analysis and interviews (chapter 0).

Losses defined as related to corporate policy are also caused by an insufficient knowledge of fit properties, but in this case this insufficiency can also be considered to constitute a misfit of supply policies and organizational policies. The information on relevant theories is obtained by literature research (chapter 2). A thorough analysis of the organizational structure of the Apeldoorn production plant, as well as Specialties (of which Apeldoorn is a part), revealed this misfit (chapter 3 and 4).

1.6.2. Relation between solution and the theory used

These results indicate that all these losses can be considered the result of a deficiency in organizational structure, as the current structure does not allow for relevant knowledge to be available for the relevant persons. This poses the question of how Apeldoorn supply management should be organized in order to be able to reduce or to control these losses. This question is captured in two sub questions.

1. What are the parts of the raw material management chain of Apeldoorn?

Before suggestions for the improvement of the organizational structure can be put forward, it is necessary to identify the supply management chain responsible for the losses. The answer to this question is formulated in chapter 1 and is based upon field research done at the Apeldoorn production plant.

2. How should supply management be organized in order to reduce losses regarding input material quality insufficiency?

To formulate an improved supply management for Apeldoorn the POP theory is used. The POP theory is especially suitable for this research because it deals with the mutual

influence of process-related, organization-related and policy-related issues, which are exactly the issues that form the background of the losses under investigation.

By using the POP theory fit between organizational management and supply

management can be determined by determining supply complexity. Chapter 2 researches the literature on POP, while chapter 3, 4 and 5 discuss the applicability of the POP model to Apeldoorn, as well as the recommendations that follow this application.

2. Theory

Since this chapter will be devoted to the development of some theoretical points that have a wider scope than the main topic of this thesis – namely the losses encountered at Owens Corning Veil Apeldoorn – the relation with this main topic may seem absent. This is not the case, however, as the theories and models discussed in this chapter will be utilized in the subsequent chapters that center on the Apeldoorn production plant. Any reader not interested in the finer points regarding the theoretical background of this thesis can proceed to chapter 3 and further directly.

2.1. Environment

In this chapter the POP-model, along with accompanying theories, is introduced. These theories all originate in the recognition that any organization’s existence in an

environment is of great importance (Mintzberg, 1979; Kamann, 2001). For that reason, some theoretical notions regarding organizational environment will be introduced first.

The fit between the organization and its environment depends on the

organizational capabilities to shape itself in congruence with its environment. By bringing the organization in congruence with the environment, organizational continuity can be achieved best. The principle of an environment shaping the organization – since it cannot be done the other way around – is derived from the well-known contingency theory. This thesis will take Kamann’s representation of this theory as a point of departure (Kamann, 2001). Within this theory uncertainty of the environment is described in terms of

2.1.1. Complexity

As every organization functions in an environment, every organization has one or more influencers that play a role in this environment. Complexity, then, is understood as both the amount and the diversity of these influencers (De Leeuw, 1988; Kamann, 2006). One can think of a mining company: although such an organization would have to comply with diverse influencers such as local laws and regulations, its equipment supplier and a few raw material buyers, the amount of its influencers is limited. This is quite unlike, for example, a telecommunication company, that needs to cooperate with a lot more buyers for different services, is providing service to very different geographical markets and needs to be in constant competition with other players on the market.

The notion of environmental complexity can be further broken down into an

endogenous and an exogenous component. If we once again take our mining company, it can be seen that the complexity perceived from the environment, such as local laws and regulations etcetera, is exogenous complexity. Endogenous complexity is the complexity as it can be influenced by the organization. In terms of our mining company: the

organization can influence the different types of purity grades it is supplying.

To sum it up: an organization is considered complex when it has to deal with a lot of different environmental influencers. Complexity can be subcategorized into complexity determined by the organization itself (endogenous) and complexity determined by the environment (exogenous)

De Leeuw states that organizations are all about reducing complexity. In the creation of any organization, systems – that can consist of subsystems – are introduced. These subsystems can be considered factors in the organizational structure. The creation of subsystems involves the reduction of the number of influencers that affect any one node in the organizational structure. De Leeuw uses the notion of hierarchy to

understand this reduction process, as the adding of an organizational level is a reduction of complexity. It can be said from this perspective that the environment is complex if many different influencers cannot be decomposed.

