We love getting flowers; they are a symbol of celebration. When you have achieved something, when you are turning 21, when you are in love, when you have graduated… Flowers are big business in Holland. The ‘Verenigde Bloemenveiling Aalsmeer’ translates to the United Flower Auction in Aalsmeer. Most of the flowers purchased in the world are auctioned on a daily basis at the Aalsmeer facilities. This happens by bringing supply and demand together by means of the auction clock, a fascinating process during which large and small batches of flowers are sold within fractions of seconds.
In five auction halls, over a thousand wholesalers bid on trainloads of flowers as they cruise slowly by. The flower auction in Aalsmeer is the largest trading center for plants and flowers in the world. Around 21 million flowers are sold daily with a 15% increase around occasions like Valentine’s Day and Mothers’ day. The building of the flower auction is only a stone’s throw from Schiphol airport and one of the largest buildings by floor space in the world, it boasts an area of more than 630,000 square meters – bigger than 120 football fields.
The five operations performance objectives Performance objectives are the generic set of performance indicators that can be used to set the objectives or judge the performance of any type of the operation, although there are alternative lists proposed by different authorities, the five performance objectives as used in the book of Slack et al. (2010: 40) are quality, speed, dependability, flexibility and cost. These performance objectives are the specific aspects of performance on which an operation is judged. What does the customer think is important?
In the case of VBA, the operations performance objectives that are the most important to build into the design process are speed, quality and dependability (reliability). Speed: According to Slack et al. (2010: 42), ‘speed’ is the elapsed time between customers’ requesting products or services and their receiving them. Doing things fast, minimizing time between a buyer pushing the button and the buyer receiving the flowers, is essential at VBA. The faster the buyer can receive the flowers, the more likely they are to buy it, or the more they will pay for it.
In the VBA operation speed is the most critical objective. As we all know, flowers are extremely perishable and cannot be kept within the operation for too long. To get the flowers out as fresh as possible, everything happens in lightning speed, including the bidding. From the moment the flowers are taken from auction, it is only a short time until they are available for sale. Quality: VBA aim to give their customers/exporters top quality flowers. There are many different approaches to defining ‘quality’. Slack et al. 2010) defines quality as consistent conformance to customers’ expectations. Quality is fundamental at VBA, it is clearly a major influence on customer satisfaction or dissatisfaction. A buyer perception of high-quality flowers or plants means customer satisfaction and therefore the likelihood that the customer will return at the flower auction. There are quality test rooms at the flower auction where flower quality inspectors perform random quality tests on flowers to ensure quality. It approves the flowers and plants on freshness and maturity and damages.
How long do the flowers stay fresh? Are the flowers free of diseases and insects? How do they cope with being transported? After inspection, the flowers and plants are ready for auction. The quality inspectors inspect on the basis of the reliable information of the past provided by the suppliers themselves. Dependability means that an operation would like to do things on time, so as staying true to one’s word and trustworthiness (Slack et al. , 2010: 40). As described above, VBA profiles itself in the market as a reliable operation.
To their customers it is very important that the growers offer reliable and constant products, products buyers can trust. The VBA operation wants to keep their promises, that is why they check regularly the quality of the growers’ products and advise them how to improve their product quality. They also check the associated information the growers provide, before the flowers go to auction. Dependability is very essential again of the perishability of the flowers. As the case describes, almost all business takes place between 7. 00 am and 10. 0 am so fresh flowers can be at the shops by lunchtime in Holland, by early afternoon in London, Paris and Berlin, and by early morning the next day in New York.
Those three performance objectives are important in the design of VBA, however that does not mean that the objectives flexibility and cost does not add value to the process. Slack et al. (2010: 46) refer ‘flexibility’ to the fact that an operation wants to be able to change what they do; that is, being able to vary or adapt the operation’s activities to cope with unexpected circumstances or to give customers individual treatment.
If the demand fluctuates, VBA has to be flexible. All operations have an interest in keeping their costs as low as is compatible with the levels of quality, speed, dependability and flexibility that their customers require (Slack et al. , 2010: 49). According to the case, VBA operates already with very low costs (about 5 per cent of turnover). The operation has invested in information technology and materials handling technology which standardizes the service, thus minimize costs further. If the operation wants to gain a competitive edge at this point, it could still minimize the costs. Process Technology
Process technology are the machines and devices that create and/or deliver goods and services (Slack et al. , 2010: ). In fact, process technology is pervasive in all types of operations and it has a very significant effect on the performance objectives as discussed earlier. VBA is not able to achieve any of its objectives without these process technologies. Slack et al. (2010: 208) distinguishes between material, information and customer processing technologies, but many newer technologies process combinations of materials, staff and customers, which are called integrating technologies.
Information technology plays a significant role in the VBA operation, although it is actually a combination of process technologies. According to the case, the high levels of computerization and automation of material flow allow the operation to operate with very low costs, at high speed and dependability (“The high levels… speed and dependability”). Materials-processing technology: The VBA staff together handles 17 million cut flowers and two milli At VBA around 19 million cut flowers and plants are auctioned everyday.
These flowers are handled in standard trolleys according to their quality and held in cool storage areas, which is done manually. But during auctioning process the flower are conveyed automatically through the auction halls in these trolleys. There is a separate conveyer automated belt for each clock. Information-processing technology, or just information technology (IT), is the most common single type of technology within operations, and includes any device which collects, manipulates, stores or distributes information (Slack et al. 2010: 211). IT seems to be the most essential process technology within the operation. As the case implies the whole operation is held together by its information processing technology. Most of the important information about the flowers is shown automatically on the auction clocks. The processing of the information takes only a few seconds and the VBA computer prints an invoice for each buyer for all the purchases made. Flow of flowers in the VBA operation – critical points