iFlow: ICT support for the daily trade of floriculture
Can we structurally improve and better stabilise the price-setting in the daily trade of floricultural products? How can revised logistics contribute to this process? To answer these questions, growers and traders along with Wageningen University and Rotterdam School of Management, part of Erasmus University, initiated the project iFlow. The goal of iFlow is to support the daily trade between growers and customers by providing information on prices, suppliers and skills and ultimately to strengthen the power of the Netherlands as a marketplace. The information for traders and growers will be accessible via various ICT tools (http://www.floraldaily.com, 2015).
The clock has always been an effective and efficient tool in the determination of a good market price and in the rapid processing of many logistics and commercial transactions. The direct flows between growers and customers, however, are greatly increased. The process of pricing on the clock is still very decisive for the pricing in the overall market. At the same time, this way of pricing is under influence of various factors and therefore has become less stable over the past few years.
The use of new and advanced IT tools to support decisions, make it possible to renew the daily trade process and the associated supply chain network, to make it more competitive and more sustainable. Research by RSM has shown that it is possible to support growers and customers in making better decisions about buying and selling flowers and plants (http://www.rsm.nl/about-rsm/news/detail/4927-iflow-working-on-smarter-decisions-in-the-day-trading-of-floriculture-products-strengthening-pricing-in-day-trading/, 2015).
Besides selling the flowers at the auction, it is also possible for growers to opt for a contract with a floral wholesaler. The grower hereby receives a fixed price per flower during the whole season. However, the wholesaler has much power, as the prices are low at the auction, and therefore it would have been better for wholesalers to purchase through the auction, the wholesaler will whine at the grower of quality, even though it might be good. It happens regularly, in that case, that the wholesaler can take the flowers for a lower price than the price of the contract or that flowers are rejected. The grower brings the flowers over to the auction if the flowers are rejected by the wholesaler. These actions between wholesalers and growers also affect the price volatility in the auction. If there appear more flowers at the auction, as a result of rejection, the price drops even further. This can be explained by the supply and demand mechanism.
Do you think iFlow can (partly) solve the problem of price instability in the floriculture industry or do you think that the power of the wholesalers is too strong in this industry?
http://www.freesianet.nl/freesia/nieuws/project-om-prijs-met-daghandel-omhoog-te-krikken/, 2015, last visited 29 September 2015
http://www.floraldaily.com/article/2090/Netherlands-IFlow-working-on-good-and-stable-price-setting-in-day-trade, 2015, last visited 29 September 2015