2.1.2. Dynamics

Any relation of an organization with its environment is subjected to dynamics (De Leeuw, 1988; Kamann, 2006). The dynamics of a relation can be formulated as the amount of variation such a relation undergoes over time. This can also be illuminated with the help of our fictional companies. If we take a look at the mining company, it can be seen that its influencers are not subjected to much variation. If global industry needs a certain mineral today, chances are that it will still be sought after for the next couple of years. Some applications of it may disappear and others might emerge.

This is different for the telecommunication company as its influencers are subjected to much more change. A couple of years ago, broadband internet was considered a luxury, meaning that our telecommunication company was the only company offering it to a few customers. Today however, nearly every household is connected to the internet via a broadband connection, and that connection can be

provided by several different companies. So now our company has to function in a totally different environment, and a couple of years from now will probably learn that the

market has changed again, but at the moment one is not able to predict this change. An environment that changes a lot in unpredictable ways, then, is considered a dynamic environment. Together with complexity – the diversity of influencers – dynamics determine environmental uncertainty of an organization.

2.2. Organization in its environment

In the ideal case, the form of an organization will be in congruence with its environment, as this congruence guarantees continuity. Mintzberg relates the notions of exogenous complexity and dynamics to organizational forms, dealing with the question of how an organization is to be organized (Mintzberg 1979; Jonson and Scoles, 1989). In highly complex and highly dynamic environments, organizations are confronted with a high level of uncertainty.

Within a rapidly changing environment in which many different influencers are to be kept satisfied, an organization must be able to act quickly and to be close to its influencers. Mintzberg speaks of an organic and decentralized organization form if an organization is structured accordingly.

The degree of centralization is a two-side spectrum and has to do with the

distance between the company departments. Especially in the case of organizations with multiple business locations, departments of an organization can be localized either

centrally – for instance at the Headquarters – or decentrally. The degree of centralization is related to both coordination and scale: having relatively autonomous departments in several locations results in a high flexibility, although economies of scale are low.

The other aspect of organizational form can also be considered a two-side

spectrum that ranges from an organic to a mechanic organization structure. This aspect describes the way in which the organization is controlled, which in turn is related to the endogenous complexity and dynamics of the job that needs to be done. Mechanic organizations are located in those business areas in which business is predictable and relatively simple in nature. An organic organizational form is needed in uncertain – and thus complex and dynamic – environments.

These aspects of organizational structure are expressed in a matrix in figure 12. This figure summarizes exogenous complexity and dynamics to four quadrants. Each of these quadrants then represents the organizational type that suits the conditions as specified alongside the axes.

C o m p le x it y H ig h L o w

So far the relation between an organization and its environment as subdivided in complexity – both endogenous and exogenous – and dynamics have been introduced. Based on this introduction, ideal organizational forms have been determined. In the next paragraph organizational production technology, organizational need for innovativeness and organizational strategy will be described (Jones, 2001; Kamann, 2001). By

introducing these notions and the way in which they are interrelated, we are enabled to benchmark the relation between internal processes, internal organization and internal policies to theoretical optimums, as will be done in chapter 4. With this benchmark, the quality management of raw materials can be improved in a way that best fits the organizational environment.

2.2.1. Aspects of organizational form

Within this thesis, the environment is described in terms of the influencers relevant to the supply chain of veil. In this chain, value is created by the production of service, information and products (Jespersen; 2005). This value is to be supplied at markets. These markets are, as part of the environment of an organization, characterized by a certain level complexity and dynamics. The degree of uncertainty characterizing these markets affects the organization that supplies value.

