Royal Flora Holland (RFH), the world’s largest flower auction, is one of the most traditional Dutch businesses in operation and with Information Technology becoming a vital part within every industry, RFH’s need for transformation has become evident.
The analysis provided in our video highlighted the problem faced by Royal FloraHolland (RFH) currently: the company is losing market share to direct trade whilst also not making an efficient use of their costly assets. These problems result in two main challenges for RFH.
The first challenge is related to the constraints imposed by the auction system. Traders have to be present at fixed times and their final trade value is uncertain. As RFH is a multi-sided platform, it brings together two interdependent groups of customers: growers/suppliers and buyers. The platform is only valuable to one party if the other is present and vice-versa. The loss of large buyers is thus a threat to the long-term survival of RFH. The second challenge, the inefficient utilization of RFH’s assets. This relates to another aspect of the auction system, the short trading period. The fast-paced rhythm imposed by the short trading period leads to all facilities only being used at full capacity during four hours per day and further requires costly contract workforce. Our transformation shall:
1. provide an efficient way to elicit prices that are attractive to both buyers and suppliers
2. attract more growers and buyers by better responding to their needs
3. increase RFH’s global market share
4. place IT at the forefront as a strategic tool to foster innovation and change
Our solution involves RFH developing an online platform accessible to both sides of their network. The platform will hereafter be referred to as “RFH Marketplace”. Growers are able to sign up for the RFH Marketplace and will be certified by RFH. After they passed the one-time certification they can show their products on the online marketplace and decide on their own prices. Products can be traded from the moment the seller publishes his products on RFH Marketplace. These could be a batch of flowers still growing at the farm or flowers already being taken out of the farm. The RFH Marketplace shall enable the growers to connect to the RFH marketplace with their own ERP. The RFH marketplace will also incorporate an online community where forums will be available as well as a news sections relevant to growers. Growers will be able to exchange ideas, solutions and even opinions online. Looking at the long term, RFH could take on an even more digital role to further integrate in an electronic market. There are also other avenues that RFH could take, such as:
– a marketplace with large stocks to provide fast delivery of flowers and plants in stock,
– increase its offering by providing logistics services either inbound, outbound or both
– become a fully-digital company with no more physical activities.
– A copy of the data analyses service which the Global Dairy Trade provides.
