Finance

Supply chain UAE flower industry endures the effects of crisis The UAE, being at the crossroads of Europe, Asia, and Africa, has great potential to be a major hub for the flower industry. The country’s location is an important strategic advantage that provides access to a potential market of more than 2 billion customers. According to industry experts, the cut flower market in the UAE had been growing by about 9 percent annually, with an estimated 200,000 rose stems being brought into the country every week.

Fresh-cut flowers like roses, chrysanthemums, orchids, cymbidium, carnations, and lilies have been in great demand. Dubai has established the Dubai Flower Centre (DFC), which is now the most modern export and local flower transit and re-distribution hub in the Middle East. The DFC was established to help flower and perishable product exporters by providing a cost-effective, accessible point of import and redistribution. The flowers that enter Dubai mainly come from Africa, Asia, and South America and the main re-exporting markets are GCC countries, the CIS (Russia), Asia-Pacific countries and Europe. But as the global credit crunch continues to bite, business, unfortunately, is no longer a bed of roses for the flower industry. Flowers are getting more expensive to ship and even harder to sell, while production costs continue to rise. The flower industry has had its petals burnt in the rising heat of the global recession. The petals of cash are no longer yielding the anticipated fortune even during traditional flower seasons such as Valentine’s Day and Mother’s Day.

The decline in the world economy and purchasing power has indeed played a major role in reducing consumer spending, and the flower industry has not been spared. Growers, producers, exporters, importers, international, regional and local wholesalers and retailers based in Dubai Flower Centre Free Zone share the same sentiments regarding the drop. Al Jowder has seen a great decline in orders from hotels and airlines, which prompted them to give at least a 40 percent discount to regular clients. One hotel client used to spend Dh 30,000 a month on flowers, but now they’ve cut their budget by more than 50 percent, said Colagong. Some wholesalers, on the other hand, have ventured into events and weddings like Zimsa Flowers to drive the declining revenues.

“Yes, we are feeling the heat from the economy”, said Youri Hong from Zimsa Flowers. “Now we are venturing into exhibits like bridal shows and other events to get more clients”. In the floral industry, logistics are vital as timing and temperature are also critical. Indeed, flowers are the most delicate agricultural item-even more so than fish. Flowers not only need to move fast, but they must also be kept cool, at a constant temperature of 33 to 37 degrees. And they must be provided preservative-treated water while in transit. Roses are especially delicate, fragile, and perishable. Eighty percent of the roses sold in the U.S. market arrive by air from rural Colombia and Ecuador. Roses move through this supply chain via an intricate but fast transportation network.

This network stretches from growers who cut, grade, bundle, pack, and ship; to importers who make the deal; to the U.S. Department of Agriculture personnel who quarantine and inspect for insects, diseases, and parasites; to U.S. Customs agents who inspect and approve; to facilitators who provide clearance and labeling; to wholesalers who distribute; to retailers who arrange and sell; and finally to the customer. Each and every minute the product is deteriorating. The time and temperature sensitivity of perishables like roses require sophistication and refined standards in the supply chain. Success yields quality and low losses.

After all, when it’s Valentine’s Day, what good is a shipment of roses that arrives wilted or late? This is a difficult logistics; only an excellent one will get the job done. Case Questions: 1- Discuss the benefits of the global supply chain in the case of flower market 2- Which supply chain strategy (Lean supply chain OR Agile Supply chain) is appropriate to flower supply? and why? Get Finance homework help today