If we once again go back to the telephone company and the mining organization and focus on the production technology, a difference can be found. The mining company possesses huge cranes, huge conveyor belts etcetera. The telephone company possesses mostly minivans able to drive to customers located all over the “production location”. This involves a difference in the respective production technologies. The nature of production technology can range from process production to project wise production. Project wise production is found in highly dynamic and highly complex markets. Kamann (2001) describes the idea that project wise production typically takes place (a) for unique products, specified by the buyer; (b) with low repetition of demand; (c) where buyer is involved from the beginning of the chain (‘engineer-to-order-environment’); (d) with aspects difficult to measure, such as high material complexity and powerful suppliers with few to choose from. This is more or less the case with the telephone company, as every customer is different in some aspects. The mining company doesn’t have that problem, as it produces (a) a non-unique raw material not specified by the buyer; (b) with high repetition of demand; (c) where the buyer only gets involved at the moment of the transaction; (d) with measurable aspects as complexity is low and both suppliers and buyers are to be found everywhere: its production technology can be described as

Similar to this description of the nature of production technology, the need for innovativeness can be introduced. On turbulent markets product innovations are needed in order to guarantee business continuity.10

As stated in the beginning of this chapter, organizational continuity is optimal when its shape is in congruence with the environment. In order to shape an organization it is best for organizational management to have a strategy. Strategy is related to how an organization is securing its continuity. To go back to the mining company: within its certain environment, barriers are needed in order to prevent other companies from penetrating its market. Because of the low endogenous complexity and therefore the robustness of the production process and the advantages related to economies of scale, low prices can be used as a barrier. In this example organizational strategy results in a low cost policy, with a focus on smoothing the organization and a need for efficient processes. In the next paragraph more types of strategies will be introduced after the introduction of the POP- model. With the help of the POP-model the strategies described in the next paragraph can be better interpreted.

2.3. Policies Organization Processes

At this point in the theoretical introduction, the POP model can be introduced. With this model we will be able to reform the organizational (O) structure of Owens Corning Veil Apeldoorn. Such an organizational modification is needed to provide intelligence to the employees working at the level of production processes (P2) that is needed to determine which process optimizations can be implemented. Furthermore, this intelligence will enable the Apeldoorn production plant to implement a suitable supply policy (P1_{) needed}

to actually bring about these optimizations.

Based on the contingency theory an organization is shaped by its environment. Value generated by the organization is supplied at markets which are characterized by complexity and dynamics. Different levels of uncertainty require different combinations of the three factors introduced above (nature of production technology, need for

innovativeness and organizational strategy).

10 _{Refer: Jones (2001): “The ability of companies to compete successfully in today’s competitive}

environment is increasingly a function of how well they innovate a how quickly they can introduce new technologies

These factors in turn determine the policy (P), organization (O) and processes (P) of any business organization. The POP model describes the organizational policy,

organization and processes as influenced by environmental factors (Kamann, 2001). This is represented in figure 13.11

Figure 13. External, internal factors, strategy, the POP and the purchasing POP

The POP model is the model of policies, organization and processes of an

organization. Management of an organization is related to these three business levels as operational and tactical management is concerned with respectively processes and organization, while strategic management deals with organizational policies. By putting into operation the organizational environment, the nature of production technology, the need for innovativeness and the strategy, an organizational benchmark can be created. This organizational benchmark can function as a reference point for the evaluation of, for example, the organizational and strategic aspects of supply management, as is done in this thesis.

Kamann (2001) has described the applicability of the POP model for supply chain management. More theoretical background therefore can be found in his publications. This thesis will not develop the fine points of the general POP model any further. From now on, the focus will be on management as far as it affects the assessment of raw materials; the POP-model will only be discussed and deployed as far as it is relevant in this respect. Relevant for this research is thus the creation of a reference point with which the management of raw material can be evaluated.

From the organizational need for innovativeness and production technology, both related to the organizational environment, impact matrices on organizational strategy and organizational structure have been created (Kamann, 2001).

H ig h L o w N e e d f o r in n o v a ti o n s Hig h L o w N e e d f o r in n o v a ti o n s

Figure 14. Impact of organizational need for innovations and the nature of the organizational production technology on strategy and the organizational form

2.3.1. Typologies

Typologies specific for supply management typologies have been derived from these generic matrices. Four main typologies are presented (Kamann, 2003).

