Floribusiness ‘We want to have control of the entire logistics process’

‘We want to have control of the entire logistics process’

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By the end of next year, all transactions via Royal FloraHolland must be digital. The suppliers will be using Floriday and all orders will also be placed via digital sales channels. What’s more, the auction is striving for full control of the logistics process. This applies to transactions between growers and buyers as well as the logistics between the different branches. “We really want to take control of the entire logistics process, from the order at the nursery to the buyer’s back door”, says CEO Steven van Schilfgaarde about this ambition of the auction.

By Arie-Frans Middelburg

The interview is nearly over when Steven van Schilfgaarde reiterates his enthusiasm about RFH’s strategy. “I feel we’re currently in a great place. Who could have imagined four years ago that all transactions would take place through a new, digital platform? It’s a great achievement for the Netherlands as the number-one international floriculture hub.” The CEO had already mentioned their improved operational services, which he referred to as a ‘ticket to tomorrow’ in the beginning of the interview. And Van Schilfgaarde is very happy about the progress they’ve made with Floriday. All members will be linked to the platform by the end of the year. Our aim is that all transactions are digital by the end of next year. “We’re very pleased with our current status”, says Van Schilfgaarde.

How far along are you with Floriday?

“Quite far. Three-quarters of all members are now linked to Floriday. More than 1,400 members (42%) are actively using the system. Our aim is that by the end of next year, all orders will be placed digitally. We’re going to launch a large campaign, which will run from now until the end of next year, encouraging everyone to manage their orders via FloraXchange, Blueroots or FloraMondo, linked to Floriday. It’s a huge step for the floricultural sector. And we can really make it happen now, because Floriday has all the required features.”

RFH is striving for growth. Will non-members be joining Floriday as well?

“The growers that are joining now include both members and suppliers. We’re also doing well at an international level; we’ve currently got 120 international users, 42 of which are based in Kenya. We designed a special module for them. At the next member sessions, we’ll also invite suppliers to join Floriday. In the context of our collaboration with Blueroots, we’re also busy linking the growers that don’t supply via Royal FloraHolland, but directly to the large traders. So, Floriday is slowly starting to take shape outside Royal FloraHolland as well, even if it’s still in an experimental phase.”

Does Floriday offer opportunities for change with regards to logistics?

“That’s another important point. When all orders are going to be placed digitally, we can further optimise the entire logistical process. Last year, we sat down with our Integral Logistics Control (ILC) to develop a new IT infrastructure that enables us to support both the clock logistics and our warehouse management. We can now offer both clock and warehouse sales in parallel from all our locations. We’re getting full control of the logistics process, from the nursery all the way to the buyer’s back door. That’s much broader than what we’re doing now. At the moment, our logistics activities are concentrated within our own hubs.”

What does this mean for the transport companies?

“We’ll be working together with them to optimise the entire floricultural sector. Eventually, we want to go to nationwide auctioning and manage both the direct and the auction transactions directly from the nursery. We’ll announce a timeframe for this on the 12th of December, the Day of the Cooperative. Both at an organisational level and with regards to IT, we are now ready to take the next steps.”

What about fulfilment services?

“We offer this service in Naaldwijk, Aalsmeer and Rijnsburg. More and more growers are making use of it. It’s going well. It’s an alternative way to distribute plants and flowers. Distribution is still very much linked to the clock. A trolley of flowers is sold, and after that, the flowers are delivered. In the new situation, the output is still there, but the distribution is no longer linked to the auctioning moment. Plants and flowers are distributed through order picking. It makes us much more flexible with regards to deliveries. With our fulfilment services, we can support both the direct and the clock flows.”

How important is fulfilment?

“In logistics, we’ve got two challenges. The first is that growers cultivate a limited number of varieties. Buyers want a larger selection of different varieties, so they must be brought together somewhere. The second challenge is that buyers are placing their orders later and later, because they want to respond to demand, which leaves us with less time to prepare the deliveries. The best way to deal with those challenges is by bringing all varieties together in one place and ensure quick deliveries from there. Add fulfilment to that, and you’re flexible with regards to delivery times as well. That way, the link between transaction and logistics is gone. It allows you to manage the logistics at a different time, separate from the moment of transaction.”

