Ornamental industry: better margins for the member growers and their customers and higher consumer expenditures on cut flowers and plants

FloraHolland, the Dutch flower auction, presented its new strategy for the period up to 2020 on Wednesday September 24th. The ?Flowering the world together, planting seeds of opportunity for our members? report provides a road map to guide and prioritize the work of the cooperative in the context of key issues affecting worldwide floriculture and our society. It specifies two main goals: better margins for the member growers and their customers and a higher consumer expenditures on cut flowers and plants. FloraHolland stressed that the strategic vision is a think piece ? designed to provoke longer-term thinking across a wide audience: from members, to customers, to staff and to other stakeholders within the industry. According to the report, FloraHolland?s ?modernized mission refers to the core of FloraHolland, to our reach and to the way in which we wish to realize our dream. In 2020, floriculture will be blossoming. Plants and flowers are the way for consumers to express their emotions and feelings. Flowers say what words cannot ? in all cultures. Plants also connect you to nature and health ? wherever you are in the world. FloraHolland makes all this possible. We ensure that responsibly produced flowers and high quality. The industry is currently going through challenging times. Many growers are very worried about operations. Costs continue to rise, while earnings are stagnating. Growth of supply and demand is now primarily occurring outside the traditional boundaries of the cooperative, and the shift from the auction clock to direct channels has negatively affected FloraHolland?s business model. Members, customers and employees are concerned about the future. FloraHolland takes full responsibility of the direction the cooperative will take in the coming six years. Established in 1911 as a marketplace to market growers?, today the auction is a more involved process, but in essence, being a marketplace is still its main business: an open marketplace that the world sees as the centre of the floriculture trade, knowledge and innovation. The report sees a clear need for a place for market parties to meet, now and in the future, both physical and virtual. ?In addition, we are turning our eye towards consumers. The industry will be healthy again when we understand exactly what the consumer wants and when we are able to align the chain ?from seed to vase? to this need. In this way, we can contribute to increasing the demand for flowers and plants, and thus the sales for our members and their customers.? All in all, FloraHolland 2020 has two major ambitions:Better margins for members and their customers by: ? making logistics chains more efficient ? strongly reducing FloraHolland?s costs: back to our core business ? being an open marketplace where sound, stable pricing is key More consumers to spend more on Flowers & Plants by: ? having the best knowledge of markets and consumers in-house ? playing a leading role in promoting floriculture in Europe ? being the global innovation center of the floriculture industry FloraHolland remains a cooperative of, by and for its members. ?FloraHolland also remains a means to contribute to the objectives of its members, and is not an objective in itself. Our success is a reflection of the success of our members and their customers.? That?s why the auction has set itself the following objectives: (basis 2014, end measurement 2020): ? Annual growth of floriculture sales ? Reducing FloraHolland?s costs ? Reducing our members? logistics and sales costs ? Customer satisfaction One of the report?s key themes is customer orientation. According to FloraHolland the current supply chain is too internally focused. ?That is understandable in view of the adverse circumstances of many market parties and FloraHolland?s uncertain direction. However, if we want to make the industry blossom again, we need cooperation and a high degree of customer orientation. For this reason, FloraHolland is going to actively work to link suppliers with customers and facilitate efficient trading between the two. We do this in a demand-driven way: ultimately it is the wallets of consumers (and the corporate market) that determine the viability of the industry. FloraHolland will also endeavor to understand and influence consumers better. To make that possible, good relationships with our customers are of the essence, and this is reflected in our ambitions. It also means that we will leave activities after the buying moment to the market as much as possible.? FloraHolland underlines that its natural role is to be a marketplace. ?That is what we were once created for, and that is what we should excel at. Due to the role that FloraHolland currently plays in the industry and due to the world become ever more global and virtual, the boundaries of the cooperative are being tested. In order to serve our current members in the best way possible, we must continue to attract purchasing power, including purchasing power that is currently not present in the market. We can do this by being the best marketplace, both virtual and physical, with the greatest possible assortment. In order to achieve the latter, we are open to all suppliers of floriculture products. At the same time, we want to allow more room for entrepreneurship within the membership.? Another aspect of the changing world, being the distinction between ?grower? and ?trader? becoming increasingly ?vague? is also on the auction?s radar. ?Everyone is shifting within the chain and often playing multiple roles. For this reason, FloraHolland is expanding the membership options. All suppliers of floriculture products can now become members. Both on the supply side and the customer side, we will maintain payment conditions that allow us to offer payment security. That is a major strength of FloraHolland and a stabilizing factor for the industry.? FloraHolland believes in a strong auction clock. However, there is no reason to think that the volume at the clock will develop any differently from the current trend, which will mean ongoing pressure on our costs in the period from 2014 to 2020. ?This is a trend that together we have been seeing for many years, and that will inevitably force us into cost reductions. Sadly, this will have consequences for jobs at FloraHolland. Forced redundancies are not our policy, and we will do everything we can to avoid them in the future, but we cannot exclude them entirely.? The auction will also review its property portfolio. The asset side of the balance sheet will have to be reduced. The new auction process will be leading in the cost reductions. Many ideas have already been put forward to improve the auction process (national auction, plants after flowers, auctioning straight from the nursery,etc.). The time has now come to take decisions together with growers and customers. ?We have to change the auction process, and we will decide how to do that in consultation with our chain partners. This will result in choices with respect to our property, and will provide direction in terms of employment.? In order to achieve the above, FloraHolland will have to work together differently within the cooperative. ?Focusing on our ambitions, we will start working in a process-driven fashion, in which ?continuous improvement? will take center stage. Through Lean Six Sigma, all employees will work to keep growers and customers happy. ?The main thing is that we again become the connecting power in floriculture and that we ensure that the highest volume in flowers and plants find their way to the end customer in the most efficient way possible. FloraHolland?s own entrepreneurship is secondary to that. This is reflected in our values, in which we replace ?dare? by ?together?. In order to bring about the right focus, in the future we will divide the various activities of the cooperative into a set of business units.? In meetings starting on October 2, FloraHolland is deliberately not presenting a fully formed strategy and concrete implementation plans. ?Given the unique nature of our cooperative, it is important for members, customers and staff to have an opportunity to give their opinions and input. So they can influence the final strategy. We hope to see many members and customers at the meetings organised both in the Netherlands and abroad. Because only together can we get the floricultural sector to blossom.? 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