1. Teams

2. Calculating friends 3. Squeezers

4. Critical partners

Teams

Within a highly unpredictable environment with complex technologies organizations need to focus on innovation in order to maintain high market shares. The complexity of the environment urges the organization to cooperate with innovative partners in order to decompose the complexity. Together with these partners current markets can be

innovated and new markets can be created. Internally the organization needs to focus on close cooperation with all production departments. Effective cooperation results in a low span of control and a low level of formalization.

Calculating Friends

This archetype is applicable to organizations subjected to a stable but complex

environment. Unique projects are characteristic to this archetype. Based on the nature of production technology there is a need for decomposing the complexity. To decompose the complexity, partners are needed. Because of the stability of the environment the organization can have more internal management layers, each manager being able to control a wide span of control.

Squeezers

Predictable environments with low complexity are characterized by mechanic and

centralized organizational structures. Basically the attitude of the environment is forcing the organizations to focus on the reduction of costs at all levels. Within process industry which produces products with stable and long live cycles this focus results in long term contracts, high levels of automation etcetera.

Critical partners

The fourth typology is related to dynamic but relatively noncomplex environments. Within these environments flexibility and predictability of production is central. Due to the need for innovations within this typology, the focus is on the improvement of efficiency and on flexibility.

These four typologies are summarized in figure 15. Further decomposition can be found at Kamann (2001).

Figure 15. Typologies matrix

From these typologies policies, organization and processes can be determined. To this thesis the archetype of Teams and Calculating friends will prove relevant in chapter 3, while the archetypes Critical Partners and Squeezers again turn up

2.4. Supply POP.

Based on the typologies introduced in figure 16 Kamann (2001) defines four ideal supply portfolios.12 S h a re in t o ta l v a lu e in p u ts L o w S h a re in t o ta l v a lu e in p u ts H ig h H ig h L o w

Figure 16. Kamann’s matrices representing the ideal supply portfolios

The generic form of these matrices is known as the Kraljic matrix (Kraljic, 1983). In the Kraljic matrix, suppliers are scored and evaluated in terms of both complexity and dynamics. The dynamics of the supplying relation is accounted for on the vertical axis as this axis presents the financial relevance of each supplier’s raw material taken over time: the vertical axis scores each supplier in terms of the percentage of total expenses spent on that supplier over a certain amount of time. The complexity of the supplying relation, then, is scaled on the horizontal axis. Based on both the endogenous and the exogenous complexity, supplier complexity is ranked.13

12 _{Within the POP model as founded by Kamann, the word “Purchase POP” is used. Within this}

research this word “purchase pop” is interpreted at raw material management Policies,

Organization and Processes. The original word “purchase” reflects its application area, the purchase department of the organization, the department which, in its original context is in control of the supplies. Because of this context in this thesis the original word “Purchase” is replaced by the word “supply”.

Kamann’s matrices in figure 16, then, can be interpreted in these terms. Strategic suppliers are those suppliers that (a) provide the organization with those supplies that are important to the organization in terms of finances and (b) cannot easily be replaced by other suppliers. In environments of highly innovative and unique projects, the larger part of the supplied value towards the organization is bought from these strategic influencers as they supply unique and complex products.

The archetype of squeezers can be understood in a similar way. As the

environment of a squeezer is highly certain, most of its input is provided by leverage suppliers. Leverage suppliers are those suppliers that a) provide the organization with those input materials commodities that are important to the organization in terms of finances and b) can easily be replaced by other suppliers.

With the creation of the ideal suppliers portfolio under a defined environmental certainty, the congruence between the organizational POP and the supply POP can be determined. As is the case with the congruence between the POP and the organizational environment, congruence between the supply POP and the POP is resulting in the most optimal organizational continuity.

2.5. Management cycle of supply

Since part of chapter 3 will be devoted to the interpretation of the benchmark resulting from the POP analyses, the introduction of the management cycle of raw material is required. Like the process of managing an organization, the process of management of supplies can be decomposed in a specifying and selecting, performing (contracting), monitoring (ordering) and controlling function.