Royal FloraHolland recently announced they want to turn their branch in Eelde into a future-proof auction. The plan involves investments in auctioning, auction presale, logistic handling and underlying IT systems. Floriday is the basic structure for the plan. In the long term, it will also facilitate other forms of dealmaking. For example, by disconnecting the logistic services from the auctioning system (clock). This means that distribution and delivery will take place on the basis of fulfilment in Eelde. Image auctioning, auction presale and remote buying will be implemented too. The modern location in Eelde will be a blueprint for RFH’s export locations.

Are Rijnsburg, Naaldwijk and Aalsmeer still going to offer customised services?

“Around three years ago, we had a long discussion about the direction that Royal FloraHolland should take and the outcome was ‘digital’. The Members’ Council also wanted to see more bold moves. If we want to make Royal FloraHolland future proof, we need to work uniformly across all locations, including with regards to logistics. This will allow for interbranch logistics. So, if a trader from Rijnsburg buys from our location in Naaldwijk, Royal FloraHolland ensures his purchase is shipped to Rijnsburg. It will make the delivery times shorter. We’ve already taken the first steps. We’re going to improve our services together with our service providers the coming years, to ensure we’ll be offering our customers the best possible service.”

No customisation then?

“No, no customisation. We’ll transfer the experience we’re gaining in Eelde to our branches in Aalsmeer, Naaldwijk and Rijnsburg. Our goal is to have uniform processes that enable us to support the logistics between buyer and grower in the most efficient and effective way.”

Does that imply no more physical auctioning in Rijnsburg, Naaldwijk and Aalsmeer?

“We’ve always said we’d switch to Image Auctioning at some stage, because we want to introduce nationwide auctioning. We’re starting a pilot with cut anthurium at the end of this year or the beginning of next year, depending on the Xanthu growers. Our infrastructure is all set for it.”

Wasn’t the idea to continue with physical auctioning for as long as it was financially feasible?

“No, I’ve always said there are two reasons to stop with physical auctioning. The first was if too many gallery seats would stay empty, and the second, a switch to new auctioning methods. We’re now entering a phase with our ILC where we’ve got all the logistics and IT in place. We’ve spent the past one and a half years laying the foundations. I’ve noticed that both buyers and the Members’ Council really want us to set some clear goals now and that’s what we’re going to do on the Day of the Cooperative.”

Is nationwide auctioning going to be followed by the ‘af-tuin veilen’ auctioning system?

“All that ’af-tuin veilen’ is, is that at the time of the transaction, which takes place via Dutch Auction, the logistics are directly between grower and buyer. We’re going to take control of the logistics as well as the way in which transactions take place, and those things will be supported by our systems. We’re going to make optimal use of our hubs, increasing the occupancy rates, which will make our process more cost efficient.”

Will sold plants and flowers still be delivered to the auction in the future?

“The different plants and flowers will still have to collected somewhere and our hubs are the most logical places. What’s most effective is when growers fill and place the trolleys at their nurseries in a systematic way, and we take care of the distribution.”

Will plants and flowers still be shipped back and forth between branches then?

“If you know the destination of a certain transaction, you can optimise the logistics based on data. We are the only ones who can do that, in collaboration with the carriers.”

Are you going to introduce any new membership types to promote growth?

“95% of the growers currently trading through RFH are members. The remaining 5% are suppliers. Our ambition is international growth. And the requirements for membership are getting stricter. So, there are reasons for us to review the membership types.”

What types do you have in mind?

“Well, we’re going to think about the obligation to supply to the auction, for example.  What’s the added value of the auction for the 30 to 40% that a Kenyan grower sells directly outside Europe? Why should he have to pay auction fees for those sales? Things are getting much more differentiated. There are growers who supply directly to exporters. They should also be able to pay via our system. How are we going to organise that? Considering our ambition to expand our platform at a global level, we need to have a fundamental discussion with our members about the different types of membership. It may result in different types of membership with different requirements and fees. We hope decisions will be made by the end of next year. Members and buyers want us to move faster. We would like that too, but first, we need to make fundamental decisions regarding the organisational structure, IT, services and membership types, to make us future proof.”

And to enable the growth that you’ve been looking for?

“We’re still growing, but at a global level, the Netherlands and Royal FloraHolland are losing market share. That’s something I’d like stop; I’d like to increase our market share. And now that we’ve got the tools, we should be able to do it.”

 

 

 

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