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Management Board column: All hands on deck in logistics

May 5, 2022

Leendert Jan Plaisier 06
In this series of columns, we give the floor to the directors and managers of Royal FloraHolland. COO Leendert-Jan Plaisier explains the impact of the peak period on logistics. "I fully understand your frustration. We feel really bad about the situation."
In the run-up to Mother's Day, the effects of various recent developments on our logistics processes became clear. We are dealing with a concurrence of circumstances, which sometimes reinforce each other and whose impact is greater than we had anticipated. This combination of factors means that we have too often failed to meet promised end times and turnaround times. We find this extremely annoying for you as a customer. Especially since we know that it puts you in a tight spot with your own logistical processes and the delivery to your customers. I fully understand your frustration. We feel really bad about the situation. Certainly also towards our own logistics staff and our peak helpers. They deliver top performance every day and yet, through no fault of their own, the end result is often unsatisfactory. I would therefore like to explain what is currently going on

Energy crisis

The energy crisis affects us all and our growers in particular. In order to save costs, many growers have turned their greenhouses cold or colder, as a result of which many flowers and plants were ripe for harvesting later. At the beginning of the peak period, there was therefore less supply than we are used to. These products were offered on the clock in the run-up to Mother's Day, which made the past weeks extra busy.

A peak within the peak

Logistics benefit from tight planning. This applies not only to the deployment of people, but also to the deployment of logistical resources. In the past few weeks, the planning deviated greatly from what we saw in practice. I would like to illustrate this with the first day of this week. On Monday 2 May, growers supplied almost 2500 more trolleys than planned. That caused a peak within the peak. There were more days when a location received dozens of percent more volume than expected. In Naaldwijk last week, we had 14% more flowers to process than planned and for plants even more than 27% more volume.

Of course, we are not complaining about the supply on the clock, but logistically speaking it is a challenge both in terms of staffing and in terms of the required trolleys and buckets. More about the staffing below. To be able to supply growers and other parties with as many trolleys as possible, we tried to make the trolleys as full as possible when distributing and order picking. This has also meant that trolleys have been delivered later. We regularly hear that we as RFH hold trolleys. We only do this with the minimum number of trolleys that we and the customers on the marketplace need the next day in our processes, otherwise we come to a complete standstill.

The clock is doing well

For years, we have seen a shift from clock to direct. In the past few weeks, the volume of the clock grew compared to last year and we saw a little less volume in the direct channel. That is a positive sign. The auction clock is still popular with growers and buyers, especially in times when market conditions are somewhat uncertain. Buyers postpone their purchasing decisions and opt for the clock. This goes hand in hand with more finesse, by the way. Buyers buy smaller quantities, which leads to an increase in the number of transactions, a higher split factor per trolley and therefore more logistical operations.

Shortage of people

I have saved the most important factor until last. Not only RFH, but the entire sector is facing a shortage of logistics staff. Just like many other sectors in the economy. We are now structurally short of 150 people. In a previous column, I elaborated on all the actions we are taking. Every day, our office staff help out as peak staff. We recently launched a recruitment campaign. This is yielding very good results. But not from one day to the next. I would like it to be different, but that is not realistic. On average, 40 new employees a week come in for an interview, and those who start are well-trained by us. In addition, we have asked our temporary employment agencies to also recruit employees who do not speak Dutch, English or German. In order to make it possible for us to employ people from the Ukraine, for example, we use an interpreter.

The prospects are positive

I expect that from now on our logistics performance will improve a little each week due to the influx of plenty of new staff. The forecast is that the busy times will continue for a while. We do see improvements in the very short term: there is a lot of newly recruited staff and we have had the biggest peak pressure.

The future

We are currently in the process of changing over to order-picking in order to create new logistics from farm to buyer. We are convinced that this is the best solution for the future in order to provide the best possible service to growers and buyers. I sometimes hear indications that order picking is at the root of the failure to meet end times and the shortage of trolleys. That is not the case for the shortage of trolleys, and for the failure to meet the end times, the bigger peak and the shortage of personnel are the main causes.

To conclude

I hope for your understanding and patience and that of your customers. Unfortunately, we cannot promise that we will meet our end times now. What we can promise is that we will do our utmost to deliver your purchases to customers in the box as quickly as possible. And that we will do our utmost to promote employee loyalty. Your cooperation, for example by not holding on to trolleys unnecessarily and early on and by cooperating well with our employees, is highly desirable and we appreciate it.