Figure 17. Management cycle of supply

2.5.1. Fit

Before Apeldoorn and its management of raw material is described in terms of the POP, one other concept is in need of introduction. This is the concept of “fit” (Boesten, 2006). Just as the benchmarks of both POP’s result in a degree of congruence, supply properties can be described in similar ways. When describing supply (chemical) properties however, we abandon the notion of congruence and adopt the notion of fit. In order to understand of the nature of the supplies used in the production plant this concept needs to be made clear.

According to Wells (1986), process industries work with huge amounts of homogenous raw material. In its ideal form, this material can be handled by the

machinery and can be combined with other material. On a high level of detail, however, a homogenous amount always shows some property variation. The bandwidth surrounding the average determines the degree of homogeneity. Fit, then, describes the degree in which the production machinery and the combination with other material can handle the property variation as specified in the bandwidth. Fit can thus take on three different forms, as specified below and shown in figure 18.

A: no fit

B: fit between some particles (a full fit is expected when only the statistical averages are taken into account)

C: full fit

Figure 18. Fit definitions

Robustness within this context is the capability of maintaining fit over time. More information about fit and variation over time is described by Forrester (1985). The difference between statistical fit (B) and full fit (C) becomes of high importance in chapter 4; although specifications based on averages indicate that supplies are acceptable, in practice these specifications might leave space for failures.

2.6. Summary - Anticipation

The main research question pertaining to this thesis is:

What possibilities does Owens Corning Veil Apeldoorn have to reduce production losses and increase overall profits?

In this chapter the influencing relations between environmental uncertainty, the

organization and the management of supplies have been described in terms of the POP model. With the help of this model, the current policy, organization and processes – both in general and with regard to supply management – of Owens Corning Veil Apeldoorn can be described. This description will take place in chapter 3 and is a necessary step towards answering the basic research question quoted above: by describing the current POP and supply POP of the Apeldoorn production plant, suboptimal aspects of the management of supplies can be tracked. This description will then be juxtaposed to the optimal situation (chapter 4), and suggestions for improvement can be made

(chapter 5). The implementation of these improvements in the POP and supply POP will be shown to enable the Apeldoorn plant to reduce losses and increase overall profits.

3. Apeldoorn POP

This chapter applies POP theory as developed in chapter 2 to the current business situation of Apeldoorn. This results in a empirical-based overview of raw material

management in Apeldoorn, which will in turn enable us to (re)formulate material-related losses as encountered by Apeldoorn in terms of the three POP levels: the policies, the organization and the processes.

Within the POP theory, organizations are influenced and shaped by their

environment. Based on the work of Mintzberg and Kamann, that influencing process is performed by groups of influencers, which vary in diversity and numbers (complexity) and in stability (dynamics). The environment of Apeldoorn consists of many influencers. Although Apeldoorn’s core business is the production of veil, the organization, the policies and the processes of Apeldoorn are continuously shaped by its environment.

In the POP theory the organizational POP of Apeldoorn which is influenced by its environment should be the benchmark for its supply POP. In the work of Kamann the congruence between these two POP’s is considered important in the effectiveness of the organizational supply. In the current situation Apeldoorn is encountering losses regarding its raw materials. In order to improve the current supply POP this thesis and especially this chapter will focus on the congruence between the policies, the organization and the processes of Apeldoorn and its policies, its organization and its processes of its supplies.

To that purpose this chapter starts with a decomposition of the relevant aspects of the Apeldoorn environment in order to determine both the complexity and the dynamics of the influencers that exert influence over the Apeldoorn plant. The first paragraph provides a general overview of the environment, leading up to some preliminary conclusions. The influencers described in the general overview are mostly influencers whose influence cannot be affected by Apeldoorn. In chapter 2 this form of influence is linked to exogenous complexity. The exogenous complexity of the Apeldoorn

environment is based for instance on parameters like the diversity and the geographic locations of other chemical plants. Besides exogenous complexity, endogenous

complexity – consisting of influencers which can be affected by organizations and in this case Apeldoorn – is relevant to this thesis.

As Kamann described, an organization can narrow its options that much, that only one supplier is able to supply, which at the end results in high dependency and high acceptance of that supplier. Together exogenous and endogenous complexity result in the total uncertainty as perceived by the organization, according to which it has to shape itself.