Cases on Information Technology Series

Bringing E-Business to the World’s Largest Flower Auction 325• Direct mediation: Teams of mediators combine specific supply and demand togenerate transactions for day trade and futures. In this process, they often followthe auction prices.Between the auctioning and mediation departments, there is a cultural difference.Employees of both departments see each other as competitors. In the past, the emphasiswas clearly on auctioning, while mediation was mainly a by-product. Now, business isgradually moving to mediation, but the mediation process is following the price settingat the auction.As a result, both channels are strongly interrelated. Just the cooperation of the twochannels gains advantage for growers and buyers. They can choose which percentageof selling or buying they want to do via each channel and therefore they are almost alwaysassured of selling or buying what they want.Operational departments, such as logistics, information technology (IT) financeand human resource management (HRM), are providing all kinds of services to thecommercial auctioning and mediation departments. The e-selling unit displayed in theorganization chart plays an important role in the e-business initiatives of the AalsmeerFlower Auction, as will be discussed next.Auctioning and Mediating Processes at the AalsmeerFlower AuctionEach night, the auction prepares the products for auctioning the next day. Thismeans: loading the products on special carts for internal transport and presentation,checking the quality of the products, and entering information about the products intothe auction system.At about 5 a.m., all the interested buyers can check which products will be auctionedthat day by addressing the “clock supply online” system of the auction. They can alsosee the products “live” at the lineup area. At 6 a.m., buyers group together in one of theauction halls. Each hall has its own products; for example, roses and tulips are auctionedin a separate hall. The buyers are wholesalers and exporters from all over the world.Therefore, the auction also offers “remote buying,” which is an Internet application inwhich each of the auction halls can be simulated. By using this system, online and offlinebuyers can buy products.Figure 2. Organization chart Aalsmeer Flower AuctionGeneral managementManaging directorCommercialdirectorBoardOperationaldirectorSupervisory boardAuctioning Mediation Logistics IT Finance HRME-sellingCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without writtenpermission of Idea Group Inc. is prohibited.