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Flexibility Audit

This paper explores the flexibility audit of KLM Cargo within the context of environmental turbulence. It analyzes various flexibility profiles, including operational, structural, and strategic aspects. The authors discuss how KLM Cargo can adapt to a dynamic environment marked by technological advancements, supplier dependencies, and unpredictable market demands. Insights into organizational potential and a conceptual model for managing turbulence are provided, emphasizing the need for improved flexibility in internal processes and alignment with external client demands.

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Flexibility Audit

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  1. Flexibility Audit Functional Chaos or Flexible Truth? P.R. Boers (Erasmus) Drs. N.A. Giling (AMS/QB) G. Joppe (Erasmus) Ing. J.J. Kooiman (AMS/QB) Dr. H.W. Volberda (Erasmus) Department of Strategic Management & Business Environment Rotterdam School of Management Erasmus University Augustus 31, 1995

  2. Agenda • Flexibility audit KLM CARGO • Environmental turbulence profile • Flexibility profile • Actual organizational potential • Discussion and conclusions

  3. Conceptual model Stable/Turbulent Environ- ment Management task Metaflexibility } • Operational • Structural • Strategic Flexibility Mix Limited/broad Low/high potential Organization design task Technology Structure Culture Organizational conditions

  4. Environmental Turbulence Profile

  5. Environmental Turbulence Profile (2) • Summary • Turbulence • Complex, dynamic environment • Highly controllable

  6. Environmental Turbulence Profile (3) • Complexity • Suppliers • Increase of internal dependencies • Technology • Increase of new technologies for process control • PMC’s • Grey area’s (who owns the customer?) • Customers • Increasing number of client demands due to intended shift to direct accounts

  7. Environmental Turbulence Profile (4) • Dynamism • Workload • “Making your capabilities visible” • Technology • Many developments in technology, impact on organisation • Financial Resources • Variations in allocation of financial resources • “Financial resources are not limiting Cargo’s actions at the moment”

  8. Environmental Turbulence Profile (5) • Unpredictability • Inside-out: • Predictable markets, despite lack of market information • Suppliers • Internally highly dependent, yet relations seem unclear

  9. Flexibilityscan KLM Cargo

  10. Flexibilityscan KLM Cargo (2) • High overall flexibility • Highlights: • High flexibility score regarding suppliers of capacity (rubber planes) • High flexibility score regarding PMCs (anticipating market needs) • Less internal flexibility, focus on cost and efficiency • Less flexibility regarding internal clients (compared to external clients)

  11. Technology characteristic

  12. Technology characteristic (2) • Summary • Large deviation: much variety in flexibility potential of technology within division • Flexibility potential can be inproved by increasing the applicability of infosystems and widening the operational production repertoire • Design variables lay out & mode of production are hardly changeable • >The above determines the potential for operational flex. of the current organisation

  13. Technology characteristic (3) • Mode of production • batch leaning towards mass production • Large range of services (mass customised) • Lay-out • functional-group • much dependences between operations

  14. Technology characteristic (4) • Means of transformation • Average flexibility, not applicable for other services • Info systems support functional departments instead of processes • Operational production repertoire • Quality control based on informal spot-checks and self-control • Routinization of actions, little customization

  15. Structure characteristic

  16. Structure characteristic (2) • Summary • Flexibility potential restricted by functional organisation, control systems and large dependencies between subparts • Organisational form • Functional • Specialised to function & product • Integral management

  17. Structure characteristic (3) • Control systems • Top down & bottom up planning • Process regulation • Specialisation systematically, but not formalised • Much participation, yet limited autonomy of the departments • Large sequential dependencies in processes

  18. Culture Characteristic

  19. Culture Characteristic (2) • Identity • Strong collective “pride” • “everything is possible here” • Many sub-cultures • Leadership • Consultive leadership style of division management • Lack of leadership by lower management • Freedom within guide-lines • Priority rules

  20. Culture Characteristic (3) • Unwritten rules • Strong conformation to Cargo mentality • Discipline dominance: “work hard, don’t argue” • Rules are violated by definition (everybody is vice president) • Willingness to change (except for middle management) • “Practise what you preach”

  21. Culture Characteristic (4) • External orientation: • long term • Fairly open, yet renewal is mainly means orientated and technology-driven • Anticipation of changes is purely driven by self-interest

  22. Decision support matrix(flexibility deficit)

  23. Decision support matrix(flexibility surplus)

  24. Overall analysis Flexible organisation High kc ? Bureaucratic organisation Controllability Rigid organisation Chaotic organisation Low Operational flexibility Structural flexibility Strategical flexibility Flexibility mix

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