VBA Assignment

Practicum II
T.T. Dercksen
S2033321 Group 40 3/6/2012

VBA and performance objectives

In this case-assignment we will have a look at several properties of the Verenigde Bloemenveiling Aalsmeer (VBA) in Holland, which is the largest flower auction operation in the world. The perspective from which we will briefly study this operation will mostly be one of the process management. First we will decide which of the five performance objectives from Slack, Chambers and Johnston (2010) are the most important within this operation. Slack et al. (2010) distinguishes the following performance objectives: quality, speed, dependability, flexibility and cost. To decide which of these objectives are most important we must first look at the distinctive characteristic of the VBA. The most important characteristic of the auction are the products that are auctioned: flowers and plants. These products are only valuable for a short period of time, after they perish and become worthless. So we can discourse that every minute the product is not sold, it loses significant value. We see the same thing happening in markets like meat or dairy where buyers want their goods as fresh as possible, so they reduce the risk of their inventory becoming worthless. As we look at the performance objectives, we can say that speed is therefore a very important objective. Buyers want their merchandise as fresh as possible, so they can sell to customers for a longer period of time and have a bigger chance of selling everything. This of course backed up by the simple economic principle of a venture wanting to make as much profit as possible. As we look further into the process of the VBA we see that goods are stored overnight in a cold storage. Flowers are best preserved in a moderately cold environment. This means that every moment flowers are not in a cold environment they will lose value faster. The VBA process should therefore have a very tight schedule that has minimum delays in both input as output. To describe this in performance objectives, we speak of dependability. This means trying to increase reliability in every part of the process. The process should be on-time in every aspect, without disruption or rescheduling. As we look at the quality of the products, we see that the better the performance on speed and dependability, the better is the quality of the product. If a product is out of cold storage for a long time, or takes very long to complete the process, the quality of the product will be considerably less. Taking this into consideration, I consider the two performance objectives of speed and dependability listed above to be the most important. Therefore these objectives should play an important role in the design of VBAs process. The case confirms this idea and adds accuracy to these two objectives.

VBA and process technology

The next topic we will study is the role of process technology and how it helps the VBA to achieve its objectives. In the first section of this assignment we decided that the performance objectives speed and dependability should be the most important objects in the design of the VBA. According to Slack et al. (2010) process technology is the machines, equipment and devices that create and/or deliver the goods and services. In this setting product creation is not applicable, the operation does however provide a service and moves and delivers goods. In this

assignment the focus will be on the main technology that is responsible for achieving the performance objectives. As we start at the beginning of the flower process, we see that the flowers are brought in standard containers (trolleys). This is an important technology as it standardizes the whole process of moving and storing. The flowers will remain in these trolleys from start until finish. Because the flowers do not have to be transferred into other boxes or containers and the trolleys are easy to transport, process speed is increased. The next technology are the cold storage facilities. Because storage creates time margin, dependability increases. The fact that the storage is cold increases an additional performance objective which we discussed earlier: quality. Next step in the operation is the auction process. This process starts with the flowers that are automatically being conveyed through the hall. This technology supports speed as every buyer can see the flowers from a fixed viewpoint, where he can bid at the same time. The bidding system is also build for speed. There are as much as four clocks where buyers can bid at the same time. The system of Dutch auction also makes the process clear and fast. The whole system is linked to a central computer. The use of software and the clarity of the process decreases the chance of mistakes and thereby increases the dependability. If one had to execute all this tasks without software it would also be less fast (not to mention the objective of cost).

VBA process flow

Figure 1 is a sketch of the flow of flowers through the operation. This begins with the arrival at Aalsmeer and ends with the distribution to the stores. De Koster and Yu (2008) wrote an article about the flower auction at Aalsmeer. They discuss the process after the auction, when flowers are transported for packaging and loading. This seems to be a major critical point because of the variety of destinations that a trolley of flowers can have (sometimes one trolley can have as much as 26 different customers/destinations) . Also the size of the distribution centre, the centre where auctioned flowers are packaged and loaded, makes it difficult to coordinate all the different trolleys fast and on-time. A big problem, because a trolley of flowers with just a few minutes delay can miss a scheduled transport and be delayed for days.

Arrival

Assigned reference number

Sufficient Quality inspection

Not sufficient

Description is entered on forms

Cold storage Conveying

Not sold Reject

Reject

Printing and ataching distribution voucher

Sold

Auction process

Transport

Record data

Figure 1: the flow of flowers through the VBA operation

Packaging/loading

Distribution