CASE STUDY

Case Study

Case Study

Introduction

Aalsmeer (VBA), the second largest flower auction in the world, auctions about 19 million flowers per day between 6 am and 11 am, which equals 60,000 daily transactions on average (2003). VBA employs about 1,800 people, but under its roof, also many of its customers have their own Distribution Centers (DC). About 10,000 people work in the entire 1 million m2 building. The number of daily transactions has been growing with about 3% annually for the last five years. (Banker, 2006, 867) The total flower distribution process consists of two parts: distribution (by tow-truck drivers) of transactions from auctioned trolleys to customer trolleys and transport of complete customer trolleys to the customer's DC.

Case Study: Aalsmeer Flower Auction

The first part of the distribution process (distributing transactions from grower trolleys over customer trolleys) becomes more and more congested, leading to exceeding of the agreed customer lead time and makespan, which subsequently influences the handling process of flowers in the customers' DCs. In order to make the process effective, VBA has strict service level agreements with wholesalers on time fences: 95% of the transactions should arrive in the customer's area within 2 hours after the purchase. The 98% total makespan should be within about 7 hours after the auction start. Unfortunately, with the increasing number of transactions, these targets can no longer be achieved with the current organization. So far, the growth has been accommodated by bringing in more workers. This solution is no longer sufficient, as the labor market is tight in this region and motivated workers are increasingly difficult to find. Also, more workers lead to more congestion in the distribution area. As a consequence, the worker productivity has been decreasing gradually over the past years, from 38 transactions per distributor per hour in 1995 to 28.7 at the start of our study. Congestion and decreasing performance with increasing workload leads to more worker stress, which again leads to lower work quality (the percentage of errors has increased substantially) and higher labor turnover. As it takes about three to four weeks for new workers to attain the required speed, this turnover leads to even lower labor productivity, a vicious spiral. Late 2000, (Bartholdi, 2006, 45) VBA asked us to investigate the possibility to improve the makespan and transaction lead time by introducing teamwork to the distribution process. The project was baptized DTD: decoupling transport and distribution. Self-managed work teams are accepted practice in many manufacturing environments. Well-known advantages include improved productivity through enhanced motivation and flexibility, improving quality and encouraging innovation, and increasing satisfaction by allowing individuals to contribute more effectively [11], [12], and [13]. In distribution environments teamwork is far from common, although Bartholdi et al. [3] report of successful implementations in specific order picking situations. One of the reasons for the lack of distribution implementations is probably because distributors often work in a dispersed area, which makes worker contacts difficult. (Bartholdi, 2006, 45) No flower auction uses teamwork. We modeled the distribution process starting at the ...