Logistics Report

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Eindhoven, December 2010

Coordination and optimization of the inter-auction transport of floricultural products at FloraHolland by J.D.G. Dat (Diederik)

BSc Industrial Engineering and Management Science - TU/e (2008) Student identity number 0577763

in partial fulfilment of the requirements for the degree of Master of Science in Operations Management and Logistics

Supervisors: Dr. T. van Woensel, TU/e, OPAC Prof. Dr. A.G. De Kok, TU/e, OPAC M. Van Veen MSc, FloraHolland, Concern Logistiek

TUE. School of Industrial Engineering. Series Master Theses Operations Management and Logistics

Subject headings: operations research, logistics, transport

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Abstract
This Master’s thesis concerns the analysis of the organization of the transport of floricultural products between six auction centres in the Netherlands. Based on the analysis of the current situation, three redesign scenarios are developed, which aim at coordinating and optimizing the inter-auction transport. Furthermore, several concepts related to these scenarios are presented that can improve the efficiency of the transport network and realise supply chain cost reductions.

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Management summary
The Netherlands have a historical dominant global trading position in the floriculture sector. Several trends in the sector, like globalization of production and market areas, virtualization of the auctioning process (e.g. remote buying via the internet) and the increase in direct trade between growers and buyers, cause that it is not evident anymore that flowers and plants are traded through the Netherlands. The organization of FloraHolland dominates this sector with a 98% market share in the Netherlands. FloraHolland is a primary cooperative, owned by the producers of floricultural products as members (4.900 in total) in 16 regions of which 13 in the Netherlands. In total, there are around 8.000 growers, located in the Netherlands or abroad, that supply products to FloraHolland. Also non-members are allowed to use FloraHolland for transactions. Good governance and shared decision making is a complicated key success factor in such a cooperative. In 2009, the turnover/trade value was equal to €3,9 billion, of which €2,4 billion (62%) through clock transactions and €1,5 billion (38%) of transactions through FloraHolland Connect, the intermediary of FloraHolland. In being a cooperative, FloraHolland is a not-forprofit organization, having 4360 employees (of which 3420 FTEs) in 2009. The trade through FloraHolland Connect is gradually increasing over the years. FloraHolland facilitates around 120.000 transactions via the auction clocks per day, between the growers and more than 3.000 (international) buyers. Research assignment To maintain and increase its competitive position, FloraHolland should organize its logistics network in such a way that it can cope the trends described above. Therefore, the following research assignment was initiated: “Design a (conceptual) new model of the inter-auction transport of products that can optimize the inter-auction transport of FloraHolland and with it to facilitate its supply chain partners.” The associated main research question is: “How should the inter-auction transport be organized and managed in order to cluster, collaborate, connect and manage the processes on and between the marketplaces of the floricultural greenports?” Analysis current organization FloraHolland has six auction locations: Aalsmeer (47% of total sales), Naaldwijk (32%), Rijnsburg (14%), Bleiswijk (3%), Venlo (3%) and Eelde (1%). Between these locations four transport flows of floricultural products exist: the inbound flows for the clock trade, the outbound flows of the clock trade, the flows of the direct trade through the intermediary FloraHolland Connect, and the flows of the import handling departments. Based on all transactions that took place in 2009 (some 26 million), the current organization and the transport flows are statistically...
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